PANCONTINENTAL OIL & GA
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(Non-Executive Chairman)
(Executive Director & Chief Executive Officer)
(Executive Finance Director)
(Non-Executive Director)
Corporate Information
ABN 95 003 029 543
Directors
Mr Henry David Kennedy
Mr Roy Barry Rushworth
Mr Ernest Anthony Myers
Mr Anthony Robert Frederick Maslin
Company Secretary
Mrs Vesna Petrovic
Registered Office
288 Stirling Street
Perth WA 6000
Telephone: +61 8 9227 3220
Fax: +61 8 9227 3211
Share Register
Advanced Share Registry Services
PO Box 1156
Nedlands WA 6909
Telephone: +61 8 9389 8033
Auditors
Rothsay Chartered Accountants
152-158 St Georges Terrace
Perth WA 6000
Internet Address & Contact
www.pancon.com.au
info@pancon.com.au
ASX Code
PCL
Contents
Chairman’s Review
Review of Operations
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Additional ASX Information
1
3
18
26
27
31
32
33
34
35
53
54
56
Chairman’s Review
For some years we have had an African focus and we
are seeing our efforts in Africa beginning to pay off. In
a sense Pancontinental has been substantially “ahead
of the game” in Africa.
The 2010 / 2011 year has been a very good one for
Pancontinental.
For some years we have had an African focus and we are
seeing our efforts in Africa beginning to pay off. In a sense
Pancontinental has been substantially “ahead of the game”
in Africa.
In Kenya, we have farmed out the giant Mbawa Prospect
to Tullow Kenya B.V. (“Tullow”), a wholly owned
subsidiary of Tullow Oil plc, for drilling in 2012, and
have defined numerous other large and high potential
structures in Licenses L8 and L6. We have also acquired
two new exploration licences, L10A & L10B. We have
major partners in our Kenyan ventures including Apache
Corporation (“Apache”), well known in Australia, and
a very experienced offshore operator, Tullow, arguably
Africa’s most successful oil explorer of recent years, and
BG Group plc (“BG Group”), one of the UK’s ten biggest
companies and a major international LNG and oil producer
and supplier, and a new entrant to Kenya.
In Namibia, after some years of effort, we have successfully
negotiated a very large offshore exploration licence in the
Walvis Basin in the north and we signed for the EL0037
licence there in June 2011.
Your CEO and Finance Director carried out lengthy road
shows in London and Australian cities and I am pleased to
say that the company was very well received in all locations.
The exploration and promotional efforts have resulted in an
increase in the company’s share price from 4 cents to a peak
of more than 14 cents during the year.
For some years your company has had a strategy of
exploring in overlooked areas that it considers to have very
large reserves potential. East Africa and Namibia are two
such areas. We have been working in Kenya and Namibia
for about ten years and I am pleased to report that these
areas are now the two “hot spots” in African oil exploration,
and arguably the two most promising and sought after areas
worldwide, alongside offshore Brazil.
Offshore East Africa, notably in Mozambique and Tanzania,
we continue to see major gas discoveries, and we expect
two major LNG developments there in the coming years.
However, Pancontinental has a deliberate exploration
policy of looking for oil rather than gas, and we believe
that we have succeeded in finding oil-prone “sweet spots”
in both Kenya and Namibia, although both areas remain to
be proven by drilling.
In our L8 area offshore Kenya we have identified and
fully mapped, now with 3D seismic, the very large and
potentially oil - bearing Mbawa Prospect. This prospect
is sufficiently attractive to bring in Tullow and Apache as
farminees during the year, and under the stewardship of the
new operator, Apache, we are planning to drill Mbawa in
2012.
With the possibility of more than 5 Billion Barrels of oil,
Mbawa has the potential to propel Pancontinental into the
forefront of Australian petroleum companies and we will be
free carried and retain 15% through most of the first Mbawa
well by our farminee, Tullow, based on current budgets.
Jointly with UK major BG Group and other UK companies
Premier Investments Limited and Cove Energy plc, we
accepted 15% interests in Blocks L10A and L10B early in
2011. We are looking to a very aggressive and enhanced
exploration programme, with BG Group as operator. In
each of these blocks we will undertake 3D seismic in the
near term and then a well in each block before mid-2014.
You may be aware of the flurry of exploration activity
offshore Namibia in the last two years. We expect that there
will be as many as 8 wells drilled offshore Namibia before
the end of 2012.
