ANNUAL
REPORT 2017
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OILEX LTDANNUAL REPORT 2017For personal use only CONTENTS
Chairman’s Review
Business Review
Permit Schedule
Directors’ Report
Remuneration Report - Audited
Lead Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Audit Report
Shareholder Information
Definitions
Corporate Information
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OILEX LTD ANNUAL REPORT 2017
CHAIRMAN’S
REVIEW
Dear Shareholder,
The 2017 financial year has delivered important steps to reset your Company and regain momentum behind the Cambay Project,
the Company’s key asset.
The Company remains committed to unlocking the multi-TCF in-place tight gas potential in the tight EP-IV siltstones at its onshore
Cambay Project, Gujarat State in India. Energy demand in India continues to underpin a strong investment case for the Joint Venture
partners at Cambay.
The Company appointed Schlumberger and Baker Hughes to advise on the optimal well and stimulation design required to achieve
potential commercial flow rates in the EP-IV reservoir. Importantly, the results from their analysis has confirmed the potential for
substantially increased flow rates with the application of the appropriate stimulation technology suite. The Company is now
reviewing its existing vertical wells with a view to conducting an initial test of the stimulation recipe.
During the year, the Company actively engaged in resolving the legacy issues associated with Cambay. In the June quarter, our
Indian joint venture received the equivalent of US$1.4 million in outstanding cash calls from its Joint Venture partner, with additional
proceeds anticipated. Importantly, all outstanding work programmes were approved by the joint venture and government regulator,
and our Joint Venture partner has resumed payment of Cambay cash calls relating to the 2017/18 work programme.
A key focus of the 2017 financial year has been the preparation of the application for an extension of the Cambay PSC. As required,
the application was lodged in September 2017 ahead of PSC expiry date of September 2019. The Company anticipates receiving a
response to the application from the Government of India in mid-2018.
Strategically, the Company continues to actively review new opportunities to create value by diversifying the Company’s
project portfolio.
On behalf of the Board, I wish to thank our staff, Joint Venture partners, contractors, local communities, shareholders and
stakeholders for their ongoing support as the Company moves closer to unlocking substantial unconventional hydrocarbon
resources within the Cambay Project.
Mr B Lingo
Chairman
12 September 2017
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OILEX LTD ANNUAL REPORT 2017
BUSINESS
REVIEW
BUSINESS
REVIEW
EXTERNAL IMPACT
ON THE PETROLEUM
INDUSTRY
Low global oil and gas prices during 2016/17 continue to
negatively impact the oil and gas industry. Overall new capital
expenditures have remained relatively low, with funding for
greenfield exploration projects challenging. Many companies
have responded by continuing where possible to reduce costs
and defer projects. Oilex has responded similarly by reducing its
headcount and non-core expenditure.
In contrast, the Indian economy has remained strong and is
described as the fastest growing major economy in the World.
India’s oil consumption grew by 8.3 percent year-on-year in
2016, against the global growth of 1.5 percent, making it the
third-largest oil consuming nation in the world. The Indian
government is actively supporting foreign investment, including
in the oil and gas sector.
WTI Oil Price US$
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OILEX
STRATEGY
Oilex continued to focus on its core project in India
during the year while also evaluating potentially
value accretive new business opportunities ranging
from discovered undeveloped resources with
exploration upside to existing production. These
evaluations are aimed at broadening the company’s
opportunity base and investment opportunities.
Figure 1: Oilex Staff
INTRODUCTION
The Cambay Project, Oilex’s major project, is located onshore
in the state of Gujarat in the heart of one of India’s most prolific
hydrocarbon and leading industrialised provinces. The project is
ideally located near a major industrial corridor and approximately
20 km from the existing national gas pipeline grid. The project is
well-positioned to commercialise production in the fast-growing,
demand-driven domestic energy market.
The area has a long history of hydrocarbon production from
a number of vertically stacked reservoir sections. Oilex
continues to focus on a tight siltstone Eocene aged reservoir
which has potential for Multi-TCF gas resources within the
license area of the Cambay Production Sharing Contract (PSC).
A secondary conventional reservoir is present in the Oligocene
section. Oilex and its Joint Venture partner, the Gujarat State
Petroleum Corporation Limited, have been working on a
development plan for both zones. The plan was submitted
together with an application for a ten-year extension of the
PSC in September 2017.
Production of gas and condensate from Cambay continued
throughout most of the year. Gas was also produced during
the year from the smaller Bhandut Field until water production
curtailed the operations.
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OILEX LTD ANNUAL REPORT 2017
BUSINESS
REVIEW
CAMBAY FIELD
Onshore Gujarat, India
OILEX
INTEREST
China
45%
OPERATOR
Pakistan
New Delhi
Cambay
I N D I A
Arabian Sea
Mumbai
Hyderabad
Nepal
Bhutan
Bangladesh
Kolkata
LEGEND
Crude oil & product Pipeline
Matural Gas Pipeline
LNG Terminal
Refinery
City
Capital
Bangalore
Chennai
Bay of Bengal
Sources: U.S. Energy Information Administration
IHS Edin, USGS
0
250
500 Kilometers
Figure 2: Gujarat Gas Pipeline Network to the Nation
Oilex is the Operator of the Cambay Field and holds a 45%
participating interest. The remaining 55% interest is held by
Joint Venture partner, Gujarat State Petroleum Corporation
Limited (GSPC).
Exploration and production in the region has occurred since
the early 1960s. Oilex’s focus on the tight siltstone reservoir is
a step away from the conventional exploration and production
that has dominated the basin. It requires application of drilling
and stimulation technologies to produce the reservoir at
commercial rates. Core samples from a well drilled in 2008 have
been analysed by Schlumberger for geomechanics properties
and fluid and proppant matching. This core test analysis along
with the data from previous vertical and horizontal wells has
been the subject of an in-depth review by Baker Hughes
aimed specifically to identify reasons for the limited success
of past drilling and stimulation, and to outline optimal drilling
and stimulation methodologies for future work programmes to
establish commercial gas production. A detailed development
plan for both the Eocene siltstones and the Oligocene
sandstones has been prepared during the year and submitted
to the Indian government regulator, the Director General of
Hydrocarbons in September 2017. The plan is required to support
the application for the PSC extension. The PSC’s primary
term expires in September 2019, requiring submission of the
application documents two years in advance. The Joint Venture
has applied for an extension of up to ten years.
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The development plan encompasses a staged approach, initially
focussing on workovers and drilling of a small number of new
wells. It is anticipated that notification by the government
regarding the PSC extension will occur during Q2 of 2018.
No major expenditure will be undertaken whilst the PSC
extension is being considered.
A field programme involving the workover of two older wells
C-70 and C-23z to test potential production flow rates from the
OS-II reservoir was completed in June 2017. However, these
wells did not return commercial volumes of oil and or gas.
During the year, a small volume of gas was produced into the
local low pressure pipeline from the Eocene reservoir.
The C-77H well produced 8.6 mmscf and C-73 produced 2.7
mmscf. A plan of cycling production alternately from C-77H and
C-73 will continue into the next year.
The Company is in discussion with potential partner companies
who have undertaken data room reviews of the EP-IV tight gas
potential. Should any change in the structure of the existing
Cambay Joint Venture eventuate, a restructure of the Company’s
ongoing funding commitment to the Cambay Project may ensue.
1603
1650
1700
1750
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1850
1900
1950
2000
2050
0
1200
2000
Metres
Cambay Field Top Y Zone
2150
(155 Horizon) Depth Map c.i.10m 2169
2100
Figure 3: Cambay Field – recorded hydrocarbon flowrates from
EP-IV (Y Zone) reservoir
Figure 4: Oilex Staff at Cambay Production Facility
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BUSINESS
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JOINT VENTURE MANAGEMENT
Oilex has been working with its Joint Venture partner, GSPC, to resolve a number of unpaid cash calls going back several years.
During the year Oilex received US$1.708 million gross from GSPC attributable to the Cambay Field. At 30 June 2017, gross unpaid
cash calls issued to GSPC totalled approximately US$5.492 million. Oilex continues to engage positively with its Joint Venture partner
to resolve these unpaid amounts. During the year Oilex continued to bear the ongoing costs of the Joint Venture and managed
payment of the Cambay Joint Venture creditors. It is anticipated that GSPC will commence regular contributions to ongoing operating
cash calls going forward.
Oilex has worked closely with GSPC exploring various options for the PSC and on the future development plan. There are no
outstanding work commitments remaining on the PSC before the term expires.
In December 2016, Oilex participated in a formal tender process initiated by GSPC, by submitting a conditional offer for a possible
additional 55% interest in the Cambay PSC. The outcome of this process has yet to be determined.
CAMBAY CONTINGENT RESOURCES
Resource volumes for the Eocene are unchanged since June 2016 and are summarised in the following table which shows Oilex net
working interest. The development plan submitted as part of the application for extension of the PSC term addresses a sub-set of
these resources in a staged approach.
Unrisked Cambay Field Estimates
At June 2017
Contingent Resources
X & Y Zones
Net Gas Volume
bcf
Net Condensate Volume
million bbl
1C
215
2C
417
3C
728
1C
12
2C
27.4
3C
54.6
Table shows Oilex Net Working Interest Contingent Resources
Refer to ASX announcement dated 24 June 2016 for further details
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BHANDUT FIELD
Onshore Gujarat, India
OILEX
INTEREST
40%
OPERATOR
During the financial year, the Joint Venture received US$0.283
million gross from GSPC against outstanding cash calls for
Bhandut. Total unpaid cash calls by GSPC were reduced to
US$62,983 (gross) at 30 June 2017.
Oilex N.L. Holdings (India) Limited is the Operator of the
Bhandut Field Production Sharing Contract (PSC) in the
Cambay Basin onshore Gujarat, India and holds a 40%
participating interest. The remaining 60% interest is held by
Joint Venture partner Gujarat State Petroleum Corporation
Limited (GSPC).
The Bhandut Field was initially discovered and developed by
ONGC in 1976.
Production from the Bhandut-3 well continued until June 2017
when it was shut-in due to increasing water production. A total
of 28.5 mmscf was produced during the year.
The field has ongoing production and exploration potential,
coupled with existing production facilities. The Company is
currently in discussion with several parties, regarding a possible
sale of its participating interest in the PSC. A development plan
in support of the application for an extension of the PSC was
submitted in September 2017.
Figure 5: Bhandut Production Facility
SABARMATI FIELD
Onshore Gujarat, India
OILEX
INTEREST
40%
OPERATOR
The Sabarmati Field Petroleum Mining Permit was relinquished
in August 2016. During the financial year, the Joint Venture
received US$84,644 gross from GSPC against outstanding cash
calls and the total unpaid cash calls by GSPC had been reduced
as at June 2017 to US$769 (gross).
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OILEX LTD ANNUAL REPORT 2017
BUSINESS
REVIEW
JPDA 06-103
Timor Sea
OILEX
INTEREST
10%
OPERATOR
Notwithstanding the Group’s belief that no penalty is applicable,
both parties have made a number of offers to settle the matter,
none of which have been mutually acceptable.
In view of ongoing discussions to resolve this matter, the
Group has elected to make a provision of US$600,000 as at
31 December 2016, being the Group’s share of a proposed
settlement of the JPDA matter. The provision, timing and or
settlement, if any, is subject to variation dependent upon
ongoing negotiations with the ANPM.
The Joint Venture continues its discussions with the ANPM and
remains hopeful an amicable settlement will be reached. If the
parties are unable to reach an amicable settlement, any party
may refer the matter to arbitration. If this occurs, the obligations
and liabilities of the Joint Venture participants under the PSC
are joint and several, with parent company guarantees provided
by all Joint Venture participants. Oilex has a 10% participating
interest in the Joint Venture and is the Operator.
The equity interest of the Joint Venture participants are:
Oilex (JPDA 06-103) Ltd (Operator)
Pan Pacific Petroleum (JPDA 06-103) Pty Ltd
Japan Energy E&P JPDA Pty Ltd
GSPC (JPDA) Limited
Videocon JPDA 06-103 Limited
Bharat PetroResources JPDA Ltd
Total
10%
15%
15%
20%
20%
20%
100%
The Joint Venture is presently being conducted in accordance
with a care and maintenance budget.
The Joint Venture submitted a request to the Autoridade
Nacional do Petroleo e Minerais (ANPM) to terminate the PSC
by mutual agreement in accordance with its terms and without
penalty or claim on 12 July 2013 (Request to Terminate).
The Request to Terminate followed Joint Venture concerns over
the security of PSC tenure as a result of developments within
the JPDA, including JPDA 06-103, which are outside the control
and influence of the Joint Venture participants, including:
»
»
existence of separate unilateral rights to terminate the
Certain Maritime Arrangements in the Timor Sea (CMATS)
arising in 2013 in favour of both the Government of Timor
Leste and the Government of Australia; and
formal arbitration proceedings being initiated by the Timor
Leste Government against the Government of Australia to
have CMATS declared void ab initio.
On 15 January 2014, the ANPM suspended the PSC for 3
months to provide sufficient time for a response to the Request
to Terminate be determined. The ANPM subsequently granted
successive 3 month extensions to the PSC.
In May 2015, the ANPM responded to the Joint Venture and
advised that the Request to Terminate had been rejected.
Shortly thereafter, the Joint Venture received a Notice of
Intent to Terminate the PSC (Notice) from the ANPM
effective 15 July 2015.
The Notice asserts a monetary claim against the Joint Venture
for payment of the estimated cost of exploration activities not
carried out in 2013 and certain local content obligations set out
in the PSC. The total amount sought to be recovered by the
ANPM in the Notice is approximately US$17 million.
The obligations and liabilities of the Joint Venture participants
under the PSC are joint and several.
The Joint Venture had previously requested credit for excess
expenditure on the approved work programme in the amount
of circa US$56 million and this issue remains unresolved.
The Notice does not include any reference to, nor allowance
for, credit for excess monies which have been spent by the
Joint Venture during the PSC term. Oilex considers such
excess expenditure should be included as part of any financial
assessment incorporated in the termination process.
The Joint Venture continues to discuss any financial
liabilities which may arise from the termination of the PSC
with the ANPM.
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CANNING BASIN
Western Australia
Oilex currently holds exploration permit application
STP-EPA-0131, and has “preferred applicant” status for two
adjacent exploration areas, STP-EPA-0106 and STP-EPA-0107
in the onshore Canning Basin, Western Australia. The combined
total area is ~3 million acres. The exploration areas cover the
prospective Wallal Graben.
Final award of each permit requires signing of Heritage
Agreements with the Nyangumarta and Njamal People and is
linked to a request to the Department of Mines and Petroleum
(DMP) that all three permits be awarded simultaneously.
Oilex can review it’s position in pursuing these applications at
any time.
The acreage is adjacent to many world class mining projects
in the Pilbara region. The Great Northern Highway runs
through the northern area and the Telfer Gas Pipeline
traverses STP-EPA-0131.
WEST KAMPAR PSC
Central Sumatra
OILEX
INTEREST
45%
+ FURTHER 22.5% SECURED - NON OPERATOR
Oilex continues to pursue a commercial resolution to the
Joint Venture dispute with the Operator in the West Kampar
PSC, in parallel with considering options to enforce its
Arbitration Award in Jakarta. The Pendalian Field which lies
within the PSC has been managed outside of the terms of
the JOA and funded by the Operator with no accounting of
any production revenues to Oilex.
Following application by a creditor, the Commercial Court in
Jakarta appointed an Administrator and implemented a scheme
of arrangement to repay creditors over a ten-year period.
As this scheme excluded Oilex’s claim, Oilex has commenced
legal action to recover the balance of the arbitration award and
to ensure its interests are protected.
At the end of 2016 the Indonesian Operator applied to the
Indonesian courts for a debt payment obligation suspension.
This was denied and the operating company, PT Sumatera
Persada Energi (SPE) was declared bankrupt. A number of
creditors meetings were held during the year. Oilex has
instructed its Indonesian based lawyers to pursue its claim in
the courts covering refund of monies provided by Oilex to the
Operator, accrued interest, arbitration and legal costs and
loss of profits.
Oilex recently has received confirmation from the Indonesian
Government regulator, SKKMigas that Oilex continues to retain
a 45% participating interest in the PSC. In the absence of a
commercial settlement, the Company intends to preserve its
rights including the Arbitration Award.
The carrying value of this investment had been fully provided for
in 2012 pending resolution of this matter.
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OILEX LTD ANNUAL REPORT 2017
BUSINESS
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FINANCIAL
Treasury policy
The funding requirements of the Group are reviewed on a
regular basis by the Group’s Chief Financial Officer and reported
to the Board to ensure the Group is able to meet its financial
obligations as and when they fall due. Internal cash flow
models are used to review and to test investment decisions.
Until sufficient operating cash flows are generated from its
operations, the Group remains reliant on equity or debt funding,
as well as assets divestiture or farmouts to fund its
expenditure commitments.
Formal control over the Group’s activities is maintained
through a budget and cash flow monitoring process with annual
budgets considered in detail, and monitored monthly by the
Board and forming the basis of the Company’s financial
management strategy.
Cash flows are tested under various scenarios to ensure
that expenditure commitments are able to be met under all
reasonably likely scenarios. Expenditures are also carefully
monitored against budget.
The Company continues to actively develop funding options in
order that it can meet its expenditure commitments and its’
planned future discretionary expenditure.
As at 30 June 2017 the Group had no loan borrowings.
Figure 6: Oilex Tree Planting
CORPORATE
The Company has dual listing on the ASX and on the Alternative
Investment Market (AIM) of the London Stock Exchange with
approximately 64% of the Company’s shares held on the
Company’s UK register. At the 23 November 2016, Annual
General Meeting, shareholders approved the adoption of an
updated Constitution.
During the year, the Company continued to undertake material
cost reduction initiatives in both its Perth and Indian offices. The
cost reductions undertaken in both Perth and India, included a
30% overall reduction in the number of personnel and a 14%
average reduction in salaries and wages for existing personnel.
A capital raising (Placement) to secure funding of approximately
£1.1 million (A$1.78 million) to support its 2017 work programme
and working capital requirements was undertaken in the first
half of 2017. Cornhill Capital Limited (Cornhill) was appointed as
broker pursuant to the AIM Rules for Companies and arranged
£1 million from new investors in the United Kingdom.
The Company also received direct subscriptions of £0.1 million
from existing professional shareholders. The Placement,
part of which was subject to shareholder approval, secured
approximately £1.1 million before expenses through the issue of
488,888,888 new fully paid ordinary shares at an average price
of 0.225 pence (A$0.0036) per share and 190,353,386 options in
the issued capital of the Company.
The first tranche of 298,353,502 shares issued for £0.67 million
(approximately A$1.07 million) completed during the March
2017 quarter. Shareholder approval was gained at a subsequent
General Meeting held on 3 May 2017, for a second tranche of
190,353,386 shares at 0.225 pence each for a gross raising
of £0.43 million (approximately A$0.69 million). Each share
of this second tranche was issued with an attached unlisted
option exercisable at 0.35 pence (A$0.0056) at any time within
six months from the date of issue. The General Meeting also
approved the granting to Cornhill of 88,888,888 unlisted options
exercisable at 0.225 pence per share exercisable within 3 years
of grant.
As at 30 June 2017 the Company had:
»
Available cash resources of $3.22 million;
» No loans or borrowings; and
»
Issued capital of 1,684,302,899 fully paid ordinary shares
and unlisted options of 286,974,272.
On 4 September 2017, the Company issued 13,809,266 new
ordinary shares following the exercise of 11,722,222 broker
options at 0.225 pence and the sum of 2,087,044 shares in lieu
of consulting fees.
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EXECUTIVE AND BOARD CHANGES
HEALTH, SAFETY, SECURITY AND ENVIRONMENT
In early 2017, a number of changes were made at Board level.
Policy
In February, Mr Max Cozijn stepped down as Non-Executive
Chairman of the Company and Mr Bradley Lingo agreed to act
as Non-Executive Chairman in an interim capacity during the
transition period. The Company has initiated a formal search
process to identify a potential new Chairman.
On 17 March 2017, Mr Jonathan Salomon’s contract as
Managing Director, was extended by one year.
In May, Mr Paul Haywood was appointed as a Non-Executive
Director, providing the Company with United Kingdom financial
markets expertise.
The Board continues to review the Board composition
with a view to conforming with best corporate governance
requirements while being cognisant of the need to conserve the
cash resources of the group during this constrained economic
environment for the hydrocarbon industry globally.
RISK MANAGEMENT
The full Board undertakes the function of the Audit and Risk
Committee and is responsible for the Group’s internal financial
control system and the Company’s risk management framework.
Management of business risk, particularly exploration,
development and operational risk is essential for success in the
oil & gas business. The Group manages risk through a formal
risk identification and risk management system.
Oilex is committed to protecting the health and safety of
everybody who plays a part in our operations or lives in the
communities where we operate. Wherever we operate, we will
conduct our business with respect and care for both the local
and global, natural and social environment and systematically
manage risks to drive sustainable business growth. We will
strive to eliminate all injuries, occupational illness, unsafe
practise and incidents of environmental harm from our activities.