Pancontinental has been watching and waiting on the
activities in Namibia for several years. After securing a
Reconnaissance Licence in 2007, the company selected
and was awarded a very large 17,000 sq km exploration
area offshore northern Namibia in March 2011. This area is
designated as EL 0037. Pancontinental operates this project
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
1
Chairman’s Review
and has an 85% interest. Again, as in Kenya, the Company
has selected this location because there is technical data
supporting the concept that the company’s acreage will
prove to be oil bearing rather than gas bearing and this may
not be the case for other locations offshore Namibia.
Pancontinental is advancing its exploration programme in
Namibia, commencing with new mapping of existing data.
We then plan 2D or 3D seismic over the most promising
leads and prospects.
Our project in Malta continues to cause frustration and we
carried on discussion with the Maltese authorities during
the year. While we are pursuing a positive outcome for the
company, we do not know when we will be able to resume
exploration over these areas.
Pancontinental has been active in a corporate sense during
the year, raising approximately $5 million through private
placements early in 2011. Given the higher level of activity
we are now entering, the company plans a further fundraising
later in 2011 or early 2012 and the details of this will be
released in due course.
While we see dark clouds on the horizon for world economies,
we have some reason to believe that the oil and gas industry
will remain relatively buoyant and may even become one of
the “safe havens” for investment in the coming months and
years.
The company welcomed Mr Anthony Maslin to the Board
in 2010. Mr Maslin brings extensive experience in financial
markets and in the resources industries.
In summary, Pancontinental is beginning to be recognised
as a significant, African oriented exploration company and,
in the current environment, we are extremely well placed to
ride the current wave of activity both in East Africa and in
Namibia.
H.D. Kennedy
2
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Review of Operations
Pancontinental Project Interests
Kenya L6
Kenya L8
Kenya L10A
Kenya L10B
Namibia EL0037
Malta Area 5 *
Malta Block 3- Area 4 *
EP 424
EP 110
EP 104 / R1
Area
(km2)
3,100
5,115
4,962
5,585
17,295
8,000
1,500
79
750
736
PCL Interest
(%)
Operator
(%)
40.0%
15.0%
15.0%
15.0%
85.0%
80.0%
80.0%
38.462%
38.462%
10.0%
Flow Energy (60%)
Apache (50%)
BG (40%)
BG (45%)
PCL (85%)
PCL (80%)
PCL (80%)
Strike Oil (61.5%)
Strike Oil (61.5%)
Buru Energy (38.95%)
Partners
(%)
n/a
Origin Energy (25%),Tullow (10%)
Cove (25%), Premier (20%)
Cove (15%), Premier (25%)
Paragon (15%)
Sun Resources (20%)
Sun Resources (20%)
n/a
n/a
Emerald Gas (12.75%), Gulliver
(14.8%), Phoenix Resources (10%),
FAR (8%), Indigo Oil (5.5%)
L15
150
12.0%
Buru Energy (38.95%) Gulliver (49%), FAR (12%), Indigo Oil
(11.5%)
*Malta- Subject to Force Majeure and licence renegotiation
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
3
Review of Operations
Highlights
Kenya Block L8 – Pancontinental farmed out a 10% interest to Tullow Kenya B.V. (“Tullow”), a wholly owned
subsidiary of Tullow Oil plc for drilling the giant Mbawa Prospect. Pancontinental retains 15% interest in L8, from
which Tullow will then have an option to earn a further 5%.
The farmin followed another farmout transaction by the then L8 operator Origin Energy Kenya Pty Ltd (“Origin”),
a wholly owned subsidiary of Origin Energy Limited to Apache Kenya Limited (“Apache”), a wholly owned
subsidiary of Apache Corporation. Apache has taken over as operator and has commenced planning for drilling
Mbawa in 2012.
A new report for the Mbawa Prospect gives revised potential (P10) of 4.9 Billion Barrels of Oil in Place plus a gas
cap of 284 Bcf at the Tertiary / Cretaceous level and 323 Million Barrels oil in place in the Jurassic (P10).
Kenya Blocks L10A & L10B - Pancontinental (15%) was awarded new licences over exploration Blocks L10A
and L10B offshore southern Kenya, alongside BG Group plc (“BG Group”), Premier Oil Investments Limited
(“Premier”) and Cove Energy plc (“Cove”).