The safety and health of our workforce and our environment
stewardship are just as important to our success as operational
and financial performance and the reputation of the Company.
Oilex respects the diversity of cultures and customs that
it encounters and endeavours to incorporate business
practices that accommodate such diversity and that have a
beneficial impact through our working involvement with local
communities. We strive to make our facilities safer and better
places in which to work and our attention to detail and focus
on safety, environmental, health and security issues will help
to ensure high standards of performance. We are committed to
a process of continuous improvement in all we do and to the
adoption of international industry standards and codes wherever
practicable. Through implementation of these principles, Oilex
seeks to earn the public’s trust and to be recognised as a
responsible corporate citizen.
Qualified Petroleum Reserves and Resources Evaluator Statement
Pursuant to the requirements of Chapter 5 of the ASX Listing Rules, the information in this report relating to petroleum reserves and resources is
based on and fairly represents information and supporting documentation prepared by or under the supervision of Mr Joe Salomon, Managing Director
employed by Oilex Ltd. Mr Salomon has over 31 years’ experience in petroleum geology and is a member of the American Association of Petroleum
Geologists, Petroleum Exploration Society of Australia and South East Asian Petroleum Exploration Society. Mr Salomon meets the requirements of a
qualified petroleum reserve and resource evaluator under Chapter 5 of the ASX Listing Rules and consents to the inclusion of this information in this
report in the form and context in which it appears. Mr Salomon also meets the requirements of a qualified person under the AIM Note for Mining, Oil
and Gas Companies and consents to the inclusion of this information in this report in the form and context in which it appears.
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OILEX LTD ANNUAL REPORT 2017
PERMIT
SCHEDULE
PERMIT
SCHEDULE
AS AT 30 JUNE 2017
ASSET
LOCATION
Cambay Field PSC
Gujarat, India
Bhandut Field PSC
Gujarat, India
ENTITY
Oilex Ltd
Oilex N.L. Holdings
(India) Limited
Oilex N.L. Holdings
(India) Limited
EQUITY %
30.0
15.0
40.0
OPERATOR
Oilex Ltd
Oilex N.L. Holdings
(India) Limited
West Kampar PSC
Sumatra, Indonesia
Oilex (West Kampar) Limited
67.5 (1)
PT Sumatera Persada Energi
JPDA 06-103 PSC
Joint Petroleum
Development Area
Timor Leste and
Australia
Oilex (JPDA 06-103) Ltd
10.0
Oilex (JPDA 06-103) Ltd
STP-EPA-0131
Western Australia
Admiral Oil Pty Ltd (3)
STP-EPA-0106
Western Australia
STP-EPA-0107
Western Australia
Admiral Oil and Gas (106)
Pty Ltd (3)
Admiral Oil and Gas (107)
Pty Ltd (3)
100.0
100.0 (3)
100.0 (3)
Admiral Oil Pty Ltd (2)
Admiral Oil and Gas (106)
Pty Ltd (2)
Admiral Oil and Gas (107)
Pty Ltd (2)
(1) Oilex (West Kampar) Limited is entitled to have assigned an additional 22.5% to its holding through the exercise of its rights
under a Power of Attorney granted by PT Sumatera Persada Energi (SPE) following the failure of SPE to repay funds due. The
assignment request has been provided to BPMigas (now SKKMigas) but has not yet been approved or rejected. If Oilex is paid
the funds due it will not be entitled to also pursue this assignment.
(2) Ultimate parent entity is Oilex Ltd.
(3) Current status is a Preferred Applicant.
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2017 FINANCIAL REPORT
CONTENTS
Directors’ Report
Remuneration Report - Audited
Lead Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Audit Report
Shareholder Information
17
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36
37
38
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40
41
81
82
87
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OILEX LTD ANNUAL REPORT 2017
DIRECTORS’
REPORT
DIRECTORS’
REPORT
For the year ended 30 June 2017
The directors of Oilex present their report (including the
Remuneration Report) together with the consolidated financial
statements of the Group comprising of Oilex Ltd (the Company)
and its subsidiaries for the financial year ended 30 June 2017
and the auditors’ report thereon.
DIRECTORS
The directors of Oilex Ltd (the Company) in office at any time
during or since the end of the financial year are:
Mr Bradley Lingo
(Non-Executive Chairman)
35 years of experience in the administration of listed mining
and industrial companies and is the Non-Executive Chairman
of Jacka Resources Limited and is a director of various private
companies. Mr Cozijn was appointed a Non-Executive Board
Member of Indigo Junction Inc, a not-for-profit organisation
providing emergency accommodation and support services
in July 2017.
During the last three years Mr Cozijn has been a director of the
following ASX listed companies:
»
»
»
Jacka Resources Limited (from May 2014 to current)
Energia Minerals Limited (from May 1997 to June 2016)
Carbon Energy Limited (from September 1992 to April 2015)
Bachelor of Arts with Honours, Juris Doctorate, MAICD
Mr Paul Haywood
Mr Lingo was appointed as a Non-Executive Director in
February 2016 and Non-Executive Chairman in February 2017.
Mr Lingo has more than 31 years of experience in a diverse
range of oil and gas leadership roles, including business
development, new ventures, mergers and acquisitions
and corporate finance. Mr Lingo has worked with Tenneco
Energy and El Paso Corporation in the US and Australia, the
Commonwealth Bank of Australia and Drillsearch Energy
Limited. He is currently the Managing Director and CEO of
Elk Petroleum Limited.
During the last three years Mr Lingo has been a director of the
following ASX listed companies:
»
Elk Petroleum Limited (from August 2015 to current)
» Drillsearch Energy Limited (from May 2009 to July 2015)
Acer Energy Limited (from November 2012 to July 2015)
»
»
(Non-Executive Director – appointed 29 May 2017)
Mr Haywood was appointed as a Non-Executive Director in
May 2017. Mr Haywood has over 14 years of international
experience in delivering value for his investment network
through a blended skill set of corporate and operational
experience, including six years in the Middle East, building
early stage and growth projects. More recently, Mr Haywood
has held senior management positions with UK and Australian
public companies in the natural resource and energy sectors
including O&G exploration and development in UK, EU and
Central Asia. Mr Haywood’s expertise stretches across a broad
UK and Australian public market, with a cross-functional skill set
with diverse experience and capability encompassing research,
strategy, implementation, capital and transactional management.
Mr Haywood is currently Executive Director of Block Energy Plc
and resource focussed UK advisory firm, Plutus Strategies Ltd.
Ambassador Oil and Gas Limited (from August 2014 to
July 2015)
During the last three years Mr Haywood has not been a director
of any other ASX listed companies.
Mr Max Cozijn
(Non-Executive Director)
BCom CPA MAICD
Mr Jonathan Salomon
(Managing Director)
B App Sc (Geology), GAICD
Mr Cozijn was initially appointed Chairman when the Company
listed on the Australian Securities Exchange (ASX) in 2003,
having been the founding director of Oilex Ltd. He stepped
down as Chairman in February 2017 and is currently a
Non-Executive Director of the Company. Mr Cozijn has a
Bachelor of Commerce degree from the University of Western
Australia, is a member of CPA Australia and is a member of the
Australian Institute of Company Directors. Mr Cozijn has over
Mr Salomon was appointed as a Non-Executive Director in
November 2015 and Managing Director on 18 March 2016.
Mr Salomon has over 31 years of experience working for
upstream energy companies. Further details of Mr Salomon’s
qualifications and experience can be found in the Executive
Management section of the Directors’ Report.
During the last three years Mr Salomon has not been a director
of any other ASX listed companies.
For personal use only P.19
DIRECTORS’
REPORT
COMPANY SECRETARY
The Chief Financial Officer, Mr Mark Bolton (B Bus) was appointed Company Secretary in June 2016.
CORPORATE GOVERNANCE STATEMENT
The Corporate Governance Statement, which reports on Oilex’s key governance principles and practices is available on the
Oilex website.
In establishing its corporate governance framework, the Company has referred to the recommendations set out in the
ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations 3rd edition. The Company has
followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its
corporate governance practices. Where the Company’s corporate governance practices follow a recommendation, the Board has
made appropriate statements reporting on the adoption of the recommendation. In compliance with the “if not, why not” reporting
regime, where, after due consideration, the Company’s corporate governance practices do not follow a recommendation, the Board
has explained its reasons for not following the recommendation and disclosed what, if any, alternative practices the Company has
adopted instead of those in the recommendation.
The Corporate Governance Statement provides detailed information on the Board and committee structure, diversity and
risk management.
DIRECTORS’ MEETINGS
Directors in office and directors’ attendance at meetings during the 2016/17 financial year are as follows:
Non-Executive Directors
B Lingo (3)
M D J Cozijn (4)
P Haywood (5)
Executive Director
J Salomon
Board Meetings (1)
Held (2)
Attended
14
14
1
14
14
14
1
14
(1) Following the changes to the Board at the Annual General Meeting on 25 November 2015, the Board resolved that the full Board
would perform the role of the Audit and Risk Committee and the Remuneration and Nomination Committee. The Company
is considering the appointment of additional independent non-executive directors in order to achieve best practice corporate
governance and may reconstitute the Committees at that time.
(2) Held indicates the number of meetings available for attendance by the director during the tenure of each director.
(3) Current Chairman effective 23 February 2017.
(4) Prior Chairman to 23 February 2017.
(5) Appointed as Non-Executive Director 29 May 2017.
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OILEX LTD ANNUAL REPORT 2017
DIRECTORS’
REPORT
EXECUTIVE MANAGEMENT
Mr Ashish Khare
(Head - India Assets - appointed 8 November 2016)
Bachelor of Engineering (BE in Chemical Engineering, including
petroleum management)
Mr Khare was appointed Acting Head - India Assets on
8 November 2016 and is based in Gandhinagar India and has
over 16 years of experience in the petroleum industry.
Mr Khare’s area of expertise include upstream oil and gas, as
well as midstream and downstream project implementation and
operation management. Mr Khare originally worked for Oilex as
GM Operations & Business Development, and has experience
working for various Indian companies including Cairn India Ltd
and Reliance Petroleum.
Mr Peter Bekkers
(Chief Geoscientist - until 30 September 2016)
BSC (Hons) Geology and Geophysics
Mr Bekkers joined Oilex in 2007, appointed as Chief
Geoscientist in April 2010 until he ceased working for Oilex in
September 2016. Mr Bekkers held various roles with Woodside
Energy Ltd, Santos Ltd and Boral Energy and had over 20 years
of experience in the oil and gas industry.
Mr Jayant Sethi
(Head - India Assets - until 11 November 2016)
Geology (Masters)
Mr Sethi joined Oilex in February 2015 as Head - India Assets
and ceased working for Oilex in November 2016. Mr Sethi
previously held senior management positions with Cairn Energy
Ltd and the Oil & Natural Gas Corporation and had over 30 years
of experience in the oil and gas industry.
Mr Jonathan Salomon
(Managing Director)
B App Sc (Geology), GAICD
Mr Salomon was appointed as a Non-Executive Director in
November 2015 and Managing Director on 18 March 2016. Mr
Salomon has a Bachelor degree in Applied Science and is a
member of the American Association of Petroleum Geologists,
Petroleum Exploration Society of Australia, South East Asian
Petroleum Exploration Society and has over 31 years of
experience working for upstream energy companies.
Mr Salomon has worked for a number of oil and gas companies
in various senior positions including General Manager
Exploration and New Ventures at Murphy Oil Corporation and
Global Head of Geoscience at RISC PL, in addition to a number
of executive director roles including Strategic Energy Resources,
Norwest Energy and Nido Petroleum. At several times in his
career, Mr Salomon has acted as an independent consultant for
various oil and gas companies, including New Standard Energy
and Pacrim Energy. Mr Salomon first worked on Indian projects
in 1994 while at Ampolex and since that time has maintained
connection with the Indian industry, at various times bidding in
India’s exploration and field development rounds and working
with Indian companies as joint venture partners, both in India
and internationally.
Mr Mark Bolton
(Chief Financial Officer and Company Secretary)
B Business
Mr Bolton was appointed Chief Financial Officer and Company
Secretary in June 2016. He has significant experience in the
resource sector in Australia, having worked as Chief Financial
Officer and Company Secretary for a number of resource
companies since 2003. Prior to this, Mr Bolton worked with
Ernst & Young as an Executive Director in Corporate Finance. Mr
Bolton has experience in the areas of commercial management
and the financing of resource projects internationally. He also
has extensive experience in capital and equity markets in a
number of jurisdictions including ASX and AIM.
For personal use only P.21
DIRECTORS’
REPORT
PRINCIPAL ACTIVITIES
FINANCIAL POSITION
The principal activities of the consolidated entity during the
financial year included:
The net assets of the consolidated entity totalled $7,273,611 as
at 30 June 2017 (2016: $9,328,974).
»
»
»
exploration for oil and gas;
DIVIDENDS
appraisal and development of oil and gas prospects; and
production and sale of oil and gas.
No dividend was paid or declared during the year and the
directors do not recommend the payment of a dividend.
There were no significant changes in the nature of the activities
during the year.
REVIEW OF OPERATIONS
OPERATING RESULTS
The loss after income tax of the consolidated entity for the
year ended 30 June 2017 amounted to $3,665,192
(2016: loss of $36,154,111).
Revenue for the period decreased due to Bhandut-3 being shut
in from 6 October 2016, Cambay-73 only being on production
test from 2 July to 24 July 2016, and Cambay-77 being shut in
after June 2016 until May 2017.
Other income includes the recovery of $285,558 relating to joint
venture receivables reclassified to development assets in prior
years, but subsequently received in the current financial year.
The prior year results included the impairment of development
assets of $10,023,940, with no impairment recorded in the
current year. Exploration and evaluation assets were impaired by
$373,780 (2016: $11,572,740). Exploration expenses of $936,721
were offset by the reversal of $1,287,170 prior year expenses,
including the reversal of cash calls and the decrease in the joint
venture partners’ share of creditors initially taken up by the
Group in its capacity as operator, resulting in a net write back of
$350,449 (2016: expense $3,972,848).
Administration expenses of $2,982,826 (2016: $5,648,298)
includes the recovery of $693,400 arising from the insurance
claim relating to the Zeta Resources Limited (Zeta) litigation,
whilst the prior year included $1,484,993 for legal and
settlement costs associated with Zeta. Other expenses
include a provision of $795,229 (2016: Nil) being the Group’s
10% share of a proposed settlement of the JPDA 06-103
termination penalty.
The impairment of receivables owing from Gujarat State
Petroleum Corporation (GSPC) has been partially reversed
with $473,112 written back in the current period
(2016: expense of $3,941,988).
Cash and cash equivalents held by the Group as at
30 June 2017 was $3,215,565 (30 June 2016: cash and
cash equivalents $5,158,361).
A review of the operations of the Group during the financial year
and the results of those operations are set out in the Review of
Operations on pages 5 to 14 of this report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The Review of Operations details those changes that have had a
significant effect on the Group.
Other than those matters, there have been no other significant
changes in the state of affairs of the Group that occurred during
the financial year.
SIGNIFICANT EVENTS AFTER BALANCE DATE
Subsequent to year end, on 4 September 2017, the Company
issued 11,722,222 ordinary shares upon the exercise of
£0.00225 ($0.004) unlisted options and 2,087,044 ordinary
shares as consideration for consulting services.
There were no other significant subsequent events occurring
after year end.
LIKELY DEVELOPMENTS
Additional comments on expected results on operations of the
Group are included in the Review of Operations on pages
5 to 14.
Further disclosure as to likely developments in the operations
of the Group and expected results of those operations have
not been included in this report as, in the opinion of the Board,
these would be speculative and as such, disclosure would not
be in the best interests of the Group.
ENVIRONMENTAL ISSUES
The Group’s oil and gas exploration and production activities
are subject to environmental regulation under the legislation of
the respective states and countries in which they operate. The
majority of the Group’s activities involve low level disturbance
associated with its drilling programmes and production from
existing wells. The Board actively monitors compliance with
these regulations and as at the date of this report is not aware
of any material breaches in respect of these regulations.
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OILEX LTD ANNUAL REPORT 2017
DIRECTORS’
REPORT
FINANCIAL POSITION
Capital Structure and Treasury Policy
Details of transactions involving ordinary shares during the financial year are as follows:
November 2016
- Managing Director Award Shares
March 2017
- Managing Director Retention Rights
March 2017
- Tranche One Placement
May 2017
- Tranche Two Placement including options
May 2017
- Broker options
Total
Number of
Shares
12,987,013
2,000,000
298,353,502
Number of Shares
Under Option
Gross Amount
Raised $
-
-
1,074,073
190,535,385
190,535,385
762,142
88,888,888
-
503,875,900
279,424,273
1,836,214
At the date of this report, the Company had a total issued capital of 1,698,112,165 ordinary shares and 274,977,051 unlisted options
exercisable at Australian Dollar equivalent prices of between $0.004 and $0.35 per share.
As at 30 June 2017 the Group had no loan borrowings.
Material Uncertainty Related to Going Concern
The audit opinion for the year ended 30 June 2017 identifies a material uncertainty regarding continuation as a going concern.
The consolidated financial statements have been prepared on a going concern basis, which contemplates the realisation of assets
and settlement of liabilities in the normal course of business. The Group will require funding in order to continue its exploration
activities and progress the Cambay Project.
The funding requirements of the Group are reviewed on a regular basis by the Group’s Chief Financial Officer and Managing Director
and are reported to the Board at each board meeting to ensure the Group is able to meet its financial obligations as and when
they fall due. Until sufficient operating cash flows are generated from its operations, the Group remains reliant on joint venture
contributions, equity raisings or debt funding, as well as asset divestitures or farmouts to fund its expenditure commitments.
The Company continues to actively develop funding options in order that it can meet its expenditure commitments and its planned
future discretionary expenditure, as well as any contingent liabilities that may arise.
DIRECTORS’ INTERESTS
The relevant interest of each director in shares and unlisted options issued by the Company, as notified by the directors to the ASX in
accordance with Section 205G (1) of the Corporations Act 2001, at the date of this report is as follows:
Number of Ordinary Shares
Number of Options Over Ordinary Shares
B Lingo
M D J Cozijn
P Haywood
J Salomon
Direct
-
-
-
14,987,013
Indirect
-
1,848,218
-
-
Direct
Indirect
-
-
-
-
-
-
-
-
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P.23
DIRECTORS’
REPORT
SHARE OPTIONS
Unissued shares under options
At the date of this report unissued ordinary shares of the Company under option (with an exercise price) are:
Expiry Date
Unlisted Options
11 November 2017
22 December 2017
5 August 2018
22 November 2017
22 May 2020
Total
Number of Shares
Exercise Price
2,000,000
5,000,000
275,000
190,535,385
77,166,666
274,977,051
$0.25
$0.10
$0.35
£0.0036 ($0.006)
£0.00225 ($0.004)
These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.
Unissued shares under option that expired during the year
During the financial year, the following unlisted employee and advisor options expired or were cancelled upon cessation
of employment:
Date Lapsed
25 August 2016
25 August 2016
4 November 2016
11 November 2016
5 December 2016
4 January 2017
4 January 2017
13 February 2017
13 February 2017
1 March 2017
1 March 2017
Total
Number
1,500,000
1,500,000
2,000,000
2,000,000
3,000,000
1,000,000
500,000
500,000
500,000
100,000
100,000
12,700,000
Exercise Price
$0.25
$0.35
$0.15
$0.15
$0.15
$0.25
$0.35
$0.25
$0.35
$0.25
$0.35
Shares issued on exercise of unlisted options
During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of unlisted options as
follows (there were no amounts unpaid on the shares issued):
During the financial year
Since the end of the financial year
Number of Shares
Amount Paid on Each Share
-
11,722,222
-
£0.00225 ($0.004)
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OILEX LTD ANNUAL REPORT 2017
DIRECTORS’
REPORT
INDEMNIFICATION AND INSURANCE OF
DIRECTORS AND OFFICERS
The Group paid a premium in respect of insurance cover for the
directors and officers of the Group. The Group has not included
details of the nature of the liabilities covered or the amount of
the premium paid in respect of the directors’ liability and legal
expense insurance contracts, as such disclosure is prohibited
under the terms of the insurance contract.
PROCEEDINGS ON BEHALF OF THE COMPANY
No proceedings have been brought on behalf of the Company,
nor has any application been made in respect of the Company
under Section 237 of the Corporations Act 2001.
NON-AUDIT SERVICES
The Company may decide to employ the Auditor on assignments
additional to their statutory audit duties where the Auditor’s
expertise and experience with the Group is important.
The Board has considered the non-audit services provided
during the year and is satisfied that the provision of the non-
audit services is compatible with, and did not compromise,
the general standard of independence for auditors imposed by
the Corporations Act 2001. The directors are satisfied that the
provision of non-audit services by the auditor, as set out below,
did not compromise the auditor independence requirements of
the Corporations Act 2001 for the following reasons:
»
»
all non-audit services were subject to the corporate
governance procedures adopted by the Group and these
have been reviewed by the Board to ensure they do not
impact the impartiality and objectivity of the auditor; and
the non-audit services provided do not undermine the
general principles relating to auditor independence as
set out in APES 110 Code of Ethics for Professional
Accountants, as they did not involve reviewing or auditing
the auditor’s own work, acting in a management or decision
making capacity for the Group, acting as an advocate for the
Group or jointly sharing risks and rewards.
Refer note 23 of the Consolidated Financial Statements for
details of the amounts paid to the auditor of the Group, KPMG
Australia, and its network firms for audit and non-audit services
provided during the year.
ROUNDING OF AMOUNTS
The Company is a company of the kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 and therefore the amounts contained in
this report and in the financial report have been rounded to the
nearest dollar, unless otherwise stated.
LEAD AUDITOR’S INDEPENDENCE DECLARATION
The Lead Auditor’s Independence Declaration for the year ended
30 June 2017 has been received and can be found on page 36.
REMUNERATION REPORT - AUDITED
The Board has performed the function of the Nomination and
Remuneration Committee since June 2016 when the Board
considered that, given the size and composition of the existing
Board, that there are no efficiencies to be gained by having a
separate committee. The Board has adopted a Nomination and
Remuneration Committee Charter, which describes the role,
composition, functions and responsibilities of the committee.
The Nomination and Remuneration Committee is responsible
for the review and recommendation to the Board, of the
Company’s Remuneration Policy, senior executives’
remuneration and incentives, the remuneration framework for
directors, superannuation arrangements, incentive plans and
remuneration reporting.
1. PRINCIPLES OF COMPENSATION
Remuneration is referred to as compensation throughout
this report. The Remuneration Report explains the remuneration
arrangements for directors and senior executives of Oilex Ltd
who have authority and responsibility for planning, directing
and controlling the activities of the Group (key management
personnel).
The compensation structures explained below are designed
to attract, retain and motivate suitably qualified candidates,
reward the achievement of strategic objectives and achieve
the broader outcome of creation of value for shareholders. The
compensation structures take into account:
»
»
»
»
»
»
the capability and experience of the key management
personnel;
the ability of key management personnel to control the
performance of the relevant segments;
the current downturn of the resources industry;
the Company’s performance including:
»
»
the Group’s earnings; and
the growth in share price and delivering constant
returns on shareholder wealth;
exploration success; and
development of projects.
Compensation packages include a mix of fixed compensation
and long-term performance-based incentives. In specific
circumstances the Group may also provide short-term
cash incentives based upon the achievement of Company
performance hurdles or in recognition of specific achievements.
1.1 Fixed Compensation
Fixed compensation consists of base compensation and
employer contributions to superannuation funds. Compensation
levels are reviewed annually through a process that considers
individual, sector and overall performance of the Group.
In addition, reviews of available data on oil and gas industry
companies provide comparison figures to ensure the directors’
and senior executives’ compensation is competitive in
the market.
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P.25
DIRECTORS’
REPORT
Whilst the Company moved certain assets to development
in previous financial years, these have been impaired and
the Company does not generate profits or net operating
cash inflows and as such does not pay any dividends, and
consequently remuneration packages are not linked to profit
performance. It is the performance of the overall exploration
and appraisal programme and ultimately the share price that
largely determines Oilex’s performance. The Board therefore
considered that fixed compensation combined with short-term
and long-term incentive components is the best remuneration
structure for achieving the Company’s objectives to the benefit
of shareholders. The table below sets out the closing share price
at the end of the current and four previous financial years.
2017
2016
2015
Share Price (cents)
0.3
1.0
6.1
2014
11.5
2013
5.0
The remuneration of directors, may consist of a cash
component as well as an equity component, and is designed
to retain directors of a high calibre, whilst rewarding them for
their ongoing commitment and contribution to the Company
on a cost effective basis. The issue of shares, rights or options
to directors, subject to shareholder approval, is judged by
the Company, to further align the directors’ interests with
that of shareholders, whilst maintaining the cash position
of the Company. The Board does not consider that there are
any significant opportunity costs to the Company or benefits
foregone by the Company in issuing shares, rights or options
to directors.
The Company did not issue any options to senior executives or
staff during the year.
In the previous financial year, the Board granted the incoming
Managing Director, Mr Salomon a retention award of 2 million
rights to fully paid ordinary shares in the Company, if Mr
Salomon’s employment with the Company was extended
beyond the initial one-year term, expiring on 18 March 2017,
with the issue of these rights being subject to shareholder
approval. Shareholder approval was obtained at the AGM held 23
November 2016, during the current year and 2 million retention
rights to shares were issued at no cost on 16 December 2016
and converted to ordinary shares on 17 March 2017.
No Non-Executive Directors have been granted any shares,
rights or unlisted options in this financial year. During the
financial year, no long-term incentives were granted to any
employee.
In September 2016 following another review of cost reduction
initiatives, the Board resolved to reduce the remuneration of
Non-Executive Directors by 10%, the Managing Director by
22.3% and the CFO by 5% effective from 1 October 2016.
Compensation for senior executives is separately reviewed at
the time of promotion or initial appointment.
1.2 Performance Linked Compensation
Performance linked compensation includes both short-term
and long-term incentives designed to reward key management
personnel for growth in shareholder wealth. The short-term
incentive (STI) is an “at risk” bonus provided in the form of cash
or shares, while the long-term incentive plan (LTI) is used to
reward performance by granting options over ordinary shares of
the Company.
Short-term incentive bonus
The Group does not utilise short-term incentives on an annual or
regular basis, as these are not considered part of the standard
compensation package for key management personnel.
In certain circumstances the Board may, for reasons of
retention, motivation or recognition, consider the use of
short-term incentives.
Short-term incentives, if granted, are at the discretion of the
Board having regard to the business plans set before the
commencement of the financial year as well as the achievement
of performance targets as determined by the Board. These
targets include a combination of key strategic, financial and
personal performance measures which may have a major
influence over company performance in the short-term.
The prior year short-term incentive, granted to Mr Salomon
as Managing Director, of $100,000 in Oilex shares upon
the resolution of the Zeta Resources Limited litigation, was
conditional upon shareholder approval.
Shareholder approval was obtained in the current financial year
at the AGM held 23 November 2016. The 2016 financial year fully
vested short-term incentive was awarded on 24 November 2016,
with 12,987,013 shares issued to Mr Salomon. The pricing of the
Oilex shares was based on the 20 day VWAP for OEX on the
ASX in the 20 trading days preceding the AGM.
During the reporting period, a short-term incentive cash
bonus was paid to Mr Sethi, Head of India Assets of $5,328.
This discretionary bonus was in recognition of Mr Sethi’s
contribution to the strengthening of the Groups’ relationship
with its Indian joint venture partner, GSPC.
Long-term incentive bonus
Long-term incentives include shares, rights and options and are
issued at the discretion of the Board.
The issue of options is designed to allow the Group to attract
and retain talented employees. The issue of options aims to
closely align the interests of senior executives and employees
with those of shareholders and create a link between increasing
shareholder value and employee reward. Any options issued
to senior executives are issued under the Australian Securities
Exchange Rule 7.1.
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OILEX LTD ANNUAL REPORT 2017
DIRECTORS’
REPORT
1. PRINCIPLES OF COMPENSATION (continued)
1.3 Non-Executive Directors
Total compensation for all Non-Executive Directors is based on comparison with external data with reference to fees paid to
Non-Executive Directors of comparable companies. Directors’ fees cover all main Board activities and membership of committees.
The Board resolved to reduce the remuneration of Non-Executive Directors by 10% effective from 1 October 2016.
The Chairman’s annual fee including superannuation reduced to $78,840 per annum the previous year, was again reduced by 10%
to $70,956 per annum effective from 1 October 2016.
The Australian based Non-Executive Directors fees including superannuation of $54,750 per annum was reduced by 10% to
$49,275 per annum effective 1 October 2016.
The annual fee for Mr Haywood, the Company’s United Kingdom based Non-Executive Director was set at £30,000 per annum on
commencement in May 2017.
The aggregate maximum fixed annual amount of remuneration available for Non-Executive Directors of $500,000 per annum was
approved by Shareholders on 9 November 2011.
In addition to the fixed component, the Company can remunerate any director called upon to perform extra services or undertake any
work for the Company beyond their general duties. This remuneration may either be in addition to, or in substitution for, the director’s
share of remuneration approved by Shareholders.
1.4 Clawback Policy
The Board has adopted the following Clawback Policy applicable from August 2015.
In relation to circumstances where an employee acts fraudulently or dishonestly, or wilfully breaches his or her duties to the
Company or any of its subsidiaries, the Board has adopted a clawback policy in relation to any cash performance bonuses (including
deferred share awards) or LTIs. The Board reserves the right to take action to reduce, recoup or otherwise adjust an employee’s
performance based remuneration in circumstances where in the opinion of the Board, an employee has acted fraudulently or
dishonestly or wilfully breached his or her duties to the Company or any of its subsidiaries. The Board may:
»
»
»
»
»
»
»
deem any bonus payable, but not yet paid, to be forfeited;
require the repayment by the employee of all or part of any cash bonus received;
determine that any unvested and/or unexercised LTIs will lapse;
require the repayment of all or part of the cash amount received by the employee following vesting and subsequent sale of a LTI;
reduce future discretionary remuneration to the extent considered necessary or appropriate to take account of the event that has
triggered the clawback;
initiate legal action against the employee; and/or
take any other action the Board considers appropriate.
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DIRECTORS’
REPORT
1.5 Managing Director Sign On and Retention Awards
The table below sets out the special funding and retention awards granted to Mr Salomon as part of his employment contract.
The retention award was issued free of charge and enables the holder to subscribe for one fully paid ordinary share in the Company
per retention right.
Terms and Conditions of Each Grant
Number of
Shares
Granted
Number of Shares
Vesting in the
Year (1)
Percentage
of Cumulative
Shares Vested (%)
Service
Commencement Date
/ Grant Date
Value at
Grant
Date
Exercise
Price
2017
J Salomon (1)
12,987,013
J Salomon (2)
2,000,000
12,987,013
2,000,000
100%
100%
23 November 2016
-
23 November 2016
$14,000
Nil
Nil
Total
2016
J Salomon (1)
Total
14,987,013
14,987,013
-
-
-
-
-
18 March 2016
$100,000
Nil
(1) The granting of $100,000 in Oilex shares upon the resolution of the Zeta Resources Limited litigation, subject to shareholder
approval was treated as vested for the year ended 30 June 2016. The Zeta litigation settlement was announced by the Company
on 8 June 2016, with $100,000 expensed to 30 June 2016. For accounting purposes under AASB 2 Share-based Payment
where the grant date occurs after year end (upon shareholder approval), the fair value of the grant is estimated at the end of the
reporting period 30 June 2016. Shareholder approval was granted in the current year at the AGM held on 23 November 2016 and
12,987,013 shares were awarded on 24 November 2016.
(2) The granting of 2 million retention rights to ordinary shares on 18 March 2016, should Oilex elect to extend and Mr Salomon
elects to enter a subsequent term of employment, subject to shareholder approval, was treated as vested for the year ended
30 June 2017. The Company issued 2 million retention rights on 19 December 2016 and these retention rights converted into
2 million ordinary shares on 17 March 2017, upon Mr Salomon’s employment being extended beyond 18 March 2017.
1.6 Remuneration Consultants
There were no remuneration recommendations made in relation to key management personnel by remuneration consultants in the
financial year ended 30 June 2017.
1.7 Adoption of year ended 30 June 2016 Remuneration Report
At the Annual General Meeting held 23 November 2016 shareholders adopted the 30 June 2016 Remuneration Report with a clear
majority of 248,754,044 votes in favour, being 96.5% of the votes cast.
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OILEX LTD ANNUAL REPORT 2017
DIRECTORS’
REPORT
2. EMPLOYMENT CONTRACTS
The following table summarises the terms and conditions of contracts between key executives and the Company:
Executive
J Salomon
Position
Contract
Start Date
Contract
Termination Date
Resignation Notice
Required
Managing Director
18 March 2016
18 March 2018 (2)
3 months
3 months
For termination by the Company, three months’ salary plus any accrued leave
Unvested Options on
Resignation
Forfeited
Termination Notice
Required from the
Company (1)
Termination
Payment
entitlement. If a Material Change Event occurs, employee may give notice to
the Company within one month of the Material Change Event, terminating
the Contract of Employment and following that effective date,
the Company will pay a Termination Payment equal to six months’ fixed
annual remuneration. The fixed annual remuneration of $350,000 was
reduced by agreement to $271,950 effective from 1 October 2016. Subject to
the Corporations Act 2001 and any necessary approvals required thereunder.
M Bolton
Chief Financial Officer
and Company Secretary
3 June 2016
31 May 2018 (3)
3 months
Forfeited
3 months
For termination by the Company, three months’ salary plus any accrued
A Khare (4)
Head of India Assets
1 May 2015
n/a
30 days
Forfeited
30 days
For termination by the Company, one months’ salary plus any accrued
leave entitlement.
leave entitlement.
(1) The Company may terminate the contract immediately if serious misconduct has occurred. In this case the termination payment
is only the fixed remuneration earned until the date of termination and any unvested options will immediately be forfeited.
(2) The Managing Director’s contract had an initial term of one year expiring 18 March 2017, which was extended by mutual
agreement between the Company and Mr Salomon to 18 March 2018.
(3) The Chief Financial Officer’s contract had an initial term of one year expiring 31 May 2017, which was extended by mutual
agreement between the Company and Mr Bolton to 31 May 2018.
(4) Mr Khare became key management personnel when he was appointed Head of India Assets effective 8 November 2016.
Prior to this Mr Khare was GM Operations & Business Development - Cambay.
For personal use only P.29
DIRECTORS’
REPORT
Executive
J Salomon
Position
Contract
Start Date
Contract
Termination Date
Managing Director
18 March 2016
18 March 2018 (2)
Resignation Notice
Required
3 months
Unvested Options on
Resignation
Termination Notice
Required from the
Company (1)
Forfeited
3 months
M Bolton
3 June 2016
31 May 2018 (3)
3 months
Forfeited
3 months
Chief Financial Officer
and Company Secretary
A Khare (4)
Head of India Assets
1 May 2015
n/a
30 days
Forfeited
30 days
Termination
Payment
For termination by the Company, three months’ salary plus any accrued leave
entitlement. If a Material Change Event occurs, employee may give notice to
the Company within one month of the Material Change Event, terminating
the Contract of Employment and following that effective date,
the Company will pay a Termination Payment equal to six months’ fixed
annual remuneration. The fixed annual remuneration of $350,000 was
reduced by agreement to $271,950 effective from 1 October 2016. Subject to
the Corporations Act 2001 and any necessary approvals required thereunder.
For termination by the Company, three months’ salary plus any accrued
leave entitlement.
For termination by the Company, one months’ salary plus any accrued
leave entitlement.
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DIRECTORS’
REPORT
3. DIRECTORS’ AND EXECUTIVE OFFICERS’ REMUNERATION
Details of the nature and amount of each major element of remuneration of each director of the Company and other key management
personnel of the consolidated entity are:
Non-Executive Directors
B Lingo (5)
Chairman
M D J Cozijn (6)
Non-Executive Director
P Haywood (7)
Non-Executive Director
Executive Director
J Salomon (8)
Managing Director
Executives
M Bolton (9)
Chief Financial Officer / Company Secretary
A Khare (10)
Head of India Assets
P Bekkers (11)
Chief Geoscientist
J Sethi (12)
Head of India Assets
Total
Total
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Salary & Fees
Year
$
Short-Term
STI Cash
Bonus (1)
$
Benefits
(including Non-
Monetary) (2)
$
Total
$
53,175
26,185
84,675
76,667
4,685
-
19,600
114,548
-
69,198
294,015
100,925
272,784
947,092
806,095
7,321
3,103
273,497
116,844
5,764
246,389
53,175
26,185
84,675
76,667
4,685
-
266,176
113,741
240,625
19,180
113,716
-
67,726
288,460
-
-
-
-
-
-
-
-
-
-
-
-
-
-
95,597
5,328
272,784
-
-
-
-
-
-
-
420
832
-
1,472
5,555
-
-
926,375
797,017
5,328
-
15,389
9,078
The Directors of the Company may be Directors of the Company’s subsidiaries. No remuneration is received for directorships of
subsidiaries. All key management personnel other than A Khare and J Sethi are employed by the parent entity.
Refer to the following explanatory notes for additional information.
Post-Employment
Superannuation
Benefits
$
Other Long Term
Benefits (3)
Termination Benifits
Options and Rights (4)
$
$
$
Proportion of
Remuneration
Performance Related
%
Share-Based
Payments
5,052
2,488
5,669
7,283
-
-
25,286
10,805
22,859
1,822
10,341
-
8,817
27,404
10,608
30,268
88,632
80,070
-
-
-
-
-
-
-
-
16,748
9,310
13,653
941
7,405
29,382
1,717
9,808
40,464
48,500
14,000
100,000
329,531
236,959
4%
42%
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
58,227
28,673
90,344
83,950
4,685
-
-
282,901
21,422
125,830
240,744
356,177
132,449
318,551
1,264,711
1,045,732
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2%
2%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
155,324
19,199
174,523
5,376
5,691
14,000
111,067
For personal use only Non-Executive Directors
B Lingo (5)
Chairman
M D J Cozijn (6)
Non-Executive Director
P Haywood (7)
Non-Executive Director
Executive Director
J Salomon (8)
Managing Director
Executives
M Bolton (9)
A Khare (10)
Head of India Assets
P Bekkers (11)
Chief Geoscientist
J Sethi (12)
Head of India Assets
Total
Total
Chief Financial Officer / Company Secretary
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
53,175
26,185
84,675
76,667
4,685
-
-
266,176
113,741
240,625
19,180
113,716
67,726
288,460
272,784
926,375
797,017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
95,597
5,328
5,328
15,389
9,078
-
-
-
-
-
-
-
-
-
420
832
1,472
5,555
7,321
3,103
273,497
116,844
5,764
246,389
Total
$
53,175
26,185
84,675
76,667
4,685
-
-
19,600
114,548
69,198
294,015
100,925
272,784
947,092
806,095
Short-Term
Benefits
Salary & Fees
STI Cash
Bonus (1)
(including Non-
Monetary) (2)
Post-Employment
Superannuation
Benefits
Other Long Term
Benefits (3)
Termination Benifits
Options and Rights (4)
Share-Based
Payments
Year
$
$
$
$
$
$
$
5,052
2,488
5,669
7,283
-
-
25,286
10,805
22,859
1,822
10,341
-
8,817
27,404
10,608
30,268
88,632
80,070
-
-
-
-
-
-
16,748
9,310
13,653
-
941
-
7,405
29,382
1,717
9,808
40,464
48,500
-
-
-
-
-
-
-
-
-
-
-
-
155,324
-
19,199
-
174,523
-
Total
$
58,227
28,673
90,344
83,950
4,685
-
-
-
-
-
-
-
14,000
100,000
329,531
236,959
-
-
-
-
-
5,376
-
5,691
14,000
111,067
282,901
21,422
125,830
-
240,744
356,177
132,449
318,551
1,264,711
1,045,732
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DIRECTORS’
REPORT
Proportion of
Remuneration
Performance Related
%
-
-
-
-
-
-
4%
42%
-
-
-
-
-
2%
-
2%
-
-
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DIRECTORS’
REPORT
3. DIRECTORS’ AND EXECUTIVE OFFICERS’ REMUNERATION (continued)
Notes in Relation to the Table of Directors’ and Executive Officers’ Remuneration
(1) The amount represents the STI earned and paid in the respective year ended 30 June.
(2) Benefits, including non-monetary include relocation costs and related expenses, as well as minor benefits, such as payments on
behalf of employees considered personal, car parking and any associated fringe benefits tax.
(3)
Includes, where applicable, accrued employee leave entitlement movements.
(4) All share-based payment disclosures, other than for Mr Salomon’s retention rights, relate to unlisted options.
The fair value of the options is calculated at the date of grant using the Black-Scholes Model. The fair value of the options is
allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the portion of the
fair value of the options allocated in each reporting period. In valuing the options, market conditions have been taken into account.
No unlisted options were issued to key management personnel and executives as remuneration during the year ended
30 June 2016 or 30 June 2017.
(5) Mr Lingo was appointed a Non-Executive Director on 11 February 2016 and interim Chairman on 23 February 2017. Mr Lingo’s
remuneration reflects the announcement by the Board on 29 September 2016, of further cost reductions including a 10% reduction
in the remuneration of Non-Executive Directors to $49,275 inclusive of statutory superannuation effective from 1 October 2016.
(6) Mr Cozijn’s remuneration reflects the announcement by the Board on 29 September 2016, of further cost reductions
including a 10% reduction in the remuneration of the Chairman to $70,956 inclusive of statutory superannuation effective from
1 October 2016. Mr Cozijn stepped down as Chairman, to continue as a Non-Executive Director on 23 February 2017 with an
annual remuneration of $49,275 inclusive of statutory superannuation. Mr Cozijn received additional fees during the financial year
of $25,000 in relation to extra duties undertaken in relation to the settlement of the Zeta Resources Limited litigation.
(7) Mr Haywood was appointed a Non-Executive Director on 29 May 2017. Mr Haywood is based in the United Kingdom and is paid
£30,000 per annum. The amount disclosed is the pro rata amount converted into Australian dollars at the applicable exchange rate
at the date of payment.