Namibia EL 0037 – Pancontinental was awarded a full Exploration Licence and Petroleum Agreement over 17,292
sq km offshore northern Namibia. Pancontinental is operator and holds 85%.
Corporate - The Company raised approximately $5 million dollars to further its exploration activities.
L8 – 5,115km2
Apache 50%
Origin 25%
Pancontinental 15%
Tullow 10%
L6 - 3,100km2
Flow 60%
Pancontinental 40%
PANCONTINENTAL
OFFSHORE KENYA
L6 & L8
L10A – 4,962km2
BG 40%
Cove 25%
Premier 20%
Pancontinental 15%
L10B – 5,585km2
BG 45%
Premier 25%
Pancontinental 15%
Cove 15%
KENYA
L6
L8
L10A
L10B
Tanzania
L10A & L10B
KENYA
Mombasa
L10A
L10B
L6
L8
L6
Pancontinental 40%
> 10 Leads/Prospects
•3D late 2011
•1 well 2012 -2013
L10A & L10B
Pancontinental 15%
•5 Play Types
•> 10 Leads
•3D & 2D late 2011
•2 wells 2013 -2014
L8 Mbawa Drilling 2012
Pancontinental free carried15%
Mbawa Potential----
Tertiary / Cretaceous (P10)
•4.9 Billion Barrels oil in place plus-
•284 Billion Cubic Feet gas in place
•Dual flat spots (DHI’s)
•Oil slicks
Jurassic (P10)
•323 Million Barrels oil in place or
•525 Bcf
in place gas cap
Tertiary - further potential
---------------
0 Km 20
International
KENYA
Pancontinental’s Offshore Kenya Strategy.
Kenya’s stable legal and fiscal regimes and Pancontinental’s
strong acreage position place the company very favourably
in the East African region.
4
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Review of Operations
Offshore East Africa has become an industry exploration
focus through recent major deepwater gas discoveries and
an oil discovery offshore Tanzania and Mozambique.
Further drilling is underway in these areas south of Kenya
and drilling is also planned in 2012 offshore Kenya, by
Pancontinental in L8 and by Anadarko and Total in deep
water.
In its early exploration offshore Kenya, Pancontinental
proposed that the prime areas to develop good oil source
rocks, and to have these fully mature to generate oil, is the
restricted environment where the Tana River delta carried
sediments and nutrients into the deep troughs inboard of the
Davie Walu Ridge.
PANCONTINENTAL OFFSHORE KENYA
Tana River sediment and
oil source nutrient input
into troughs
Interpreted oil
generating troughs
(blue)
Davie- Walu Ridge
restricting oceanic
circulation (mauve)
L6
L8
L10A
L10B
Thick Tertiary sediment loading was also conceived to
“cook” the younger as well as older source rocks sufficiently
to generate oil in the troughs. Since then, the concept of an
oil generating system has been supported by the presence
of interpreted naturally occurring sea-surface oil slicks
coinciding with the postulated oil generating “troughs” and
these lie within all of Pancontinental’s exploration blocks.
Pancontinental was awarded the L6 and L8 licences in 2002
and has subsequently farmed these out.
With the 2011 awards of the L10A and L10B licences,
Pancontinental has extended its strategy of exploring for oil
to the south of L8 and L6. The new blocks cover the same
deep Tertiary troughs that the company interprets to be oil-
generating in L8 and L6.
KENyA
Block L8, offshore Lamu Basin
Pancontinental 15%
L8 covers 5,114.9 sq km offshore Kenya in the Lamu Basin
in water depths from 100m to 1,300 m. Pancontinental
and its co-venturer (and subsequent merger partner) Afrex
Limited (“Afrex”) originated the L6 and L8 projects.
L8 holds the giant Mbawa Prospect, planned for drilling
in 2012. A report by former operator Origin enabled
Pancontinental to verify the large hydrocarbon volumetric
potential of the prospect.
Pancontinental farmed out to Origin in 2005, with Origin
fully funding a 2D seismic survey and in 2009 / 2010 Origin
increased its interest to 75% by funding an approximate
US$10 million 3D seismic survey over the Mbawa Prospect.
Pancontinental retained a 25% interest following the 3D
survey and has now farmed-down to Tullow and retains 15%
through Mbawa drilling.
In L8, the largest of several very substantial exploration
objectives is the Mbawa Prospect, an anticlinal structure
mapped using the 3D seismic data. Mbawa has potential for
both oil and gas at inferred Cretaceous and Jurassic reservoir
levels.