(8) Mr Salomon was appointed Managing Director in March 2016 with a fixed annual remuneration of $350,000 per annum,
inclusive of statutory superannuation, having previously been a Non-Executive Director. Mr Salomon’s remuneration reflects the
announcement by the Board on 29 September 2016, of further cost reductions including a 22.3% reduction in the remuneration of
the Managing Director to $271,950 inclusive of statutory superannuation effective from 1 October 2016.
Upon appointment as Managing Director in 2016, Mr Salomon was granted the following three initial funding and retention awards,
conditional upon shareholder approval, which was obtained at the AGM on 23 November 2016:
»
»
$100,000 in Oilex shares upon resolution of the Zeta Resources Limited litigation. This performance condition was achieved
as at 8 June 2016. The 2016 financial year fully vested short-term incentive was awarded on 24 November 2016, with
12,987,013 shares issued to Mr Salomon. The pricing of the Oilex shares was based on the 20 day VWAP for OEX on the
ASX in the 20 trading days preceding the AGM.
$100,000 in Oilex shares in respect of recovery of joint venture partner’s outstanding receivables and progressing of the
drilling of the next well at Cambay by March 2017. This performance condition was not achieved.
» Granting of 2 million Retention Rights to shares at no cost if Mr Salomon and the Company agree that Mr Salomon will
enter into a subsequent term of employment as Managing Director.
The 2 million retention rights were issued to Mr Salomon on 19 December 2016 and converted into ordinary shares on
17 March 2017 upon Mr Salomon’s employment being extended to 18 March 2018.
(9) On 10 June 2016, Mr Bolton became key management personal following his appointment on 3 June 2016, with an annual
remuneration of $273,750 inclusive of statutory superannuation. The amount paid in the year ended 30 June 2017 reflects
the announcement by the Board on 29 September 2016, of further cost reductions with Mr Bolton agreeing to reduce his
remuneration by 5% to $260,063 effective 1 October 2016.
(10) Mr Khare became key management personnel on 8 November 2016 and is based in India. Mr Khare’s remuneration in 2016 is
not disclosed as it relates to his previous position of General Manager Operations and Business Development, a position he
held until August 2016 when he left on unpaid sabbatical leave. Mr Khare was appointed Head of India Assets in late 2016 and
his remuneration disclosed is from 8 November 2016 which reflects a partly worked year. Mr Khare’s remuneration has been
converted from Indian Rupees at the average exchange rate for the year.
(11) Mr Bekkers ceased employment on 30 September 2016.
(12) Mr Sethi resigned 11 November 2016.
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DIRECTORS’
REPORT
Analysis of bonuses included in remuneration
Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to key management personnel are
detailed below:
Executives
Mr J Sethi (2)
Included in remuneration
% vested in year
% forfeited in year (1)
$5,328
100%
-
Short-term incentive cash bonus
(1) The amounts forfeited are due to the performance or service criteria not being met in relation to the current financial year.
(2) Amounts included in remuneration for the financial year represent the discretionary amount related to the financial year.
This bonus was paid in recognition of Mr Sethi’s contribution to the strengthening of the Groups’ relationship with its
Indian Joint Venture partner, GSPC.
4. EQUITY INSTRUMENTS
SHARES
Full details of the ordinary shares in the Company issued as compensation to key management personnel during the financial year
have been disclosed at item 1.5 Managing Director Sign On and Retention Awards.
During the current financial year 12,987,013 ordinary shares were issued to Mr Salomon. The granting of $100,000 in Oilex shares
upon the resolution of the Zeta Resources Limited litigation, subject to shareholder approval was treated as vested for the year
ended 30 June 2016. The Zeta litigation settlement was announced by the Company on 8 June 2016, with $100,000 expensed
to 30 June 2016. For accounting purposes under AASB 2 Share-based Payment where the grant date occurs after year end
(upon shareholder approval), the fair value of the grant has been estimated at the end of the reporting period 30 June 2016.
Shareholder approval was granted in the current year at the AGM held on 23 November 2016 and 12,987,013 shares were
awarded on 24 November 2016.
An additional 2,000,000 ordinary shares were issued upon the conversion of the retention rights. Full details are disclosed at the
following item 4.1 Rights and Options Over Equity Instruments Granted as Compensation.
RIGHTS AND OPTIONS
All rights and options refer to rights and unlisted options over ordinary shares of the Company, which are exercisable on a one-for-one
basis.
4.1 Rights and Options Over Equity Instruments Granted as Compensation
There were no unlisted options over ordinary shares granted as compensation during the financial year.
Details on rights over ordinary shares in the Company that were granted as compensation to each key management person during
the financial year are as follows:
Rights
Number of Rights
Granted during 2017
Vesting
Condition
Grant
Date
Fair Value at
Grant Date
Expiry
Date
J Salomon
2,000,000
Entering into a
subsequent term of
employment
23 November 2016
$0.007
18 March 2017
All rights expire on the earlier of their expiry date or termination of the individual’s employment. The rights granted in the previous
year were subject to shareholder approval which was obtained in the current year at the AGM on 23 November 2016. The conversion
to 2 million ordinary shares occurred 17 March 2017.
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DIRECTORS’
REPORT
4. EQUITY INSTRUMENTS (continued)
4.2 Rights and Options Over Equity Instruments Granted as Compensation Granted Since Year End
No rights and options over ordinary shares in the Company were granted as compensation to key management personnel and
executives since the end of the financial year.
4.3 Modification of Terms of Equity-Settled Share-based Payment Transactions
No terms of equity-settled share-based payment transactions (including options granted as compensation to key management
personnel) have been altered or modified by the issuing entity during the financial year.
4.4 Exercise of Options Granted as Compensation
During the financial year no shares were issued on the exercise of options previously granted as compensation.
4.5 Details of Equity Incentives Affecting Current and Future Remuneration
Details of vesting profiles of the rights held by the key management person of the Group are detailed below:
Instrument
Number
Grant Date
% Vested in Year % Forfeited in Year
Financial Years in
Which Grant Vests
J Salomon (1)
Rights
2,000,000
23 November 2016
100%
-%
30 June 2017
(1) Mr Salomon was appointed Managing Director on 18 March 2016, the previous financial year. Upon appointment as
Managing Director, Mr Salomon was granted (conditional upon shareholder approval, which was obtained at the AGM
held 23 November 2016 in the current financial year):
2,000,000 retention rights to shares at no cost, if Mr Salomon and the Company agree that Mr Salomon will enter into
subsequent term of employment as Managing Director. These rights were issued 16 December 2016 and converted to
ordinary shares on 17 March 2017 upon Mr Salomon entering into a subsequent term.
There were no options granted to key management personnel in the financial years ended 30 June 2017 or 2016.
4.6 Analysis of Movements in Equity Instruments
The value of rights or options over ordinary shares in the Company granted and exercised held by each key management person
during the reporting period is detailed below:
J Salomon (2)
Granted in Year (1)
2,000,000
Value of Rights Exercised in Year
14,000
(1) The value of rights granted in the year is the fair value of the rights calculated at grant date. The total value of the rights granted is
included in the table above. This amount is allocated to remuneration over the vesting period.
(2) Mr Salomon was appointed Managing Director on 18 March 2016, the previous financial year. Upon appointment as
Managing Director, Mr Salomon was granted (conditional upon shareholder approval, which was obtained at the AGM
held 23 November 2016 in the current financial year):
2,000,000 retention rights to shares at no cost, if Mr Salomon and the Company agree that Mr Salomon will enter a
subsequent term of employment as Managing Director. These rights were issued 16 December 2016 and converted to
ordinary shares on 17 March 2017 upon Mr Salomon entering a subsequent term.
There were no options granted to key management personnel in the financial years ended 30 June 2017 or 2016.
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P.35
DIRECTORS’
REPORT
4.7 Options or Rights over Equity Instruments Granted as Compensation
No unlisted options held by key management personnel are vested but not exercisable. The movement during the financial year in the
number of options over ordinary shares or rights to ordinary shares, in the Company held, directly, indirectly or beneficially, by each
key management person, including their related parties, is as follows:
Held at
1 July 2016
Granted as
Compensation
Exercised
Held at
30 June 2017
J Salomon (1)
B Lingo
M D J Cozijn
P Haywood (2)
M Bolton
A Khare (3)
-
-
-
n/a
-
n/a
P Bekkers (4)
1,500,000
J Sethi (5)
1,000,000
2,000,000
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
n/a
n/a
Vested During
the Year
2,000,000
-
-
-
-
-
-
-
Vested and
Exercisable at
30 June 2017
-
-
-
-
-
-
n/a
n/a
(1) Mr Salomon was appointed Managing Director on 18 March 2016, the previous financial year. Upon appointment as
Managing Director, Mr Salomon was granted (conditional upon shareholder approval, which was obtained at the AGM held
23 November 2016 in the current financial year):
2,000,000 retention rights to shares at no cost, if Mr Salomon and the Company agree that Mr Salomon will enter a
subsequent term of employment as Managing Director. These rights were issued 16 December 2016 and converted to
ordinary shares on 17 March 2017 upon Mr Salomon entering a subsequent term.
(2) Mr Haywood was appointed as a Non-Executive Director on 29 May 2017.
(3) Mr Khare commenced employment 8 November 2016.
(4) Mr Bekkers ceased employment on 30 September 2016 and held 1,500,000 vested and exercisable unlisted options at date of
resignation. These options lapsed unexercised on 4 January 2017.
(5) Mr Sethi resigned 11 November 2016 and held 1,000,000 vested and exercisable unlisted options at date of resignation.
These options lapsed unexercised on 13 February 2017.
5. KEY MANANGEMENT PERSONNEL TRANSACTIONS
5.1 Other Transactions with Key Management Personnel
One key management person, Mr Cozijn, holds positions in other entities that results in him having control or joint control over the
financial or operation policies of those entities.
Oilex utilised the services of Diplomat Holdings Pty Ltd, of which Mr Cozijn is a director. Mr Cozijn provided management services
in relation to the settlement of the Zeta Resources Limited litigation. The Oilex Board considered the amount paid of $25,000 was a
reasonable amount for the services rendered.
This transaction has been disclosed in the remuneration table.
OILEX LTDANNUAL REPORT 2017For personal use only
P.36
OILEX LTD ANNUAL REPORT 2017
DIRECTORS’
REPORT
5. KEY MANANGEMENT PERSONNEL TRANSACTIONS (continued)
5.2 Movements in Shares
The movement during the financial year in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by
each key management person, including their related parties, is as follows:
J Salomon (2)
B Lingo
M D J Cozijn
P Haywood (3)
M Bolton
A Khare (4)
P Bekkers (5)
J Sethi (6)
Held at
1 July 2016
Received on Exercise of
Options or Rights
-
-
1,848,218
n/a
-
n/a
643,903
-
2,000,000
-
-
-
-
-
-
-
Other
Changes (1)
12,987,013
-
-
-
-
-
-
-
Held at
30 June 2017
14,987,013
-
1,848,218
-
-
-
n/a
n/a
(1) Other changes represent shares that were granted, purchased or sold during the year.
(2) Mr Salomon was appointed Managing Director on 18 March 2016, the previous financial year. Upon appointment as
Managing Director, Mr Salomon was granted (conditional upon shareholder approval, which was obtained at the AGM held
23 November 2016 in the current financial year):
$100,000 in Oilex shares upon resolution of the Zeta Resources Limited litigation. This performance condition was achieved
as at 8 June 2016 and has been included as remuneration in the year ended 30 June 2016. The pricing of the Oilex shares
was based on the 20 day VWAP for OEX on the ASX in the 20 days preceding the meeting of shareholders to approve such
awards and 12,987,013 shares were issued on 24 November 2016 following the AGM.
2,000,000 retention rights to shares at no cost, if Mr Salomon and the Company agree that Mr Salomon will enter a
subsequent term of employment as Managing Director. These rights were issued 16 December 2016 and converted to
ordinary shares on 17 March 2017, upon Mr Salomon entering a subsequent term.
(3) Mr Haywood was appointed as a Non-Executive Director on 29 May 2017.
(4) Mr Khare commenced employment 8 November 2016.
(5) Mr Bekkers ceased employment 30 September 2016.
(6) Mr Sethi ceased employment 11 November 2016.
END OF REMUNERATION REPORT - AUDITED
Mr Brad Lingo
Chairman
Mr Jonathan Salomon
Managing Director
Signed in accordance with a resolution of the Directors.
West Perth, Western Australia
12 September 2017
For personal use only
P.37
LEAD AUDITOR’S
INDEPENDENCE DECLARATION
OILEX LTDANNUAL REPORT 2017For personal use only P.38
OILEX LTD ANNUAL REPORT 2017
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Revenue
Cost of sales
Gross loss
Other income
Exploration expenditure
Impairment of exploration and evaluation assets
Impairment of development assets
Administration expense
Share-based payments expense
Other expenses
Results from operating activities
Finance income
Finance costs
Foreign exchange (loss)/gain
Net finance (loss)/income
Note
4(a)
4(b)
4(c)
4(d)
7
8
4(e)
21
4(f)
4(g)
2017
$
2016
$
91,744
(620,067)
(528,323)
446,132
(1,080,512)
(634,380)
311,601
350,449
1,281
(3,972,848)
(373,780)
(11,572,740)
-
(10,023,940)
(2,982,826)
(5,648,298)
(8,262)
(149,523)
(382,789)
(3,813,481)
(3,613,930)
(35,813,929)
56,071
(63)
(107,270)
(51,262)
62,228
(309)
(402,101)
(340,182)
Loss before income tax
(3,665,192)
(36,154,111)
Income tax expense
Loss
5
-
-
(3,665,192)
(36,154,111)
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Foreign operations - foreign currency translation differences
Other comprehensive income, net of tax
15,074
15,074
1,143,897
1,143,897
Total comprehensive loss
(3,650,118)
(35,010,214)
Earnings per share
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
6
6
(0.3)
(0.3)
(3.2)
(3.2)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the
accompanying notes.
For personal use only P.39
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Total current assets
Trade and other receivables
Exploration and evaluation
Development assets
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Trade and other payables
Employee benefits
Provisions
Total current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
2017
$
2016
$
11
12
9
12
7
8
15
13
10
10
10
3,215,565
1,742,283
128,549
1,188,110
6,274,507
-
518,670
5,927,288
220,954
6,666,912
5,158,361
2,235,737
79,441
1,238,553
8,712,092
102,343
909,593
6,139,004
263,400
7,414,340
12,941,419
16,126,432
1,253,787
2,914,769
229,752
955,538
356,510
181,794
2,439,077
3,453,073
3,228,731
3,228,731
3,344,385
3,344,385
5,667,808
6,797,458
7,273,611
9,328,974
16(a)
16(b)
172,866,479
171,513,760
8,093,764
8,425,861
(173,686,632)
(170,610,647)
7,273,611
9,328,974
The above Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.
OILEX LTDANNUAL REPORT 2017For personal use only P.40
OILEX LTD ANNUAL REPORT 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Attributable to Owners of the Company
Issued
Capital
$
Note
16(a)
Option
Reserve
$
16(b)
Foreign Currency
Translation
Reserve
$
16(b)
Accumulated
Losses
$
Total
Equity
$
Balance at 30 June 2015
153,928,046
2,342,059
6,351,222
(136,017,376)
26,603,951
Total comprehensive (loss)/income
Loss
Other comprehensive income
Foreign currency translation differences
Total other comprehensive income
Total comprehensive (loss)/income
Transactions with owners of the Company
Contributions and distributions
Shares issued
Capital raising costs
Managing director special award shares
Shares issued on exercise of listed options
Transfers on forfeited options
Share-based payment transactions
-
-
-
-
20,589,107
(3,055,535)
-
52,142
-
-
-
-
-
-
-
-
-
-
(1,560,840)
149,523
Total transactions with owners of the Company
17,585,714
(1,411,317)
-
(36,154,111)
(36,154,111)
1,143,897
1,143,897
-
-
1,143,897
1,143,897
1,143,897
(36,154,111)
(35,010,214)
-
-
-
-
-
-
-
-
-
-
-
1,560,840
20,589,107
(3,055,535)
-
52,142
-
-
149,523
1,560,840
17,735,237
Balance at 30 June 2016
171,513,760
930,742
7,495,119
(170,610,647)
9,328,974
Balance at 30 June 2016
171,513,760
930,742
7,495,119
(170,610,647)
9,328,974
Total comprehensive (loss)/income
Loss
Other comprehensive income
Foreign currency translation differences
Total other comprehensive income
Total comprehensive (loss)/income
Transactions with owners of the Company
Contributions and distributions
Shares issued
Capital raising costs (1)
Managing director special award shares
Shares issued on exercise of listed options
Transfers on forfeited options
Share-based payment transactions
-
-
-
-
1,836,214
(597,495)
114,000
-
-
-
-
-
-
-
-
347,774
(114,000)
-
(589,207)
8,262
Total transactions with owners of the Company
1,352,719
(347,171)
-
(3,665,192)
(3,665,192)
15,074
15,074
-
-
15,074
15,074
15,074
(3,665,192)
(3,650,118)
-
-
-
-
-
-
-
-
-
-
-
589,207
1,836,214
(249,721)
-
-
-
-
8,262
589,207
1,594,755
Balance at 30 June 2017
172,866,479
583,571
7,510,193
(173,686,632)
7,273,611
(1) Capital raising costs include cash payments and the fair value of options granted to the underwriter.
The above Consolidated Statement of Changes in Equity is to be read in conjunction with the accompanying notes.
For personal use only P.41
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Cash flows from operating activities
Cash receipts from customers
Payments to suppliers and employees
Cash outflow from operations
Note
2017
$
2016
$
110,997
(4,535,094)
(4,424,097)
438,993
(5,720,957)
(5,281,964)
Proceeds from/(payments for) exploration and evaluation expenses
980,930
(5,060,999)
Cash receipts from government grants
Interest received
Interest paid
-
55,852
(63)
325,280
62,867
(309)
Net cash used in operating activities
11
(3,387,378)
(9,955,125)
Cash flows from investing activities
Payments for capitalised exploration and evaluation
Proceeds from sale of assets and scrap materials
Acquisition of development assets
Acquisition of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Proceeds from exercise of share options
Payment for share issue costs
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 30 June
11
(1,380)
20,493
(1,499)
(24,275)
(6,661)
(1,142,168)
3,088
(1,921,290)
(45,643)
(3,106,013)
16(a)
1,836,214
20,769,192
16(a)
-
(249,721)
1,586,493
(1,807,546)
5,158,361
(135,250)
3,215,565
52,142
(3,551,134)
17,270,200
4,209,062
1,187,158
(237,859)
5,158,361
The above Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.
OILEX LTDANNUAL REPORT 2017For personal use only P.42
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
ABOUT THIS REPORT - OVERVIEW
NOTE 1 – REPORTING ENTITY
(c) Going Concern Basis
Oilex Ltd (the Company) is a for-profit entity domiciled in
Australia. These consolidated financial statements comprise
the Company and its subsidiaries (collectively the Group and
individually Group Entities). Oilex Ltd is a company limited by
shares incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange (ASX) and on
the Alternative Investment Market (AIM) of the London Stock
Exchange. The Group is primarily involved in the exploration,
evaluation, development and production of hydrocarbons.
NOTE 2 – BASIS OF PREPARATION
(a) Statement of Compliance
The consolidated financial statements are general purpose
financial statements which have been prepared in accordance
with Australian Accounting Standards (AASBs) adopted by
the Australian Accounting Standards Board (AASB) and the
Corporations Act 2001. The consolidated financial statements
comply with International Financial Reporting Standards (IFRS)
adopted by the International Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue
by the Board of Directors on 11 September 2017.
(b) Basis of Measurement
The consolidated financial statements have been prepared
on the historical cost basis except for share-based payment
arrangements measured at fair value and the foreign currency
translation reserve.
A number of the Group’s accounting policies and disclosures
require the determination of fair value, for both financial and
non-financial assets and liabilities. Fair values have been
determined for measurement and/or disclosure purposes.
Where applicable, further information about the assumptions
made in determining fair values is disclosed in the notes specific
to that asset or liability.
The Directors believe it is appropriate to prepare the
consolidated financial statements on a going concern basis,
which contemplates continuity of normal business activities
and the realisation of assets and settlement of liabilities in the
ordinary course of business.
The Group has incurred a loss of $3,665,192, including $373,780
for impairment of exploration assets, and had cash outflows
from operating and investing activities of $3,387,378 and $6,661
respectively. As at 30 June 2017, the Group’s current assets
exceeded current liabilities by $3,835,430 and the Group has
cash and cash equivalents of $3,215,565.
The Group will require additional funds within the next twelve
months in order to meet planned expenditures for its projects,
including progressing the Cambay Project, any new business
opportunities that the Group may acquire and administrative
expenses. The Group may also require funds in relation to the
matter set out in note 25, noting that the timing and amount of
discretionary expenditures is able to be varied or deferred as
required, although certain commitments exist in the short and
medium term. The Group will continue to manage its funding
and expenditure to ensure that it has sufficient cash reserves for
at least the next twelve months.
The Directors believe that the Company will be able to secure
sufficient funding to meet the requirements to continue as a
going concern, including the receipt of outstanding cash calls
owing by its joint venture partner Gujarat State Petroleum
Corporation (GSPC), acknowledging that repayment by the
joint venture partner is not guaranteed, and/or capital raisings.
The Company also has a history of successful previous capital
raisings, acknowledging that the structure and timing of any
capital raising is dependent upon investor support, prevailing
capital markets, shareholder participation, oil and gas prices and
the outcome of planned exploration and evaluation activities,
which creates uncertainty.
For personal use only P.43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
The Directors consider the going concern basis of preparation
to be appropriate based on its forecast cash flows for the
next twelve months and that the Group will be in a position to
continue to meet its minimum administrative, evaluation and
development expenditures and commitments for at least twelve
months from the date of this report.
If further funds are not able to be raised or realised, then it may
be necessary for the Group to sell or farmout its exploration and
development assets and to reduce discretionary administrative
expenditure.
The ability of the Company to achieve its forecast cash flows,
particularly the repayments from its joint venture partner and
the raising of additional funds, represents a material uncertainty
that may cast significant doubt about whether the Company can
continue as a going concern, in which case it may not be able
to realise its assets and extinguish its liabilities in the normal
course of business and at the stated amounts in the financial
statements.
(d) Currency and Foreign Currency Transactions
These consolidated financial statements are presented in
Australian dollars, which is the Company’s functional currency.
The functional currency of the Company’s subsidiaries is United
States or Australian dollars.
Transactions in foreign currencies are translated into the
respective functional currencies of Group entities at exchange
rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the
foreign exchange rate at the reporting date.
Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are translated into the
functional currency at the exchange rate at the date that the fair
value was determined. Non-monetary items that are measured
in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction. Foreign
currency differences are generally recognised in profit or loss.
(e) Basis of Consideration
These consolidated financial statements comprise the
Company and its subsidiaries (collectively the Group and
individually Group Entities).
i) Subsidiaries
Subsidiaries are entities controlled by the Group. The list
of controlled entities is contained in note 17. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences
until the date that control ceases.
ii) Joint Arrangements - Joint Operations
The interests of the Group in unincorporated joint operations
and jointly controlled assets are recorded in note 18.
iii) Transactions Eliminated on Consolidation
Intragroup balances and transactions, and any unrealised
gains and losses or income and expenses arising from
intragroup transactions, are eliminated in preparing the
consolidated financial statements.
(f) Key Estimates, Judgements and Assumptions
In preparing these consolidated financial statements,
management continually evaluate judgements, estimates
and assumptions that affect the application of the Group’s
accounting policies and the reported amounts of assets,
liabilities, income and expenses. All judgements, estimates and
assumptions made are believed to be reasonable based on the
most current set of circumstances. Actual results may differ
from these judgements, estimates and assumptions. Estimates
and underlying assumptions are reviewed on an ongoing basis.
Revisions to estimates are recognised prospectively.
A key assumption underlying the preparation of the financial
statements is that the entity will continue as a going concern.
An entity is a going concern when it is considered to be able
to pay its debts as and when they fall due, and to continue in
operation, without any intention or necessity to liquidate or
otherwise wind up its operations.
Judgement has been required in assessing whether the entity is
a going concern as set out in note 2(c).
OILEX LTDANNUAL REPORT 2017For personal use only
P.44
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 2 – BASIS OF PREPARATION (continued)
»
(f) Key Estimates, Judgements and Assumptions (continued)
In the process of applying the Group’s accounting policies,
management have made judgements, assumptions and
estimation uncertainties that have a significant risk of resulting
in a material adjustment within the next financial year as follows:
Income Tax - refer note 5
Exploration and Evaluation Assets - refer note 7
Development Assets - refer note 8
Provisions - refer note 10
Trade receivables - refer note 12
(g) Rounding of Amounts
The Company is a company of the kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 and therefore the amounts contained in
this report and in the financial report have been rounded to the
nearest dollar, unless otherwise stated.
(h) Accounting Policies
Significant accounting policies that are relevant to the
understanding of the consolidated financial statements have
been provided throughout the notes to the financial statements.
Accounting policies that are determined to be non-significant
have not been included in the consolidated financial statements.
The accounting policies disclosed have been applied consistently
to all periods presented in these consolidated financial
statements and have been applied consistently by Group
entities, except for the following changes in accounting policies.
AASB 2015-2 Amendments to Australian Accounting
Standards - Disclosure Initiative: Amendments to AASB 101.
The standard makes amendments to AASB 101 Presentation
to Financial Statements arising from the IASB’s Disclosure
Initiative project. The Group has applied these amendments
in the current year. The amendments do not require any
significant change to current practice, but clarify that specific
single disclosures that are not material do not have to be
presented in the financial statements and that aggregating
or disaggregating information can facilitate improved
reporting to users. The order of notes to the financial
statements are not prescribed and accounting policies can
be combined with notes on related subjects.
»
AASB 2014-4 Amendments to AASB 116 and AASB 138 -
Clarification of Acceptable Methods of Depreciation and
Amortisation prohibits revenue based depreciation for
property, plant and equipment, a depreciation method that
the Group does not use.
The adoption of new and amended Standards had no impact on
the financial position or the consolidated financial statements of
the Group.
The Group has not elected to early adopt any other new or
amended AASB’s that are issued but not yet effective
(refer note 27).
For personal use only P.45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
OLIEX LTD’S RESULTS FOR THE YEAR
This section focuses on the results and
performance of the Group.
NOTE 3 – OPERATING SEGMENTS
Major Customer
The Group’s most significant customer is Enertech Fuel
Solutions Pvt Limited with gas sales representing 89% of the
Group’s total revenues (2016: 77%). Indian Oil Corporation
Limited, in its capacity as nominee of the Government of India,
represents 11% of the Group’s total revenues from sale of oil
(2016: 23%).
Revenue
Revenue is recognised when the significant risks and rewards
of ownership have transferred to the buyer. Risks and rewards
of ownership are considered passed to the buyer at the time
of delivery of the product to the customer. Revenues from test
production are accounted for as revenue.
Expenses
Impairment – refer notes 7 and 8
Doubtful debts – refer note 12
Depreciation – refer note 15
Amortisation – refer note 8
Employee benefits – refer note 10
Leases – refer note 24
An operating segment is a component of the Group that
engages in business activities from which it may earn
revenues and incur expenses, including revenues and
expenses that relate to transactions with any of the Group’s
other components. The Group has identified its operating
segments based upon the internal management reports that
are reviewed and used by the executive management team in
assessing performance and that are used to allocate the Group’s
resources. The operating segments identified by management
are based on the geographical location of the business.
Each segment has responsible officers that are accountable
to the Managing Director (the Group’s chief operating decision
maker). All operating segments operating results are regularly
reviewed by the Group’s Managing Director to make decisions
about resources to be allocated to the segment and assess
its performance and for which discrete financial information is
available. Segment results that are reported to the Managing
Director include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis.
The Group’s executive management team evaluates the
financial performance of the Group and its segments principally
with reference to revenues, production costs, expenditure on
exploration evaluation and development costs.
The Group undertakes the exploration, development and
production of hydrocarbons and its revenue is from the sale of
oil and gas. Information reported to the Group’s chief operating
decision maker is on a geographical basis.
Financing requirements, finance income and expenses are
managed at a Group level.
Corporate items include administration costs comprising
personnel costs, head office occupancy costs and investor
and registry costs. It may also include expenses incurred by
non-operating segments, such as new ventures and those
undergoing relinquishment. Assets and liabilities not allocated
to operating segments and disclosed are corporate, and mostly
comprise cash, plant and equipment, receivables as well as
accruals for head office liabilities.
OILEX LTDANNUAL REPORT 2017For personal use only P.46
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 3 – OPERATING SEGMENTS (continued)
Revenue
External revenue
Cost of sales
Production costs
Amortisation of development assets
Movement in oil stocks inventory
Total cost of sales
Gross loss
India
Australia
2017
$
2016
$
2017
$
2016
$
91,744
446,132
(637,921)
(1,027,166)
(944)
18,798
(46,652)
(6,694)
(620,067)
(1,080,512)
(528,323)
(634,380)
-
-
-
-
-
-
-
-
-
-
-
-
Exploration expenditure expensed
517,625
(3,082,482)
(62,780)
(391,405)
(299,831)
(182,018)
(104,396)
(17,112)
350,449
(3,972,848)
Impairment of exploration and expenditure
Impairment of development assets
Depreciation
Share-based payments
Other income
Other expenses
-
-
(30,488)
-
20,019
479,442
(11,572,740)
(373,780)
(10,023,940)
(38,251)
(8,543)
1,242
(3,719,178)
-
-
-
-
-
-
-
-
-
-
-
Reportable segment profit/(loss) before income tax
458,275
(29,078,272)
(436,560)
(391,405)
(308,799)
(220,433)
(203,656)
(2,574,757)
(5,831,797)
(3,613,930)
(35,813,929)
Net finance income
Foreign exchange (loss)/gain
Income tax expense
Loss for the period
Segment assets
Segment liabilities
11,191,203
10,638,650
3,868,800
4,640,250
215
-
374,226
-
6,791
784,834
45,561
6,196
302,418
232,011
711,756
1,919,001
5,667,808
6,797,458
-
1,743,210
5,067,995
12,941,419
16,126,432
There were no significant inter-segment transactions during the year.
(1) Joint Petroleum Development Area.
(2) Corporate represents a reconciliation of reportable segment revenues, profit or loss, assets and liabilities to the
consolidated figure.
JPDA (1)
Indonesia
Corporate (2)
Consolidated
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
91,744
446,132
(637,921)
(1,027,166)
(944)
18,798
(46,652)
(6,694)
(620,067)
(1,080,512)
(528,323)
(634,380)
(373,780)
(11,572,740)
-
(10,023,940)
(26,849)
(29,576)
(8,262)
(140,980)
291,582
(1,131)
(57,337)
(8,262)
311,601
(67,827)
(149,523)
1,281
56,008
61,919
(107,270)
(402,101)
-
-
(3,665,192)
(36,154,111)
-
-
-
-
-
-
-
-
-
-
-
-
-
1,170
(840,455)
(840,455)
(10,138)
(220,433)
(21,638)
(2,726,832)
(5,642,998)
(3,308,278)
(9,393,952)
For personal use only P.47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
91,744
446,132
(637,921)
(1,027,166)
(944)
18,798
(46,652)
(6,694)
(620,067)
(1,080,512)
(528,323)
(634,380)
-
-
-
(30,488)
20,019
479,442
(10,023,940)
(38,251)
(8,543)
1,242
(3,719,178)
-
-
-
-
-
-
-
-
-
-
-
Exploration expenditure expensed
517,625
(3,082,482)
(62,780)
(391,405)
Impairment of exploration and expenditure
Impairment of development assets
(11,572,740)
(373,780)
Reportable segment profit/(loss) before income tax
458,275
(29,078,272)
(436,560)
(391,405)
Revenue
External revenue
Cost of sales
Production costs
Amortisation of development assets
Movement in oil stocks inventory
Total cost of sales
Gross loss
Depreciation
Share-based payments
Other income
Other expenses
Net finance income
Foreign exchange (loss)/gain
Income tax expense
Loss for the period
Segment assets
Segment liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
India
Australia
2017
$
2016
$
2017
$
2016
$
JPDA (1)
Indonesia
Corporate (2)
Consolidated
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(299,831)
-
-
-
-
1,170
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
91,744
446,132
(637,921)
(1,027,166)
(944)
18,798
(46,652)
(6,694)
(620,067)
(1,080,512)
(528,323)
(634,380)
(182,018)
(104,396)
(17,112)
350,449
(3,972,848)
-
-
-
-
-
-
-
-
-
(373,780)
(11,572,740)
-
(10,023,940)
(26,849)
(29,576)
(8,262)
(140,980)
291,582
(1,131)
(57,337)
(8,262)
311,601
(67,827)
(149,523)
1,281
(840,455)
(840,455)
(10,138)
(220,433)
(21,638)
(2,726,832)
(5,642,998)
(3,308,278)
(9,393,952)
(308,799)
(220,433)
(203,656)
(2,574,757)
(5,831,797)
(3,613,930)
(35,813,929)
56,008
61,919
(107,270)
(402,101)
-
-
(3,665,192)
(36,154,111)
11,191,203
10,638,650
3,868,800
4,640,250
215
-
374,226
6,791
784,834
45,561
6,196
-
-
1,743,210
5,067,995
12,941,419
16,126,432
302,418
232,011
711,756
1,919,001
5,667,808
6,797,458
OILEX LTDANNUAL REPORT 2017For personal use only P.48
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 4 – REVENUE AND EXPENSES
Loss from ordinary activities before income tax has been determined after the following revenues and expenses:
(a) Revenue
Oil sales
Gas sales
(b) Cost of Sales
Production costs
Amortisation of development assets
Movement in oil stocks inventory
(c) Other Income
Recovery of recharges
Oilex Oman Limited liquidation recovery
Profit on disposal of other assets
Note
2017
$
9,749
81,995
91,744
2016
$
100,405
345,727
446,132
(637,921)
(1,027,166)
(944)
18,798
(46,652)
(6,694)
(620,067)
(1,080,512)
285,558
6,024
20,019
311,601
-
-
1,281
1,281
Recovery of recharges relate to the recovery of head office expenditure recharged to the Cambay Joint Venture, reclassified from
joint venture receivables to development assets in the year ended 30 June 2015, then subsequently impaired in the year ended
30 June 2016 and recovered via repayment in the current period.
(d) Exploration Expenditure
Exploration expense
Write back joint venture partners share of costs previously provided for
(936,721)
(3,972,848)
1,287,170
-
3
350,449
(3,972,848)
(e) Administration Expenses
Employee benefits expense
Redundancy benefits
Administration expense
Corporate advisory fee
Zeta Resources Limited settlement and legal costs
Insurance recovery
(1,241,565)
(1,296,011)
(191,519)
(51,762)
(1,633,611)
(2,815,532)
(600,000)
-
(9,531)
(1,484,993)
693,400
-
(2,982,826)
(5,648,298)
Zeta Resources Limited settlement & legal costs in 2016 excluded the recovery from an insurance claim received in 2017.
For personal use only
P.49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(f) Other Expenses
Depreciation provision
Doubtful debts provision
Doubtful debts provision reversal
Well abandonment adjustment/(expense)
Note
15
12
12
10
Termination penalty provision JPDA 06-103 PSC
10 & 25
Loss on disposal of other assets
(g) Foreign Exchange (Loss)/Gain - net
Foreign exchange gain/(loss) - realised
Foreign exchange (loss)/gain - unrealised
NOTE 5 – INCOME TAX EXPENSE
Numerical reconciliation between tax expense and pre-tax accounting loss:
Loss before income tax
Income tax using the domestic corporation tax rate of 27.5% (2016: 30%)
Effect of tax rate in foreign jurisdictions
Non-deductible expenses
Share-based payments
Foreign expenditure non-deductible
Non-deductible foreign impairment expenditure
Other non-deductible expenses
Non-assessable income
Recovery of fully impaired development asset receivable
Unrecognised deferred tax assets generated during the year and not
brought to account at balance date as realisation is not regarded as probable
Income tax expense
Tax losses utilised not previously brought to account
Income tax expense for the period
2017
$
2016
$
(57,337)
(67,827)
-
(3,941,988)
473,112
-
-
196,334
(795,229)
(3,335)
-
-
(382,789)
(3,813,481)
15,782
(123,052)
(107,270)
(166,388)
(235,713)
(402,101)
2017
$
2016
$
(3,665,192)
(36,154,111)
(1,007,928)
(10,846,233)
(372,567)
(3,501,373)
2,272
44,857
1,785,848
1,469,010
-
6,479,004
309,554
735,922
(76,275)
640,904
-
(5,618,813)
-
5,618,813
640,904
(640,904)
-
-
-
-
OILEX LTDANNUAL REPORT 2017For personal use only
P.50
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 5 – INCOME TAX EXPENSE (continued)
Tax Assets and Liabilities
During the year ended 30 June 2017, $640,904 of tax losses were recognised and were offset against the current tax liability resulting
in nil tax assets and liabilities.
Unrecognised deferred tax assets not brought to account at balance date as
realisation is not regarded as probable – temporary differences
Other
Losses available for offset against future taxable income
Deferred tax asset not brought to account
2017
$
2016
$
25,495,372
27,174,420
15,286,865
15,157,350
40,782,237
42,331,770
The deductible temporary differences and tax losses do not expire under current tax legislation.
The deferred tax asset not brought to account for the 2017 financial year will only be realised if:
»
»
»
It is probable that future assessable income will be derived of a nature and of an amount sufficient to enable the benefit to
be realised;
The conditions for deductibility imposed by the tax legislation continue to be complied with; and
The companies are able to meet the continuity of ownership and/or continuity of business tests.
The foreign component of the deferred tax asset not brought to account for the 2017 financial year will only be realised if the
Group derives future assessable income of a nature and of an amount sufficient to enable the benefit to be realised and the Group
continues to comply with the deductibility conditions imposed by the Income Tax Act 1961 (India) and there is no change in income
tax legislation adversely affecting the utilisation of the benefits.
Tax Consolidation
In accordance with tax consolidation legislation the Company, as the head entity of the Australian tax-consolidated group, has
assumed the deferred tax assets initially recognised by wholly owned members of the tax-consolidated group with effect from
1 July 2004. Total tax losses of the Australian tax-consolidated group, available for offset against future taxable income are
$6,518,031 (2016: $7,222,073).
Accounting Policy
Income tax expense comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates
to a business combination, or items recognised directly in equity, or in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they
relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to
settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for differences relating to
investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the
tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted
or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
For personal use only
P.51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Key Estimates and Assumptions
The application of the Group’s accounting policy for recognition of tax losses requires management to make certain estimates and
assumptions as to future events and circumstances, including the assessment of whether economic quantities of resources have
been found, or alternatively, that the sale of the respective areas of interest will be achieved. Any such estimates and assumptions
may change as new information becomes available. A deferred tax asset is only recognised for unused losses if it is probable that
future taxable profits will be available to utilise those losses.
In determining the amount of current and deferred tax the Group considers the impact of uncertain tax positions and whether
additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years
based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on
estimates and assumptions and may involve a series of judgements about future events. New information may become available that
causes the Group to change its judgement regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact
tax expense in the period that such a determination is made.
NOTE 6 – LOSS PER SHARE
(a) Basic Loss Per Share
Loss used in calculating earnings per share
Loss for the period attributable to ordinary shareholders
3,665,192
36,154,111
2017
$
2016
$
Weighted average number of ordinary shares
Issued ordinary shares at 1 July
Effect of shares issued
Effect of share options exercised
2017
Number
2016
Number
1,180,426,999
677,906,039
115,920,908
446,449,448
-
5,140
Weighted average number of ordinary shares at 30 June
1,296,347,907
1,124,360,627
(b) Diluted Loss Per Share
The Company’s potential ordinary shares, being its options and warrants granted, are not considered dilutive as the conversion of
these instruments would result in a decrease in the net loss per share.
(c) Subsequent Transactions
The Company has issued 13,809,266 ordinary shares since year end.
On 4 September 2017, 11,722,222 shares were issued upon exercise of broker options at 0.225 pence (0.04 cents) expiring
22 May 2020 and 2,087,044 shares were issued as consideration for consulting services.
Accounting Policy
Basic earnings per share is calculated by dividing net profit or loss attributable to ordinary shareholders of the parent entity by the
weighted average number of ordinary shares outstanding during the year, adjusted for any bonus element.
Diluted earnings per share is determined by adjusting the profit attributable to ordinary shareholders and weighted average number of
shares outstanding for the dilutive effect of potential ordinary shares, which may comprise outstanding options, warrants and
their equivalents.
OILEX LTDANNUAL REPORT 2017For personal use only
P.52
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
ASSETS AND LIABILITIES
This section provides information on the assets
employed to develop value for shareholders
and the liabilities incurred as a result.
NOTE 7 – EXPLORATION AND EVALUATION
Balance at 1 July
Expenditure capitalised
Transfer to development assets
Impairment
Effect of movements in foreign exchange rates
Balance at 30 June
2017
$
2016
$
909,593
11,644,674
1,380
-
469,190
(193,585)
(373,780)
(11,572,740)
(18,523)
518,670
562,054
909,593
As at 30 June 2017, the seismic costs capitalised in relation to STP-EPA-0131 in the Canning Basin were fully impaired following an
internal evaluation which showed that these assets were unlikely to be recouped through successful development or sale in the
near future and hence would not recover costs capitalised to date. As a consequence of this assessment, $373,780 was impaired
(2016: $11,572,740 was impaired in relation to Cambay-72, Cambay-19z and the initial acquisition costs of the Indian assets).
The balance remaining relates to the Cambay Field which is currently under evaluation. It has minimal production that is sold to
a third party.
Accounting Policy
Accounting for exploration and evaluation expenditure is assessed separately for each area of interest. Exploration and evaluation
expenditure in respect of each area of interest is accounted for under the successful efforts method. An area of interest is an
individual geological area which is considered to constitute a favourable environment for the presence of hydrocarbon resources or
has been proven to contain such resources.