The latest 3D survey provides approximately 300 sq km
of high quality seismic data over Mbawa and confirmed
Pancontinental’s interpretation of the “Flat Spots” seen on
earlier 2D seismic and the structure proved to remain robust
and very large.
Mbawa coincides with interpreted natural oil slicks derived
from sea floor “pockmarks” associated with faulting on the
flank of the structure. As well as Mbawa, other prospects
in L8 also have high volumetric potential and are also
associated with interpreted slicks.
The “slicks” on the sea surface above Mbawa are interpreted
to originate from minor natural sea - floor leakage, suggesting
the presence of an active petroleum generating system.
From the new 3D data the slicks appear to coincide with
deep faults and the sea floor “pock marks” (interpreted small
expulsion craters), suggesting minor natural oil and / or gas
leakage along the fault planes. The interpreted oil slicks
on the sea surface support the concept of oil generation,
expulsion and migration from the kitchen area and Mbawa
itself. Similar natural leakage is seen in major oil and gas
provinces elsewhere around the globe.
The interpreted extensive deep oil and gas generating
“kitchen” near the Mbawa Prospect extends to the north into
area L6 and south into L10A and L10B.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
5
Review of Operations
Mbawa also shows superposed “flat spots” or “DHI’s” on
both 2D and 3D seismic data.
The “flat spots” are possible gas-oil and oil-water interfaces
at about the level of interpreted Tertiary to Cretaceous
reservoir sands. Only drilling is capable of verifying the
interpreted seismic characteristics and the oil and gas
volumetric potential (if any).
Pancontinental’s interpretation is consistent with a gas
column of about 100m overlying an oil column of more
than 120m but these can only be validated by further seismic
analysis and drilling. True DHI’s are only seen at this depth
when the reservoir rocks (in this case sandstone) are thick
and highly porous, suggesting a highly productive reservoir
system if oil or gas is present.
As well as the main Tertiary- Cretaceous prospect, there are
opportunities in large Upper Jurassic / Lower Cretaceous
fault blocks, in the Cretaceous and the Tertiary sequences
themselves and in a newly identified Upper Jurassic play.
Conceptually, several play types could be tested by one well
to about 4,000m depth.
A number of offshore prospects with large potential lie within
Kenya Block L8, with the Mbawa Prospect being the largest
mapped to date. Neighbouring Block L6 (Pancontinental
40%) also has significant potential in a number of prospects
and leads.
After Mbawa, the next largest prospect is Nanaa Central
with approximately 40% of Mbawa’s volumetric potential.
Nanaa Central would provide an additional commercial
opportunity after any Mbawa discovery.
In early 2011 Pancontinental
“farmed out” part of its interest
to Tullow and Origin farmed out
to Apache.
Farmout to Tullow
In early 2011, Pancontinental “farmed out” part of its
interest in L8 to Tullow and the then L8 operator Origin
farmed out to Apache. Tullow has agreed to fund most of
Pancontinental’s share of drilling the giant Mbawa Prospect,
as estimated under current budgets.
Under the L8 farmout agreement signed with Tullow,
Tullow earns a 10% interest by paying US$ 1 million to
Pancontinental for reimbursement of past costs, subject to
audit, and also by funding the future work programme on
its own behalf and up to an agreed expenditure “cap” of
US$ 9 million attributable to Pancontinental’s retained 15%
interest.
Tullow has agreed to fund
most of Pancontinental’s
share of drilling the giant
Mbawa Prospect.
Pancontinental will retain a 15% interest in L8 through
Mbawa drilling, from which Tullow will then have an option
to earn a further 5% from Pancontinental by funding any
second well to a second agreed “cap” of US$6 million in
respect of Pancontinental’s share of well costs. If Tullow
does not exercise the option, each of the two parties will
fund its own direct share of the well.
Tullow is a leading independent oil and gas exploration
and production company. It has a market capitalisation of
approximately GBP 12 billion (A$ 19 billion). It is based
in London, it is a constituent of the FTSE100 index and it
produces more than 37,000 Barrels of oil equivalent per
day. It is one of the world’s most successful oil companies
of recent years, with extensive exploration acreage and
production in 15 countries across Africa and 22 countries
worldwide.