Expenditure incurred prior to securing legal rights to explore an area is expensed. Exploration licence acquisition costs relating to
established oil and gas exploration areas are capitalised.
The costs of drilling exploration wells are initially capitalised pending the results of the well. Costs are expensed where the well does
not result in a successful discovery.
All other exploration and evaluation expenditure, including general administration costs, geological and geophysical costs and new
venture expenditure is expensed as incurred, except where:
»
»
The expenditure relates to an exploration discovery for which, at balance date, an assessment of the existence or otherwise of
economically recoverable reserves is not yet complete; or
The expenditure relates to an area of interest under which it is expected that the expenditure will be recouped through successful
development and exploitation, or by sale.
When an oil or gas field has been approved for commercial development, the accumulated exploration and evaluation costs are first
tested for impairment and then reclassified as development assets.
Impairment of Exploration and Evaluation Expenditure
The carrying value of exploration and evaluation assets are assessed at each reporting date if any of the following indicators
of impairment exist:
»
»
»
»
The exploration licence term in the specific area of interest has expired during the reporting period or will expire in the near future
and it is not anticipated that this will be renewed;
Expenditure on further exploration and evaluation of specific areas is not budgeted or planned;
Exploration for and evaluation of oil and gas assets in the specific area has not lead to the discovery of potentially commercial
reserves; or
Sufficient data exists to indicate that the carrying amount of the asset is unlikely to be recovered in full, either by development
or sale.
For personal use only P.53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Key Estimates and Assumptions
The application of the Group’s accounting policy for exploration and evaluation expenditure necessarily requires management to
make certain estimates and assumptions as to future events and circumstances, particularly the assessment of whether economic
quantities of resources have been found, or alternatively, that the sale of the respective areas of interest will be achieved. Critical
to this assessment are estimates and assumptions as to contingent and prospective resources, the timing of expected cash
flows, exchange rates, commodity prices and future capital requirements. These estimates and assumptions may change as new
information becomes available. If, after having capitalised expenditure under this policy, it is determined that the expenditure is
unlikely to be recovered by future exploitation or sale, then the relevant capitalised amount will be written off to the consolidated
statement of profit or loss and other comprehensive income.
NOTE 8 – DEVELOPMENT ASSETS
Cost
Opening balance
Transfer from exploration
Transfer (to)/from joint venture receivables
Acquisition of development assets
Effect of movements in foreign exchange rates
Closing balance
Amortisation and Impairment Losses
Opening balance
Impairment of development assets
Amortisation charge for the year
Effect of movements in foreign exchange rates
Closing balance
Carrying Amounts
Opening balance
Closing balance
2017
$
2016
$
16,161,010
15,647,996
-
-
1,499
(530,759)
193,585
(347,029)
163,827
502,631
15,631,750
16,161,010
10,022,006
-
-
943
(318,487)
10,023,940
46,651
(48,585)
9,704,462
10,022,006
6,139,004
15,647,996
5,927,288
6,139,004
OILEX LTDANNUAL REPORT 2017For personal use only P.54
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 8 – DEVELOPMENT ASSETS (continued)
Cambay Field Development Assets
There was no impairment of the Cambay Field development
assets during the year ended 30 June 2017 (2016: $9,830,355
for Cambay Field and $193,585 for Bhandut gas production
facilities).
June Impairment
The recoverability of the Cambay Field development assets as at
30 June 2017 was estimated assessing the fair value less cost
to sell by using a discounted cash flow model.
The key assumptions used for the determination of the
discounted cash flow assessment were based upon projected
gas and condensate production assuming an extension to the
PSC. Projected production remains below 2P resources.
Natural gas prices are based upon the Company’s review of the
correlation of historical Brent oil and Indian LNG import prices,
together with independent consensus estimates for future Brent
oil prices. The forecast Indian LNG prices have been adjusted for
re-gas charges and Indian taxes. Forecast real prices increase
steadily from US$5.40/mmbtu in 2017 to US$7.00/mmbtu by
2022, after which time the prices remain steady until 2029
(2016: US$5/mmbtu through to 2024 rising to US$13/mmbtu
by 2029).
Real oil prices, derived from independent forward price curves
(US$/bbl) used were US$56.40 in 2018 increasing steadily to
US$61.00 by 2022.
The PSC primary term expires in September 2019. The
Government of India has issued a PSC extension policy which
enables the Company to apply for an extension to the PSC to
the earlier of the economic life of the field or 2029, subject to
a field development plan being submitted. The Cambay Field
development plan was submitted in September 2017. The CGU’s
recoverable amount includes the assumption that the extension
will be obtained.
The assumption for long term US inflation rate was 2.2% and for
AUD/USD was $0.77. The pre-tax nominal discount rate adopted
was 20.6% (2016: 2.2%, $0.74 and 18.1% respectively).
The Company has certain specific risks in implementing its
planned development of Cambay which are not fully considered
by the pre-tax discount rate. Accordingly, the Company has
risked the discounted cash flow calculation for these specific
risks including the well success, grant of PSC extensions
and well completion technologies by applying an estimated
risk factor for each risk as at 30 June 2017. The specific risk
adjustment has decreased in 2017, reflecting the advanced
status of the Cambay PSC extension application together with
positive technical progress on the stimulation optimisation.
Whilst the Company’s long term forecast gas prices were
lower as at 30 June 2017, the Company’s forecast operating and
capital costs were also lower, as were the overall specific risk
adjustments applied for the development of Cambay, including
the grant of the extension. Accordingly, no impairment or
reversal was required in the year ended 30 June 2017.
Accounting Policy
Development expenditure includes past exploration and
evaluation costs, pre-production development costs,
development drilling, development studies and other subsurface
expenditure pertaining to that area of interest. Costs related
to surface plant and equipment and any associated land and
buildings are accounted for as property, plant and equipment.
The definition of an area of interest for development expenditure
is narrowed from the exploration permit for exploration and
evaluation expenditure to the individual geological area where
the presence of an oil or natural gas field exists, and in most
cases will comprise an individual oil or gas field.
Amortisation is not charged on costs carried forward in respect
of areas of interest in the development phase until production
commences. When production commences, carried forward
development costs are amortised on a units of production basis
over the life of economically recoverable reserves.
Impairment of Development Assets
The carrying value of development assets are assessed on
a cash generating unit (CGU) basis at each reporting date to
determine whether there is any indication of impairment or
reversal of impairment. Indicators of impairment can include
changes in market conditions, future oil and gas prices and
future costs. Where an indicator of impairment exists, the assets
recoverable amount is estimated.
An impairment loss is recognised if the carrying amount of an
asset or its CGU exceeds its estimated recoverable amount.
A CGU is the smallest identifiable asset group that generates
cash flows that are largely independent from other assets and
groups. The CGU is the Cambay Field, India. Impairment losses
are recognised in profit or loss.
For personal use only P.55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell (FVLCS). As a market
price is not available, FVLCS is determined by using a discounted cash flow approach. In assessing FVLCS, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. Valuation principals that apply when determining FVLCS are that future events that
would affect expected cash flows are included in the calculation of FVLCS.
Impairment losses are reversed when there is an indication that the loss has decreased or no longer exists and there has been a
change in the estimate used to determine the recoverable amount. Such estimates include beneficial changes in reserves and future
costs, or material increases in selling prices. 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 amortisation, if no impairment loss had been recognised.
Key Estimates and Assumptions
Significant judgements and assumptions are required by management in estimating the present value of future cash flows
particularly in the assessment of long life development assets. It should be noted that discounted cash flow calculations are subject
to variability in key assumptions including, but not limited to, the expected life of the relevant area of interest, long-term oil and gas
prices, currency exchange rates, pre-tax discount rates, number of future wells, production profiles and operating costs. In addition,
the CGU’s recoverable amount includes the assumption that the PSC extension will be obtained.
An adverse change in one or more of the assumptions used to estimate FVLCS could result in an adjustment to the development
asset’s recoverable amount.
Development costs are amortised on a units of production basis over the life of economically recoverable reserves, so as to write off
costs in proportion to the depletion of the estimated reserves. The estimation of reserves requires interpretation of geological and
geophysical data. The geological and economic factors which form the basis of reserve estimates may change over reporting periods.
There are a number of uncertainties in estimating resources and reserves, and these estimates and assumptions may change as new
information becomes available.
NOTE 9 – INVENTORIES
Oil on hand - net realisable value
Drilling inventory - net realisable value
2017
$
2016
$
26,112
1,161,998
1,188,110
7,949
1,230,604
1,238,553
There were no reversal of writedowns to net realisable value.
Accounting Policy
Inventories comprising materials and consumables and petroleum products are measured at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion
and selling expenses.
OILEX LTDANNUAL REPORT 2017For personal use only
P.56
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 10 – PROVISIONS
Site Restoration, Well Abandonment and Other Provisions
Balance at 1 July
Provision adjustments during the year - Restoration
Provision adjustments during the year - Termination (refer note 25)
Effect of movements in exchange rates
Balance at 30 June
Current - Restoration and Termination
Non-current - Restoration
2017
$
2016
$
3,526,179
3,595,742
-
(196,334)
795,229
(137,139)
-
126,771
4,184,269
3,526,179
955,538
3,228,731
4,184,269
181,794
3,344,385
3,526,179
Current - Employee Entitlements
229,752
356,510
Accounting Policy
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation and when a reliable estimate can be made of the amount
of the obligation.
Provisions are made for site rehabilitation of an oil and gas field on an incremental basis during the life of the field (which includes
the field plant closure phase). Provisions include reclamation, plant closure, waste site closure and monitoring activities. These costs
have been determined on the basis of current costs, current legal requirements and current technology. At each reporting date the
rehabilitation provision is re-measured to reflect any changes in the timing or amounts of the costs to be incurred. Any such changes
are dealt with on a prospective basis.
Short-term employee benefits for wages, salaries and fringe benefits are measured on an undiscounted basis and expensed as the
related service is provided. A liability is recognised based on remuneration wage and salary rates that the Group expects to pay as at
the reporting date as a result of past service provided by the employee, if the obligation can be measured reliably.
The Group’s net obligation in respect of long-term service benefits is the amount of future benefit that employees have earned in
return for their service up to the reporting date. The obligation is calculated using expected future increases in wage and salary rates
including related on-costs and expected settlement dates, and is discounted using the high quality corporate bond rate at the balance
sheet date which have maturity dates approximating to the terms of the Group’s obligations.
Key Estimates and Assumptions
In relation to rehabilitation provisions the Group estimates the future removal costs of onshore oil and gas production facilities,
wells and pipeline at the time of installation of the assets. In most instances, removal of assets occurs many years into the future.
This requires judgemental assumptions regarding removal date, future environmental legislation, the extent of reclamation activities
required, the engineering methodology for estimating cost, future removal technologies in determining the removal cost, and
discount rates to determine the present value of these cash flows.
For personal use only
P.57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 11 – CASH AND CASH EQUIVALENTS
2017
$
2016
$
Cash at bank and on hand
3,215,565
5,158,361
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 20.
Accounting Policy
Cash and cash equivalents comprise bank balances, call deposits, cash in transit and short-term deposits with an original maturity of
three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by
the Group in the management of its short-term commitments.
Reconciliation of Cash Flows from Operating Activities
Net loss for the period
Amortisation of development assets
Depreciation
Provision for doubtful debts/(net reversal)
Loss/(profit) on disposal of assets
Profit on sale of scrap
Impairment of exploration and evaluation assets
Impairment of development assets
Termination penalty provision
Well abandonment provision/(reversal)
Equity settled share-based payments
Unrealised foreign exchange loss
2017
$
2016
$
(3,665,192)
(36,154,111)
944
57,337
46,652
67,827
(473,112)
3,941,988
3,335
(20,019)
373,780
(1,281)
-
11,572,740
-
10,023,940
795,229
-
-
(196,334)
8,262
51,550
149,523
215,205
Operating Loss Before Changes in Working Capital and Provisions
(2,867,886)
(10,333,851)
Movement in trade and other payables
Movement in prepayments
Movement in trade and other receivables
Movement in provisions
Movement in inventory
Movement in employee benefits
Net Cash Used in Operating Activities
(1,652,794)
2,481,955
(49,108)
516,145
1,258,725
(2,579,972)
(21,211)
50,443
(105,547)
30,053
10,930
(80,385)
(3,387,378)
(9,955,125)
OILEX LTDANNUAL REPORT 2017For personal use only P.58
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 12 – TRADE AND OTHER RECEIVABLES
Current
Allocation of receivables
Joint venture receivables
Other receivables
Joint venture receivables
Joint venture receivables
Provision for doubtful debts
Other receivables
Corporate receivables
Provision for doubtful debts
Non-current
2017
$
2016
$
1,377,795
1,583,668
364,488
652,069
1,742,283
2,235,737
5,323,861
6,169,854
(3,946,066)
(4,586,186)
1,377,795
1,583,668
473,749
(109,261)
364,488
732,577
(80,508)
652,069
Other receivables - India TDS (tax deducted at source)
-
102,343
Joint Venture receivables include the Group’s share of outstanding cash calls and recharges owing from the Joint Venture partners.
The Group has been in ongoing discussions with its Joint Venture partner Gujarat State Petroleum Corporation, for repayment of
disputed and other amounts owing. Whilst progress has been made in recovering outstanding amounts, an assessment has been
made of the recoverable balance as at 30 June 2017, in line with identified impairment indicators. Each receivable has been assessed
individually for recovery, and those deemed to have a low chance of recovery have been fully provided for in the current year. The
recovery of $1,879,153 (Equivalent US$1,426,013) in the quarter ended 30 June 2017 has resulted in a partial reversal of the prior
years’ provision.
The Group is continuing discussions in order to resolve the outstanding issues and recover the outstanding amounts.
The carrying value of trade and other receivables is considered to approximate its fair value due to the assessment of recoverability.
Details of the Group’s credit risk are disclosed in note 20(b).
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P.59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Movement in provision for doubtful debts
Balance at 1 July
Provisions reversed/(made) during the year
Effect of movements in exchange rates
Balance at 30 June
Allocation of provision
Joint venture receivables
Other receivables
Accounting Policy
2017
$
2016
$
(4,666,694)
(782,919)
473,112
138,255
(3,941,988)
58,213
(4,055,327)
(4,666,694)
(3,946,066)
(4,586,186)
(109,261)
(80,508)
(4,055,327)
(4,666,694)
The Group initially recognises loans, receivables and deposits on the date that they are originated. All other financial assets (including
assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to
the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when,
the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the
liability simultaneously.
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets
are recognised initially at fair value and subsequently measured at amortised cost, less any impairment losses.
A provision for doubtful debts is recognised in profit or loss when there is objective evidence of non-recovery or an impairment
indicator exists. If receivables are subsequently recovered, or an event causes the amount of impairment loss to decrease, the
amounts are reversed through profit or loss.
Impairment of Receivables
In assessing collective impairment, the Group uses historical trends of the probability of default, timing of recoveries and the amount
of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual
losses are likely to be greater or less than suggested by historical trends. The Group considers that there is evidence of impairment if
any of the following indicators are present; financial difficulties of the debtor, probability that the debtor will dispute amounts owing
and default or delinquency in payment (more than one year old).
Key Estimates and Assumptions
The Group considers evidence of impairment for receivables at both a specific asset and collective level. All individually significant
receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then
collectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individually significant
are collectively assessed for impairment by grouping together receivables with similar risk characteristics. This requires judgemental
assumptions regarding recoverability. Changes in these assumptions impact the recoverable amount of the asset.
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OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 13 – TRADE AND OTHER PAYABLES
Trade creditors
Accruals
2017
$
2016
$
593,978
659,809
1,253,787
1,887,716
1,027,053
2,914,769
The Company’s assessment in note 12, of the recoverability of outstanding cash call amounts owing from its joint venture partner
(GSPC) has resulted in an additional impairment and consequently the Company is of the opinion that the Cambay Joint Venture
will be unable to meet its third party liabilities, without financial support from the Company as Operator, due to non-payment of
outstanding cash calls by the Joint Venture partner. As a result, the Group has accrued $49,800 as at 30 June 2017 (2016: $467,924)
to cover Cambay and Bhandut Joint Venture third party liabilities.
The carrying value of trade and other accruals is considered to approximate its fair value due to the short nature of these financial
liabilities.
Accounting Policy
Trade and other payables are recorded at the value of the invoices received and subsequently measured at amortised cost and are
non-interest bearing. The liabilities are for goods and services provided before year end, that are unpaid and arise when the Group
has an obligation to make future payments in respect of these goods and services. The amounts are unsecured. Financial assets and
liabilities are offset and the net amount presented in the statement of financial position when and only when, the Group has a legal
right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 14 – EXPENDITURE COMMITMENTS
Exploration Expenditure Commitments
In order to maintain rights of tenure to exploration permits, the Group is required to perform exploration work to meet the minimum
expenditure requirements specified by various state and national governments. These obligations are subject to renegotiation when
application for an exploration permit is made and at other times. These obligations are not provided for in the financial report.
The expenditure commitments are currently estimated to be payable as follows:
Within one year
One year or later and no later than five years
2017
$
2016
$
-
-
-
-
-
-
Future commitments may include the Canning Basin Exploration Permit Applications. The formal exploration permit period does not
commence until Oilex accepts an offer of a Petroleum Exploration Permit from the Government of Western Australia, Department of
Mines and Petroleum.
There are no minimum exploration work commitments in the Cambay and Bhandut Production Sharing Contracts.
When obligations expire, are re-negotiated or cease to be contractually or practically enforceable, they are no longer considered to be
a commitment.
Further expenditure commitments for subsequent permit periods are contingent upon future exploration results. These cannot be
estimated and are subject to renegotiation upon expiry of the existing exploration leases.
Capital Expenditure Commitments
The Group had no capital commitments as at 30 June 2017 (2016: Nil).
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OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 15 – PROPERTY, PLANT AND EQUIPMENT
Cost
Balance at 1 July 2015
Acquisitions
Disposals
Currency translation differences
Balance at 30 June 2016
Balance at 1 July 2016
Acquisitions
Disposals
Currency translation differences
Balance at 30 June 2017
Depreciation and Impairment Losses
Balance at 1 July 2015
Depreciation charge for the year
Disposals
Currency translation differences
Balance at 30 June 2016
Balance at 1 July 2016
Depreciation charge for the year
Disposals
Currency translation differences
Balance at 30 June 2017
Carrying amounts
At 1 July 2015
At 30 June 2016
At 1 July 2016
At 30 June 2017
Motor
Vehicles
$
Plant and
Equipment
$
Office
Furniture
$
Total
$
14,456
1,192,477
143,711
1,350,644
-
(5,217)
495
9,734
39,432
(37,155)
15,704
6,211
(3,875)
2,532
45,643
(46,247)
18,731
1,210,458
148,579
1,368,771
9,734
1,210,458
148,579
1,368,771
-
-
(336)
9,398
24,275
(325,637)
(15,787)
893,309
-
-
(2,647)
24,275
(325,637)
(18,770)
145,932
1,048,639
13,537
961,007
95,949
1,070,493
252
(5,217)
459
9,031
9,031
180
-
(315)
8,896
919
703
703
502
60,757
(37,155)
9,148
6,818
(2,068)
1,884
67,827
(44,440)
11,491
993,757
102,583
1,105,371
993,757
51,567
(321,827)
(10,686)
712,811
231,470
216,701
216,701
180,498
102,583
5,590
-
(2,195)
105,978
47,762
45,996
45,996
39,954
1,105,371
57,337
(321,827)
(13,196)
827,685
280,151
263,400
263,400
220,954
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Accounting Policy
Property, plant and equipment is measured at cost less accumulated depreciation and any accumulated impairment losses. The cost
of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling
and removing the items and restoring the site on which they are located and an appropriate proportion of overheads.
Gains and losses on disposal are determined by comparing the proceeds from disposal with the carrying amount of property, plant
and equipment and are recognised net in the consolidated statement of profit or loss and other comprehensive income.
Depreciation is calculated using the reducing balance method over the estimated useful life of the assets, with the exception of
software which is depreciated at prime cost. The estimated useful lives in the current and comparative periods are as follows:
» Motor vehicles
4 to 7 years
»
Plant and equipment
2 to 7 years
» Office furniture
2 to 10 years
Depreciation methods, useful lives and residual values are reviewed and adjusted if appropriate, at each financial year end.
Impairment of Property, Plant and Equipment
The carrying value of assets are assessed at each reporting date to determine whether there is any indication of impairment. If any
such indication exists then the assets recoverable amount is estimated.
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OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
EQUITY, GROUP STRUCTURE AND RISK MANAGEMENT
This section address the Group’s capital structure, the Group
structure and related party transactions, as well as including
information on how the Group manages the various financial risks.
NOTE 16 – ISSUED CAPITAL AND RESERVES
The reconciliation of the movement in capital and reserves for the consolidated entity can be found in the consolidated statement of
changes in equity.
(a) Issued Capital
Shares
On issue 1 July - fully paid
Issue of share capital
Shares issued for cash
Shares issued for cash (1)
Shares issued for cash (2)
Shares issued for cash (3)
Shares issued for non-cash (4)
Conversion of retention rights (5)
Capital raising costs
Underwriter and sub-underwriter options (6)
2017
Number
of Shares
2017
$
Issued Capital
2016
Number
of Shares
2016
$
Issued Capital
1,180,426,999
171,513,760
677,906,039
153,928,046
271,230,456
27,123,046
190,535,385
12,987,013
2,000,000
976,430
97,642
762,142
100,000
14,000
(249,721)
(347,774)
502,520,960
20,641,249
-
-
-
-
-
-
-
-
-
-
(3,055,535)
-
Balance at the end of the period - fully paid
1,684,302,899
172,866,479
1,180,426,999
171,513,760
Refer notes following for additional information and note 21 for details of unlisted options.
Additional information of the issue of ordinary shares and unlisted options:
On 15 March 2017, the Company announced a two tranche placement and underwritten rights issue placement to raise
approximately $1.78 million.
(1) On 24 March 2017, the Company issued 271,230,456 new ordinary shares under Tranche One of the Placement at an average
issue price of 0.225 pence ($0.0036) per share.
(2) On 31 March 2017, the Company issued 27,123,046 new ordinary shares being the remaining balance of Tranche One of the
Placement at an average issue price of 0.225 pence ($0.0036) per share.
(3) On 10 May 2017, the Company issued 190,535,385 new ordinary shares, being the 190,353,385 tranche two shares approved by
shareholders at a General Meeting held 3 May 2017, plus an additional 182,000 new ordinary shares, at an issue price of 0.225
pence ($0.004) per share. The 190,535,385 attached unlisted options were issued on 22 May 2017 at an exercise price of 0.35
pence ($0.0062) expiring 22 November 2017.
(4) On 24 November 2016, the Company issued 12,987,013 new ordinary shares for a non-cash consideration of $100,000 ($0.0077
per share) as part of the remuneration of the Managing Director, Mr Jonathan Salomon as approved by the shareholders at the
AGM held on 23 November 2016. This amount was included as remuneration in the prior period.
(5) On 23 November 2016, shareholders at the AGM approved the issue to the Managing Director Mr Jonathan Salomon, of
2,000,000 retention rights to ordinary shares. The retention rights converted into fully paid ordinary shares on 17 March 2017,
upon Mr Salomon’s employment being extended beyond 18 March 2017.
(6) On 3 May 2017, shareholders at a General Meeting also approved the issue of 88,888,888 unlisted broker options. These were
issued by the Company on 22 May 2017 at an exercise price of 0.225 pence ($0.0040) expiring 22 May 2020.
The Company does not have authorised capital or par value in respect of its issued shares. The holders of ordinary shares are entitled
to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
For personal use only
P.65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Accounting Policy
Ordinary shares are classified as equity. Transaction costs directly attributable to the issue of ordinary shares and share options are
recognised as a deduction from equity, net of any tax effects.
(b) Reserves
Foreign Currency Translation Reserve
Option Reserve
2017
$
2016
$
7,510,193
583,571
7,495,119
930,742
8,093,764
8,425,861
Foreign Currency Translation Reserve (FCTR)
The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations from their functional currency to Australian dollars.
The assets and liabilities of foreign operations are translated to Australian dollars at exchange rates at the reporting date. The income
and expenses of foreign operations are translated to Australian dollars at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the FCTR. When the settlement
of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign
exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation
and are recognised in other comprehensive income and are presented within equity in the FCTR.
When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the
cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss
on disposal.
Option Reserve
The option reserve recognises the fair value of options issued but not exercised. Upon the exercise, lapsing or expiry of options, the
balance of the option reserve relating to those options is transferred to accumulated losses.
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OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 17 – CONSOLIDATED ENTITIES
Parent Entity
Oilex Ltd
Subsidiaries
Independence Oil and Gas Limited
Admiral Oil and Gas Holdings Pty Ltd
Admiral Oil and Gas (106) Pty Ltd
Admiral Oil and Gas (107) Pty Ltd
Admiral Oil Pty Ltd
Oilex N.L. Holdings (India) Limited
Oilex Oman Limited (1)
Oilex (JPDA 06-103) Ltd
Oilex (West Kampar) Limited
Country of
Incorporation
Ownership Interest %
2017
2016
Australia
Australia
Australia
Australia
Australia
Australia
Cyprus
Cyprus
Australia
Cyprus
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(1) Oilex Oman Limited, a dormant company registered in Cyprus, was placed under voluntary liquidation and a liquidator appointed
on 19 June 2014. The Cyprus Department of Registrar of Companies and Official Receiver certified that the company was
dissolved on 6 July 2017.
Accounting Policy
The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
NOTE 18 – JOINT ARRANGEMENTS
The Group’s interests in joint arrangements as at 30 June 2017 are detailed below. Principal activities are oil and gas exploration,
evaluation, development and production.
(a) Joint Operations Interest
Permit
OFFSHORE
JPDA 06-103
ONSHORE
Cambay Field
Bhandut Field
Timor Leste and Australia (JPDA)
India (Cambay Basin)
India (Cambay Basin)
Sabarmati Field
India (Cambay Basin)
West Kampar Block
Indonesia (Central Sumatra)
2017
%
10.0 (1)
45.0
40.0
40.0 (2)
67.5 (3)
2016
%
10.0
45.0
40.0
40.0
67.5
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P.67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(1) The JPDA 06-103 Production Sharing Contract was terminated 15 July 2015. The Joint Operating Agreement between the Joint
Venture participants is still in effect.
(2) The Sabarmati Production Sharing Contract was cancelled 10 August 2016. The Joint Operating Agreement between the Joint
Venture participants is still in effect.
(3) Oilex (West Kampar) Limited is entitled to have assigned an additional 22.5% to its holding of 45% through exercise of its rights
under a Power of Attorney granted by PT Sumatera Persada Energi (SPE), following the failure by SPE to repay funds due. The
assignment request has been provided to BPMigas (now SKKMigas), the Indonesian Government regulator, and has not been
approved or rejected. If Oilex is paid the funds due it will not be entitled to also pursue this assignment.
(b) Joint Operations
The aggregate of the Group’s interests in all joint operations is as follows:
Current assets
Cash and cash equivalents
Trade and other receivables (1)
Inventory
Prepayments
Total current assets
Non-current assets
Exploration and evaluation
Development assets
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Total liabilities
Net assets
(1) Trade and other receivables of the joint operations is before any impairment and provisions.
2017
$
2016
$
93,418
2,481,886
1,161,997
39,868
367,131
2,656,826
1,230,603
38,705
3,777,169
4,293,265
518,670
5,927,288
146,877
535,812
6,139,004
178,063
6,592,835
6,852,879
10,370,004
11,146,144
(205,508)
(205,508)
(904,823)
(904,823)
10,164,496
10,241,321
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 18 – JOINT ARRANGEMENTS (continued)
(c) Joint Operations Commitments
In order to maintain rights of tenure to exploration permits, the Group is required to perform exploration work to meet the minimum
expenditure requirements specified by various state and national governments. These obligations are subject to renegotiation when
application for an exploration permit is made and at other times. These obligations are not provided for in the financial report.
The aggregate of the Group’s commitments attributable to joint operations is as follows:
2017
$
2016
$
Exploration expenditure commitments
-
-
There are no minimum exploration work commitments in the Cambay and Bhandut Production Sharing Contracts.
Accounting Policy
Joint arrangements are arrangements of which two or more parties have joint control. Joint control is the contractual agreed
sharing of control of the arrangements which exists only when decisions about the relevant activities required unanimous consent
of the parties sharing control. Joint arrangements are classified as either a joint operation or joint venture, based on the rights and
obligations arising from the contractual obligations between the parties to the arrangement.
To the extent the joint arrangement provides the Group with rights to the individual assets and obligations arising from the joint
arrangement, the arrangement is classified as a joint operation and as such, the Group recognises its:
»
»
»
»
»
Assets, including its share of any assets held jointly;
Liabilities, including its share of any liabilities incurred jointly;
Revenue from the sale of its share of the output arising from the joint operation;
Share of revenue from the sale of the output by the joint operation; and
Expenses, including its share of any expenses incurred jointly.
The Group’s interest in unincorporated entities are classified as joint operations.
Joint Ventures provides the Group a right to the net assets of the venture and are accounted for using the equity method. The Group
currently has no joint venture arrangements.
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P.69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 19 – RELATED PARTIES
Identity of Related Parties
The Group has a related party relationship with its subsidiaries (refer note 17), joint operations (refer note 18) and with its key
management personnel.
Key Management Personnel
The following were key management personnel of the Group at any time during the financial year and unless otherwise indicated
were key management personnel for the entire period:
Non-Executive Directors
Position
Brad Lingo
Max Cozijn
Non-Executive Chairman from 23 February 2017
(Non-Executive Director from 1 July 2016 to 22 February 2017)
Non-Executive Director from 23 February 2017
(Non-Executive Chairman from 1 July 2016 to 22 February 2017)
Paul Haywood
Non-Executive Director from 29 May 2017
Executive Director
Joe Salomon
Position
Managing Director
Executives
Mark Bolton
Ashish Khare
Peter Bekkers
Jayant Sethi
Position
Chief Financial Officer and Company Secretary
Head - India Assets (effective 8 November 2016)
Chief Geoscientist (ceased employment 30 September 2016)
Head - India Assets (resigned 11 November 2016)
Key Management Personnel Compensation
Key management personnel compensation comprised the following:
Short-term employee benefits
Other long-term benefits
Non-monetary benefits
Post-employment benefits
Termination benefits
Share-based payments
2017
$
2016
$
931,703
1,483,734
40,464
15,389
88,632
174,523
14,000
48,500
17,928
102,987
91,095
137,604
1,264,711
1,881,848
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OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 19 – RELATED PARTIES (continued)
Individual Directors’ and Executives’ Compensation Disclosures
Information regarding individual Directors’ and Executives’ compensation is provided in the Remuneration Report section of the
Directors’ Report. Apart from the details disclosed in this note, or in the Remuneration Report, no Director has entered into a material
contract with the Company since the end of the previous financial year and there were no material contracts involving Directors’
interests existing at year end.
Key Management Personnel Transactions with the Company or its Controlled Entities
A number of key management personnel, or their related parties, hold positions in other companies that result in them having control
or significant influence over these companies.
A number of these companies transacted with the Group during the year. The terms and conditions of these transactions were no
more favourable than those available, or which might reasonably be expected to be available, on similar transactions with non-key
management personnel related entities on an arm’s length basis.
The aggregate value of these transactions and outstanding balances related to key management personnel and entities over which
they have control or significant influence were as follows:
Key Management Personnel
Transaction
Mr M Cozijn
Mr R L Miller
Management services
Management services
Mr S Bhandari
Consultancy services
Transactions Value
Balance Outstanding
Note
1
2
3
2017
$
25,000
2016
$
-
-
-
364,659
34,327
2017
$
2016
$
-
-
-
-
-
-
(1) Oilex used the services of Diplomat Holdings Pty Ltd, of which Mr Cozijn is an employee. Rates charged were as agreed by the
Oilex Board and have been included in the remuneration of key management personnel disclosures.
(2) Oilex used the services of La Jolla Enterprises Pty Ltd, of which Mr Miller is an employee. Rates charged were at market rates
and have been included in the remuneration of key management personnel disclosures.
(3) Oilex used the services of India Hydrocarbons Limited (IHL) of which Mr Bhandari is a principal director and shareholder. Gross
fees have been included in the remuneration of key management personnel disclosures.
NOTE 20 – FINANCIAL INSTRUMENTS
(a) Financial Risk Management
The Group has exposure to the following risks arising from financial instruments.
i) Credit Risk
ii) Liquidity Risk
iii) Market Risk
This note presents qualitative and quantitative information in relation to the Group’s exposure to each of the above risks and the
management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework and the
development and monitoring of risk management policies. Risk management policies are established to identify and analyse the
risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management
policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(b) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers and joint ventures.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the
Group’s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on
credit risk.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset. The maximum exposure to credit
risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables - current
Trade and other receivables - non-current
2017
$
2016
$
3,215,565
1,742,283
-
4,957,848
5,158,361
2,235,737
102,343
7,496,441
The Group’s cash and cash equivalents are held with major banks and financial institutions.
The Group’s gross share of outstanding cash calls and recharges owing from joint venture partners and joint operations is $5,188,896
(2016: $6,169,854).
The Group’s most significant customer is Enertech Fuel Solutions Pvt Limited with gas sales representing 89% of the Group’s total
revenues (2016: 77%), accounts for $7,130 of trade receivables (2016: $12,090), whilst the Indian Oil Corporation Limited, in its
capacity as nominee of the Government of India, accounts for $131,142 of trade receivables as at June 2017 (2016: $150,710).
Impairment Losses
The aging of the trade and other receivables at the reporting date was:
Consolidated Gross
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121 days to one year
More than one year
Provision for doubtful debts
Trade and other receivables net of provision
Trade and other receivables net of provision
Current
Non-current
2017
$
2016
$
246,543
77,420
48,523
-
5,425,124
5,797,610
524,188
196,160
308,645
1,928,749
4,047,032
7,004,774
(4,055,327)
(4,666,694)
1,742,283
2,338,080
1,742,283
2,235,737
-
102,343
1,742,283
2,338,080
OILEX LTDANNUAL REPORT 2017For personal use only
P.72
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 20 – FINANCIAL INSTRUMENTS (continued)
(b) Credit Risk (continued)
Receivable balances are monitored on an ongoing basis. The Group may at times have a high credit risk exposure to its joint venture
partners arising from outstanding cash calls.
The Group considers that there is evidence of impairment if any of the following indicators are present: financial difficulties of the
debtor, probability that the debtor will dispute amounts owing and default or delinquency in payment (more than one year old). The
Group has been in discussions with its joint venture partner for repayment of disputed and other amounts owing. As at 30 June 2017,
each receivable has been assessed individually for recovery and those deemed to have a low chance of recovery, have been fully
provided for in the current year. The Group is continuing discussions in order to resolve the outstanding issues and recover payment
of the outstanding amounts, however due to the age of the receivables amounts, cannot be certain of the timing or of full recovery.
(c) Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due without
incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity by monitoring present cash flows and ensuring that adequate cash reserves, financing facilities and
equity raisings are undertaken to ensure that the Group can meet its obligations.
The table below analyses the Group’s financial liabilities by relevant maturity groupings based on the remaining period at the balance
date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
2017
Trade and other payables
Total financial liabilities
2016
Trade and other payables
Total financial liabilities
Carrying Amount
$
Total
$
2 months or less
$
2 – 12 months
$
Greater than
1 year
$
Contractual Cash Flows
1,253,787
1,253,787
1,253,787
1,253,787
1,253,787
1,253,787
2,914,769
2,914,769
2,914,769
2,914,769
2,914,769
2,914,769
-
-
-
-
-
-
-
-
For personal use only P.73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(d) Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.
i) Currency risk
An entity is exposed to currency risk on sales and purchases that are denominated in a currency other than the functional currency of
the entity. The currencies giving rise to this risk are the United States dollar, Indian rupee and British pound.
The amounts in the table below represent the Australian dollar equivalent of balances in the Oilex Group Entities that are held in a
currency other than the functional currency in which they are measured in that Group Entity. The exposure to currency risk at balance
date was as follows:
In equivalents of Australian dollar
Cash and cash equivalents
Trade and other receivables
Current
Non-current
USD
$
2017
INR
$
GBP
$
USD
$
2016
INR
$
GBP
$
587,568
1,754,444
691,048
3,998,289
304,818
156,625
16,739
2,783,076
-
-
-
-
37,710
3,869,825
102,343
-
-
-
Trade and other payables
(1,170)
(328,008)
(5,860)
(470,438)
(505,992)
(33,041)
Net balance sheet exposure
603,137
4,209,512
685,188
3,667,904
3,668,651
123,584
The following significant exchange rates applied during the year:
AUD
USD
INR
GBP
Average Rate
Reporting Date Spot Rate
2017
0.7545
50.149
0.5951
2016
0.7283
48.297
0.4914
2017
0.7692
49.767
0.5913
2016
0.7426
50.162
0.5549
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P.74
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 20 – FINANCIAL INSTRUMENTS (continued)
(d) Market Risk (continued)
i) Currency risk (continued)
Foreign Currency Sensitivity
A 10% strengthening/weakening of the Australian dollar against the following currencies at 30 June would have (increased)/
decreased the loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain
constant. The analysis is performed on the same basis for 2016.
10% Strengthening
United States dollars (USD)
Indian rupees (INR)
British pounds (GBP)
10% Weakening
United States dollars (USD)
Indian rupees (INR)
British pounds (GBP)
ii)
Interest rate risk
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
2017
$
67,037
467,724
76,132
2016
$
410,567
407,628
13,732
(54,848)
(382,683)
(62,290)
(335,919)
(333,514)
(11,235)
Carrying Amount
2017
$
2016
$
Fixed Rate Instruments
Financial assets (short-term deposits included in trade receivables)
149,004
148,585
Variable Rate Instruments
Financial assets (cash at bank)
3,215,565
5,158,361
For personal use only P.75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Fair Value Sensitivity Analysis for Fixed Rate Instruments
The Group does not account for any fixed rate financial instruments at fair value through profit or loss so a change in interest rates at
the reporting date would not affect profit or loss or equity.
Cash Flow Sensitivity Analysis for Variable Rate Instruments
An increase of 100 basis points in interest rates at the reporting date would have decreased the loss by the amounts shown below.
A decrease of 100 basis points in interest rates at the reporting date would have had the opposite impact by the same amount. This
analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same
basis for 2016.
Impact on profit or loss
iii) Other market price risks
2017
$
2016
$
32,156
51,584
The Group had no financial instruments with exposure to other price risks at June 2017 or June 2016.
Equity Price Sensitivity
The Group had no exposure to equity price sensitivity at June 2017 or June 2016.
(e) Capital Risk Management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business. The capital structure of the Group consists of equity attributable to equity holders of the Company,
comprising issued capital, reserves and accumulated losses as disclosed in the consolidated statement of changes in equity.
(f) Fair Values of Financial Assets and Liabilities
The net fair values of financial assets and liabilities of the Group approximate their carrying values. The Group has no off-balance
sheet financial instruments and no amounts are offset.
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OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
OTHER DISCLOSURES
This section provides information on items which
are required to be disclosed to comply with
Australian Accounting Standards, other regulatory
pronouncements and the Corporations Act 2001.
NOTE 21 – SHARE-BASED PAYMENTS
At 30 June 2017, the terms and conditions of unlisted options granted by the Company to directors, employees, financiers and
advisors are as follows, whereby all options are settled by physical delivery of shares:
Grant Date
Number of Instruments
Vesting Conditions
Contractual Life of Options
Key Management Personnel
-
Other Employees
11 November 2013
5 August 2014
5 August 2014
Financiers and Advisors
22 December 2014
22 May 2017
22 May 2017
-
-
2,000,000
275,000
275,000
5,000,000
190,535,385
88,888,888
Vest immediately
Vest immediately
One year of service
Vest immediately
Vest immediately
Vest immediately
-
4 years
3 years
4 years
3 years
6 months
3 years
Total Options
286,974,273
The following share-based payments expense in relation to unlisted options and retention rights to shares have been recognised in
the Consolidated Statement of Profit or Loss and Other Comprehensive Income:
Share options and rights - equity settled
Directors and employees
Financiers and advisors
Total share-based payments expense
Accounting Policy
2017
$
8,262
-
8,262
2016
$
149,523
-
149,523
Options allow directors, employees and advisors to acquire shares of the Company. The fair value of options granted to employees
is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread
over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is
measured using the Black-Scholes Model, taking into account the terms and conditions upon which the options were granted. The
amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only
due to share prices not achieving the threshold for vesting.
Options are also provided as part of consideration for services by financiers and advisors. The 88,888,888 unlisted options issued to
the Company’s AIM broker have been treated as a capital raising cost.
When the Group grants options over its shares to employees of subsidiaries, the fair value at grant date is recognised as an increase
in the investments in subsidiaries, with a corresponding increase in equity over the vesting period of the grant.
For personal use only P.77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
The number and weighted average exercise prices (WAEP) of unlisted share options are as follows:
Outstanding at 1 July
Forfeited during the year
Lapsed during the year
Exercised during the year
Granted during the year
Granted to Broker
Attached to Tranche 2 shares
Outstanding at 30 June
WAEP
2017
$0.19
$0.30
$0.15
-
$0.01
$0.01
$0.01
Number
2017
20,250,000
(5,700,000)
(7,000,000)
-
88,888,888
190,535,385
286,974,273
WAEP
2016
$0.19
$0.17
$0.21
-
-
-
Number
2016
33,975,000
(5,150,000)
(8,575,000)
-
-
-
$0.19
20,250,000
Exercisable at 30 June
$0.01
286,974,273
$0.19
20,250,000
The unlisted options outstanding at 30 June 2017 have an exercise price in the range of $0.004 to $0.35 (2016: $0.10 to $0.35) and a
weighted average remaining contractual life of 1.2 years (2016: 1.2 years).