The Tullow farmin followed another transaction by the L8
operator Origin and the US major Apache,announced on
16 February 2011. Under the Origin - Tullow agreement,
Apache has acquired 50% interest in L8 and has become the
licence operator.
Interest holders in PSC Block L8 are:
Apache Corporation
Origin Energy Kenya Pty Ltd
50%
20%
Pancontinental Oil & Gas NL and Afrex Ltd *
15%
Tullow Kenya B.V.
15%
*Afrex Limited is a wholly owned subsidiary of
Pancontinental Oil & Gas NL.
Mbawa Prospect Volumetric Assessment
A report by L8 previous operator Origin has given new
estimates of the oil and gas volumetric potential of the
Mbawa Prospect.
L8 operator Origin, in March 2011, issued the L8 Joint
Venture with a first stage technical report on the evaluation
of the Mbawa structure based upon Origin’s interpretation
of the Mbawa 3D seismic survey data acquired in 2009. The
6
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Review of Operations
report stressed that the interpretation was based upon pre-
stack time migration (PSTM) processing only and did not
include interpretation results from a subsequent pre-stack
depth migration (PSDM) which was carried out because of
the structural complexity revealed by the PSTM data. The
PSDM data was not available at the time of completion of
Origin’s report.
A report by L8 previous operator
Origin has given new estimates
of the oil and gas potential of the
Mbawa Prospect.
While there is no direct evidence that the Mbawa Prospect
contains any oil or gas until drilling has taken place, new
volumetric estimates contained in the report indicate that,
if filled to spill point and subject to risks that include trap
integrity and the fact that the offshore Lamu Basin petroleum
system is unproven, Mbawa has in-place and unrisked
potential to contain at the Tertiary- Cretaceous level –
•
•
up to 4.9 Billion Barrels of oil (P10) plus
a gas cap of 284 Billion Cubic Feet (P10)
In the report it is estimated that Mbawa has in-place and
unrisked potential to contain at the deeper Top Jurassic
level –
•
•
up to 323 Million Barrels oil (P10) or
525 Billion Cubic Feet gas (P10)
but these are subject to risks that include the fact that there
is limited data for reservoir parameters on the East African
margin, there is no control on interpretation of Jurassic
carbonates and the lack of a commercial discovery of
hydrocarbons in Jurassic carbonates on the East African
margin.
The geological parameters used in estimating the volumetric
potential have been drawn from regional data and modelling
of worldwide geological systems and may not necessarily
reflect the parameters in place in the Mbawa Prospect. The
P10 potential volumes quoted are only possible if the prospect
is filled to spill point and the interpretation and estimated
parameters prove to be valid. There is no direct evidence
that the prospect contains any oil or gas and it is possible
that the prospect may be only partially filled or contains no
hydrocarbons. Recoverable reserves are lower than in-place
volumes and are subject to a number of factors that are not
estimated in the quoted volumetric potentials. Only drilling
and further assessment can determine the actual volumes (if
any) of oil or gas in place or recoverable.
While the P10 potential is regarded as the maximum in-place
and unrisked potential, corresponding P Mean potentials in
place, subject to the same risks as those outlined above for
the P10 estimates, are-
Tertiary / Cretaceous potential –
•
2 Billion Barrels (P Mean) oil plus a gas cap of 196
Bcf (P Mean)
Jurassic potential – 138 Million Barrels (P Mean) or
•
231 Bcf (P Mean)
Other results from the report and based upon Pancontinental’s
interpretation of it are-
•
The Mbawa Prospect is a large faulted anticline divided
into a number of “compartments”
• Both Tertiary / Cretaceous and Jurassic closures contain
several major culminations and a number of minor
culminations
• At the Tertiary / Cretaceous level a major southern
culmination contains two superposed “flat spots” or
“DHIs” (Direct Hydrocarbon Indicator) consistent with
a gas-oil interface above an oil–water interface.
Mbawa Drilling
Several of the major culminations on the overall Mbawa
Prospect may be locations for drilling. Initial planning has
been undertaken for drilling and now further extensive
planning has been commenced by incoming operator
Apache. The timing of drilling is subject to a number of
factors including equipment lead-times and the availability
of a suitable drilling rig.
The accurate location of a drilling site is expected to be
announced once incoming operator Apache has verified
the 3D interpretation. Water depth over Mbawa is about
800 metres, easily within the range of modern drilling and
production equipment. Amplitude-versus-offset (AVO)
analysis and special PSDM seismic processing are ongoing.
Mbawa coincides with
interpreted natural oil
slicks derived from sea floor
“pockmarks” and also shows “flat
spots” or “DHI’s” on seismic.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
7
Review of Operations
KENYA L8 – MBAWA
MBAWA PROSPECT
TERTIARY “FLAT SPOTS”
TERTIARY / CRETACEOUS “FLAT SPOT”
LOWER “FLAT SPOT”
800m WATER DEPTH
TURBIDITE AND CHANNEL SANDS ?
TOE THRUST PLAY
TILTED JURASSIC FAULT BLOCKS
0 Km(approx) 2
KENyA
BLOCKS L10A & L10B, OFFSHORE LAMU BASIN
Pancontinental 15%
Offshore Kenya, Pancontinental joined the UK major BG
Group and other UK companies Premier and Cove in the
award of two new Production Sharing Contracts (“PSCs”)
over Blocks L10A and L10B.
The joint venture signed the new PSC’s with the Minister
of Energy of Kenya on 16 May 2011. The new areas more
than double Pancontinental’s gross acreage position offshore
Kenya.
The L10A and L10B Blocks have respective areas of
4,962.03 sq km and 5,585.35 sq km and water depths of 200
to 1,900m, which is within the reach of modern drilling and
development technology.
3D and 2D seismic surveys are planned for late 2011 and
then one well is planned in each block before mid-2014.
The entry of a number of major international companies
supports
alongside Pancontinental offshore Kenya
Pancontinental’s long-held view of the significant oil and
gas potential of its Kenyan projects.
The Joint Ventures consist of-
With BG Group as operator, the Joint Venture has commenced
an aggressive “fast track” exploration programme leading
to drilling in this highly promising exploration province.
is commencing exploration activities
Pancontinental
the most successful UK-based
alongside several of
companies in the oil and gas sector.
BG Group plc
Premier Oil Investments Limited
Cove Energy plc
Pancontinental Oil & Gas NL
L10A
L10B
40%
20%
25%
15%
45%
25%
15%
15%
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PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Review of Operations
Pancontinental joined the UK
major BG Group as well as
Premier and Cove in two new
contracts over Blocks L10A and
L10B offshore Kenya.
The L10A & L10B operator BG Group is one of the 10
largest companies in the UK with a market capitalisation of
around GBP 50 billion (A$80 billion). It is a constituent of
the FTSE 100 index and operates in more than 25 countries
worldwide.
BG Group is a world leader in natural gas exploration
and production, Liquefied Natural Gas (LNG) and gas
transmission and distribution and worldwide, producing
around 650,000 Barrels of Oil Equivalent per Day. It has
an impressive record of finding and commercialising major
international hydrocarbon reserves and has drilled two recent
gas discoveries offshore Tanzania, south of Kenya.
Premier is amongst the largest UK independent oil and gas
companies with a market capitalisation of approximately
US$ 3 billion (A$ 3 billion). Premier produces about 45,000
Barrels of Oil per Day and has reserves of more than 250
Million Barrels of Oil Equivalent.
Cove is listed in London with a market capitalisation of
GBP 510 million (A$815 million). Cove had success with its
first well, the Windjammer gas discovery off Mozambique
in February 2010. Since then it has shared in more gas
discoveries and an oil discovery in the next three wells in
the same area. As well as other East African assets, it holds
a minority interest in an extensive tract of deeper water
acreage offshore Kenya with operator Anadarko Petroleum
Corporation.
An initial L10A and L10B review by operator BG Group has
identified more than ten strong “leads” for follow-up by 3D
and 2D seismic surveys. The leads are geologically varied,
with six “play types” identified.
A number leads have potential
including a large Upper Jurassic
“reef”, Cretaceous and Tertiary
channel and turbidite sands and
Miocene reefs.
KENYA L10A & L10B – LEADS
KENYA
Mombasa
L10A
L10B
L10A & L10B
Pancontinental 15%
• Awarded May 2011
•
• Water depth 200m
10,000 km2
•
to 1,800m
Interpreted oil
“kitchen” troughs
• Notable partners-
•
BG Group, Premier
Oil, Cove Energy
“Fast Track”
exploration
programme
5 Play Types
•
• > 10 Leads
•
•
3D & 2D late 2011
2 wells 2013 -2014
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
---------------
0 Km 20
9
Review of Operations
KENYA L10A & L10B – LEAD EXAMPLES
Upper Jurassic reef
Tertiary / Upper
Cretaceous anticline
Miocene reef
Miocene reef
Cretaceous
Mega‐channel
Cretaceous
Mega‐channel
Several of the leads have a similar character and are on-trend
south of the giant Mbawa Prospect in L8 (Pancontinental
15%). These leads are large anticlinal features.