No unlisted options were exercised during the years ended 30 June 2017 and 30 June 2016.
The fair value of unlisted options is calculated at the date of grant using the Black-Scholes Model. Expected volatility is estimated by
considering historical volatility of the Company’s share price over the period commensurate with the expected term. The following
factors and assumptions were used in determining the fair value of options of the 88,888,888 broker options on grant date:
2017
Grant Date
Vesting
Date
Expiry
Date
Fair Value
Per Option
Exercise
Price
Price of
Shares on
Grant Date
Expected
Volatility
Risk Free
Interest
Rate
Dividend
Yield
22 May 2017
22 May 2017
22 May 2020
$0.004
$0.004
$0.005
107.10%
1.50%
-
The fair value of the 190,535,385 options and tranche two shares issued to shareholders in May 2017 was the amount paid and has
been included in issued capital. No unlisted options were issued in 2016.
Retention Rights
In the previous financial year, on 18 March 2016, the Company granted 2,000,000 retention rights to shares to the
Managing Director, Mr Salomon, if Mr Salomon and the Company agreed that Mr Salomon enters a subsequent term of
employment as Managing Director.
On 17 March 2017, the Company announced that Mr Salomon’s term as Managing Director had been extended by one year.
Each retention right issued, converts into one ordinary share on exercise. No amounts are paid or payable by the holder of the
retention rights. No retention rights were exercised in 2016.
2017
Grant Date (1)
Vesting
Date
Exercise
Price
Balance at start
of year
Granted
Exercised (2)
Balance at
end of year
23 November 2016
17 March 2017
$0.00
-
2,000,000
(2,000,000)
-
(1) Subject to and with shareholder approval subsequently granted at the AGM held on 23 November 2016.
(2) Conversion price $0.007 per retention right
OILEX LTDANNUAL REPORT 2017For personal use only P.78
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 22 – PARENT ENTITY DISCLOSURE
As at, and throughout, the financial year ended 30 June 2017 the parent entity of the Group was Oilex Ltd.
Result of the parent entity
Loss for the year
Other comprehensive income/(loss)
Total comprehensive (loss)/income for the year
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of the parent entity comprising of:
Issued capital
Option reserve
Foreign currency translation reserve
Accumulated losses
Total equity
Parent Entity Contingencies
2017
$
2016
$
(2,452,635)
(33,765,212)
(145,399)
(44,185)
(2,598,034)
(33,809,397)
5,483,257
9,960,325
7,856,401
12,514,242
1,192,420
3,023,934
2,694,250
4,591,369
6,936,391
7,922,873
172,866,479
171,513,760
583,571
930,742
5,019,497
5,164,897
(171,533,156)
(169,686,526)
6,936,391
7,922,873
The Directors are of the opinion that provisions are not required in respect of the following matters, as it is not probable that a future
sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
Oilex Ltd has issued guarantees in relation to the lease of corporate offices, as well as corporate credit cards. The bank guarantees
amount to $149,004. An equal amount is held in cash and cash equivalents as security by the banks.
Parent entity capital commitments for acquisition of property plant and equipment
Oilex Ltd had no capital commitments as at 30 June 2017 (2016: Nil).
Parent entity guarantee (in respect of debts of its subsidiaries)
Oilex Ltd on 7 November 2006 issued a Deed of Parent Company Performance Guarantee in relation to the Production Sharing
Contract entered into with the Timor Sea Designated Authority dated 15 November 2006. Refer note 25.
Oilex Ltd has issued no other guarantees in respect of debts of its subsidiaries.
For personal use only P.79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 23 – AUDITORS’ REMUNERATION
Audit and review services
Auditors of the Company – KPMG
2017
$
2016
$
Audit and review of financial reports (KPMG Australia)
160,319
161,988
Audit of Joint Operations operated by Oilex Ltd
Operator proportion only (KPMG Australia)
Audit and review of financial reports (KPMG related practices)
Other Auditors
Audit and review of financial reports (India Statutory)
Other services
Auditors of the Company – KPMG
Taxation compliance services (KPMG Australia)
Taxation compliance services (KPMG related practices)
Other Auditors
Taxation compliance services (India Statutory)
NOTE 24 – OPERATING LEASES
Leases as Lessee
Non-cancellable operating lease rentals are payable as follows:
Within one year
One year or later and no later than five years
400
26,699
187,418
5,801
193,219
18,300
6,627
24,927
7,735
32,662
2017
$
124,413
19,104
143,517
915
19,768
182,671
5,844
188,515
24,524
16,293
40,817
9,350
50,167
2016
$
126,062
110,246
236,308
The Group leases its head office premises at Ground Floor, 44a Kings Park Road, West Perth under an operating lease. The current
lease has a three year term, commencing 1 June 2015, with an option to renew for a further two years.
The Group leases office premises in Gandhinagar (India) under an operating lease. The current lease has a three year term,
commencing 16 October 2016.
2017
$
2016
$
Operating lease rentals expensed during the financial year
145,560
174,458
OILEX LTDANNUAL REPORT 2017For personal use only P.80
OILEX LTD ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 24 – OPERATING LEASES (continued)
Accounting Policy
Operating leases payments are recognised in profit or loss on a straight line basis over the term of the lease. Lease incentives
received are recognised as an integral part of the total lease expense and are allocated over the lease term.
NOTE 25 – PROVISIONS, CONTINGENT LIABILITIES AND ASSETS
Contingent Liabilities at Reporting Date
The Directors are of the opinion that provisions (except as noted below) are not required in respect of these matters, as it is not
probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
Guarantees
Oilex Ltd has issued guarantees in relation to the lease of the current corporate office in West Perth, as well as corporate credit
cards. The bank guarantees amount to $149,004.
Termination Penalty
In November 2006 Oilex (JPDA 06-103) Ltd (Operator) and the Joint Venture parties entered into a Production Sharing Contract (PSC)
with the Designated Authority for JPDA 06-103 and the PSC was signed in January 2007 (effective date 15 January 2007).
On 12 July 2013, the Operator, on behalf of the Joint Venture participants, submitted to the Autoridade Nacional do Petroleo e
Minerais (ANPM), a request to terminate the PSC by mutual agreement in accordance with its terms and without penalty or claim
due to the ongoing uncertainty in relation to security of tenure. This request required the consent of the Timor Sea Designated
Authority.
On 15 May 2015, the ANPM issued a Notice of Intention to Terminate and on 15 July 2015 issued a Notice of Termination and
Demand for Payment (Notice). The demand for payment (100%) of the penalty claim of US$17,018,790 is the ANPM’s estimate of the
cost of exploration activities not undertaken in 2013, as well as certain local content obligations set out in the PSC. In addition, the
ANPM asserts that the Joint Venture partners are liable to interest on the monetary claim at a rate of 5.2% compounded monthly.
The Joint Venture has made overpayments in the PSC work programme and considers certain excess expenditure should be included
as part of any financial assessment incorporated within the termination process. Notwithstanding the Group’s belief that no penalty
is applicable, both parties have made a number of offers to settle the matter, none of which have yet resulted in settlement of the
matter. In view of ongoing activities to resolve this matter, the Group has recorded a provision of US$600,000 in the current financial
year, being the Group’s 10% share of a proposed settlement of the JPDA matter, refer note 10. The provision and or settlement is
subject to variation dependent upon ongoing negotiations with the ANPM.
In the event the parties are unable to reach an amicable settlement, any party may refer the matter to arbitration. The obligations and
liabilities of the Joint Venture participants under the PSC are joint and several.
The equity interest of the Joint Venture participants are:
Oilex (JPDA 06-103) Ltd (Operator)
Pan Pacific Petroleum (JPDA 06-103) Pty Ltd
Japan Energy E&P JPDA Pty Ltd
GSPC (JPDA) Limited
Videocon JPDA 06-103 Limited
Bharat PetroResources JPDA Ltd
Total
10%
15%
15%
20%
20%
20%
100%
For personal use only
P.81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Contingent Assets at Reporting Date
Contingent assets relate to an insurance claim receivable by the Company for which the amount is not capable of reliable
measurement, nor virtually certain. This claim has now been settled, with $693,400 being received as disclosed in note 4(e).
Contingent assets not otherwise accounted for in this financial report
Insurance claim made or pending net of excess up to
-
900,000
2017
$
2016
$
NOTE 26 – SUBSEQUENT EVENTS
Subsequent to year end, on 4 September 2017, the Company issued 11,722,222 ordinary shares upon the exercise of
£0.00225 ($0.004) unlisted options and 2,087,044 ordinary shares as consideration for consulting services.
Other than the above disclosure, there has not arisen in the interval between the end of the financial year and the date of this
report an item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect
significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.
NOTE 27 – OTHER ACCOUNTING POLICES
New Standards and Interpretations Not Yet Adopted
The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in
the period of initial application. They are not yet effective and have not been applied in preparing this financial report.
»
»
»
»
AASB 9 Financial Instruments includes revised guidance on the classification and measurement requirements of financial
liabilities and assets, including a new expected credit loss model for calculating impairment, and general hedge accounting
requirements. AASB 9 is effective for annual periods beginning on or after 1 January 2018 with early adoption permitted. The
adoption of AASB 9 is not expected to have a material impact on the Group’s financial assets or financial liabilities.
AASB 15 Revenue from Contracts with Customers provides a single, principles based five-step model to be applied to all
contracts with customers. Guidance is provided for determining whether, how much and when revenue is recognised. New
disclosures about revenue are also introduced. AASB 15 is effective for annual periods beginning on or after 1 January 2018 with
early adoption permitted. The revenue recognition of the sale of oil and gas in India is not expected to be materially affected by
the adoption of AASB 15.
AASB 16 Leases provides a new lessee accounting model requiring the recognition of assets and liabilities for all leases with a
term greater than 12 months, unless the underlying asset is of low value. It requires the lessee to recognise a right-of-use asset,
representing the rights to use the underlying lease asset and a lease liability representing the obligation of lease payments. AASB
16 is effective for annual periods beginning on or after 1 January 2019 with early adoption permitted. The impact on the Group’s
financial assets and financial liabilities of the adoption of AASB 16 has yet to be determined and will depend upon the leases in
place on transition.
AASB 2016-5 Amendments to Australian Accounting Standards - Classification and Measurement of Share-based Payment
Transactions. The standard makes amendments to AASB 2 Share-based Payment. The amendments address the accounting
for the effects of vesting and non-vesting conditions and the accounting for a modification to the terms and conditions of a
share-based payment that changes the classification of the transaction from cash-settled to equity-settled, is effective for annual
reporting periods beginning on or after 1 January 2018 and it is not expected that this will have a significant impact on the
consolidated financial statements.
OILEX LTDANNUAL REPORT 2017For personal use only P.82
OILEX LTD ANNUAL REPORT 2017
DIRECTORS’
DECLARATION
(1) In the opinion of the Directors of Oilex Ltd (the Company):
(a) the consolidated financial statements and notes set out on pages 37 to 80 and the Remuneration Report in the Directors’
Report, set out on pages 23 to 35, are in accordance with the Corporations Act 2001, including:
i) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its performance for the financial year
ended on that date; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
(2) The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing
Director and Chief Financial Officer for the financial year ended 30 June 2017.
(3) The Directors draw attention to note 2(a) to the consolidated financial statements, which includes a statement of compliance
with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors.
Mr Brad Lingo
Chairman
Mr Jonathan Salomon
Managing Director
West Perth, Western Australia
12 September 2017
For personal use only P.83
INDEPENDENT
AUDIT REPORT
OILEX LTDANNUAL REPORT 2017For personal use only P.84
OILEX LTD ANNUAL REPORT 2017
INDEPENDENT
AUDIT REPORT
For personal use only P.85
INDEPENDENT
AUDIT REPORT
OILEX LTDANNUAL REPORT 2017For personal use only P.86
OILEX LTD ANNUAL REPORT 2017
INDEPENDENT
AUDIT REPORT
For personal use only P.87
INDEPENDENT
AUDIT REPORT
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OILEX LTD ANNUAL REPORT 2017
SHAREHOLDER
INFORMATION
Shareholder information as at 1 September 2017
Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below.
The address of the principal registered office is Ground Floor, 44a Kings Park Road, West Perth, Western Australia 6005, Australia,
Telephone +61 8 9485 3200.
The name of the Company Secretary is Mr M Bolton.
Detailed schedules of exploration and production permits held are included in the Business Review.
Directors’ interest in share capital options are disclosed in the Directors’ Report.
There is currently no on-market buy-back in place.
Shareholding
(a) Distribution of share and option holdings:
Size of holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Number of
shareholders
Number of
unlisted option
holders
297
504
347
858
562
2,568
-
-
-
4
18
22
(b) Of the above total 2,109 ordinary shareholders hold less than a marketable parcel.
(c) Voting Rights:
The voting rights attached to the ordinary shares are governed by the Constitution.
On a show of hands every person present who is a Member or representative of a Member shall have one vote and on a poll, every
Member present in person or by proxy or by attorney or duly authorised representative shall have one vote for each share held. None
of the options give an entitlement to voting rights.
Register of Securities
The register of securities listed on the Australian Securities Exchange is held by Link Market Services Limited, Level 12, 250 St
Georges Terrace, Perth, Western Australia 6000, Australia, Telephone +61 8 9211 6670.
The register of securities listed on the Alternative Investment Market of the London Stock Exchange is held by Computershare
Investor Services PLC, PO Box 82, The Pavilions, Bridgwater Road, Bristol BS13 8AE, United Kingdom, Telephone +44 870 702 003.
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian Securities
Exchange and the Alternative Investment Market of the London Stock Exchange (AIM) and trades under the symbol OEX.
Unquoted Securities - Options
Total unlisted options on issue are 286,699,273.
Mr Salomon (Managing Director) holds 14,987,013 shares as at 1 September 2017 which represents 0.9% of shares.
For personal use only P.89
SHAREHOLDER
INFORMATION
Twenty Largest Shareholders
Shareholders
Shares Held
% of issued
capital
Barclayshare Direct Investing Nominees Limited
96,697,377
#
Curmi and Partners Ltd
Magna Energy Limited
Zeta Resources Limited
TD Direct Investing Nominees (Europe) Limited
HSDL Nominees Limited
HSDL Nominees Limited
Hargreaves Lansdown (Nominees) Limited
Hargreaves Lansdown (Nominees) Limited
Chase Nominees Limited
Rock (Nominees) Limited
Hargreaves Lansdown (Nominees) Limited <15942>
Investor Nominees Limited
HSBC Client Holdings Nominee (UK) Limited <731504>
Investor Nominees Limited
UBS Private Banking Nominees Ltd
Share Nominees Ltd
TD Direct Investing Nominees (Europe) Limited
HSDL Nominees Limited
HSDL Nominees Limited
73,604,878
73,505,090
71,323,567
65,784,613
56,328,133
53,401,076
51,421,072
50,412,877
50,000,000
43,060,710
40,303,093
39,786,712
37,248,545
35,869,895
32,266,549
30,632,702
27,525,367
24,824,912
24,139,922
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
5.74
4.37
4.36
4.23
3.91
3.34
3.17
3.05
2.99
2.97
2.58
2.39
2.36
2.21
2.13
1.92
1.82
1.63
1.47
1.43
Total
Total issued shares as at 1 September 2017
9,787,137,090
1,684,302,899
58.07
100.00
Substantial shareholders as disclosed in the most recent substantial shareholder notices given to the company are as follows:
Substantial Shareholders
Zeta Resources Limited
Magna Energy Limited
Shares Held
121,232,567
114,320,284
% of issued
capital
7.20
6.79
Zeta Resources Limited and Magna Energy Limited hold shares on both ASX and AIM.
(#) Included within the total issued capital are 1,075,940,725 shares held on the AIM register. Included within the top 20 shareholders
are certain AIM registered holders as marked.
OILEX LTDANNUAL REPORT 2017For personal use only P.90
OILEX LTD ANNUAL REPORT 2017
DEFINITIONS
Associated
Gas
Natural gas found in contact with or dissolved in crude oil in the reservoir. It can be further categorised as
Gas-Cap Gas or Solution Gas.
Bbls
BCF
BCFE
BOE
Barrels of oil or condensate.
Billion cubic feet of gas at standard temperature and pressure conditions.
Billion cubic feet equivalent of gas at standard temperature and pressure conditions.
Barrels of Oil Equivalent. Converting gas volumes to the oil equivalent is customarily done on the basis of the
nominal heating content or calorific value of the fuel. Common industry gas conversion factors usually range
between 1 barrel of oil equivalent (BOE) = 5,600 standard cubic feet (scf) of gas to 1 BOE = 6,000 scf. (Many
operators use 1 BOE = 5,620 scf derived from the metric unit equivalent 1 m³ crude oil = 1,000 m³ natural gas).
BOPD
Barrels of oil per day.
GOR
MMscfd
MMbbls
PSC
mD
MD
Contingent
Resources
Gas to oil ratio in an oil field, calculated using measured natural gas and crude oil volumes at stated conditions.
The gas/oil ratio may be the solution gas/oil, symbol Rs; produced gas/oil ratio, symbol Rp; or another suitably
defined ratio of gas production to oil production. Volumes measured in scf/bbl.
Million standard cubic feet of gas per day.
Million barrels of oil or condensate.
Production Sharing Contract.
Millidarcy – unit of permeability.
Measured Depth.
Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known
accumulations by application of development projects, but which are not currently considered to be commercially
recoverable due to one or more contingencies.
Contingent Resources may include, for example, projects for which there are currently no viable markets,
or where commercial recovery is dependent on technology under development, or where evaluation of the
accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorised in
accordance with the level of certainty associated with the estimates and may be sub-classified based on project
maturity and/or characterised by their economic status.
Prospective
Resources
Those quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations.
Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of
development projects to known accumulations from a given date forward under defined conditions.
Proved Reserves are those quantities of petroleum, which by analysis of geoscience and engineering data, can
be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known
reservoirs and under defined economic conditions, operating methods and government regulations.
Probable Reserves are those additional Reserves which analysis of geoscience and engineering data indicate are
less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves.
Reserves
Possible Reserves are those additional reserves which analysis of geoscience and engineering data indicate are
less likely to be recoverable than Probable Reserves (3P).
Probabilistic methods.
P90 refers to the quantity for which it is estimated there is at least a 90% probability the actual quantity
recovered will equal or exceed.
P50 refers to the quantity for which it is estimated there is at least a 50% probability the actual quantity
recovered will equal or exceed.
P10 refers to the quantity for which it is estimated there is at least a 10% probability the actual quantity recovered
will equal or exceed.
SCF/BBL
Standard cubic feet (of gas) per barrel (of oil).
TCF
Trillion cubic feet.
Tight Gas
Reservoir
The reservoir cannot be produced at economic flow rates or recover economic volumes of natural gas unless the
well is stimulated by a large hydraulic fracture treatment, a horizontal wellbore, or by using multilateral wellbores.
For personal use only ANNUAL REPORT 2017
OILEX LTD
P.91
CORPORATE
INFORMATION
DIRECTORS
STOCK EXCHANGE LISTINGS
Brad Lingo Bachelor of Arts with Honours, Juris Doctorate,
MAICD
Non-Executive Chairman
Oilex Ltd’s shares are listed under the code OEX on the
Australian Securities Exchange and on the Alternative
Investment Market of the London Stock Exchange (AIM)
AIM NOMINATED ADVISER
Strand Hanson Limited
26 Mount Row
London W1K 3SQ
United Kingdom
AIM BROKER
Cornhill Capital Limited
4th Floor
18 St Swithins Lane
London EC4N 8AD
United Kingdom
SHARE REGISTRIES
Link Market Services Limited (for ASX)
Level 12
250 St Georges Terrace
Perth Western Australia 6000
Australia
Computershare Investor Services PLC (for AIM)
The Pavilions
Bridgwater Road
Bristol BS13 8AE
United Kingdom
AUDITORS
KPMG
235 St Georges Terrace
Perth Western Australia 6000
Australia
Joe Salomon B APP SC (Geology), GAICD
Managing Director
M D J Cozijn BCom CPA, MAICD
Non-Executive Director
P Haywood
Non-Executive Director
COMPANY SECRETARY
Mark Bolton B Business
CFO and Company Secretary
REGISTERED AND PRINCIPAL OFFICE
Ground Floor
44a Kings Park Road
West Perth Western Australia 6005
Australia
Ph. +61 8 9485 3200
Fax +61 8 9485 3290
POSTAL ADDRESS
PO Box 254
West Perth Western Australia 6872
INDIA OPERATIONS - GANDHINAGAR PROJECT OFFICE
3rd Floor Radhe Arcade ‘Block C’
Nr. Swagat Rainforest 1, Kudasan
Gandhinagar Koba Road
Gandhinagar 382421
Gujarat, India
WEBSITE
www.oilex.com.au
EMAIL
oilex@oilex.com.au
OILEX LTD
ACN 078 652 632
ABN 50 078 652 632
For personal use only Registered and Principal Office
Ground Floor / 44a Kings Park Road
West Perth Western Australia 6005
Ph: +61 8 9485 3200
Fax: +61 8 9485 3290
www.oilex.com.au
For personal use only