A number of other leads have potential in different parts
of the geological section, including a large Upper Jurassic
“reef”, Cretaceous and Tertiary channel and turbidite sands
and Miocene reefs.
Most of the leads have been selected for further early work
including seismic coverage commencing later in 2011 with
the aim of bringing these to prospect status.
leads in the eastern part of the blocks, while the 2D survey
of 970 linear km will cover other leads, including a Miocene
reef trend in the western part of the blocks. The aim of the
surveys is to identify the most prospective prospects for
drilling. Two wells are required under the licences in the
second exploration period commencing in August 2013.
Other planned work includes geological field sampling,
gravity field attribute studies, heat flow modelling, seismic
test reprocessing, basin modelling and seismic attribute
studies.
Forward Work Programme
KENyA
Following an initial prospectivity review the joint venture
has commenced planning for extensive 3D and 2D marine
seismic surveys over the main leads. The project operator is
currently seeking a seismic vessel for the data acquisition and
the general locations of the surveys have been determined.
While the 3D acquisition is planned for the east of the areas
and 2D in the west, precise locations will be determined in
due course.
On current planning the seismic acquisition will commence
in late 2011 and processing should be completed mid 2012.
The 3D survey of approximately 2,200 sq km will cover 6
BLOCK L6, OFFSHORE/ONSHORE LAMU BASIN
Pancontinental 40%
The L6 licence area covers approximately 3,100 sq km.
Approximately one quarter of the area lies onshore and the
rest extends offshore to 400 metres water depth.
L6 lies in the Lamu Basin, with a deep sedimentary section
extending from the Tertiary to at least the Jurassic. A deep
central graben in the area is considered to be an oil and
gas “source kitchen” and potential hydrocarbon trapping
prospects have been identified immediately adjacent to this
area.
10
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Review of Operations
KIFARU
PROSPECT
Offshore, sea-surface oil or condensate slicks are interpreted
to originate from the sea floor in the south of L6, supporting
the interpretation of a working hydrocarbon system in this
under-explored region. Kenya has a burdensome energy
shortage and any significant hydrocarbons found onshore,
including gas, could be readily commercialised.
The attention of the joint venture has shifted from the gas /
condensate potential onshore to the larger oil and gas potential
offshore. Significant new studies in L6, including those
interpreting hydrocarbon migration paths, have highlighted
the potential of areas adjacent to the central graben.
Major prospects have potential
in excess of 100 million barrels
recoverable oil or 0.5 trillion
cubic feet of gas. Eight
prospects have been mapped
in five clusters
Several major prospects in L6 have potential in excess of
100 million barrels recoverable oil or 0.5 trillion cubic feet
of gas. Eight prospects have been mapped in five clusters:
•
The Kifaru Prospects in the southwest of the block in
water depths of 60 metres (Kifaru N) and 100 metres
(Kifaru S). These prospects are now one of the main
focuses of exploration work;
•
•
•
The Kiboko and Nyati clusters are large and well situated
in water depths from 100 metres to 350 metres;
The Chui Prospects are large features in near-shore
water depths up to 120 metres; and
The Kudu Prospect, being onshore, is located where
a smaller gas or oil discovery could be readily
commercialised.
With the recognition of the potential offshore Kenya, the
joint venture is seeking a farminee with the aim of acquiring
3D seismic data over the Kifaru Prospect in 2011 and drilling
in 2011 / 2012.
NAMIBIA
EL 0037 Offshore Walvis Basin
Pancontinental 85%
Pancontinental was awarded the EL 0037 Exploration Licence
(“EL”) by the Ministry of Mines and Energy of Namibia on 28
June 2011 and a corresponding Production Agreement (“PA”)
was signed on 4 July 2011 (also effective 28 June 2011).
Pancontinental was awarded
EL 0037 in Namibia on
28 June 2011
EL 0037 covers 17,295 sq km over an oil -prospective trend in
the Walvis Basin offshore northern Namibia. Pancontinental
holds 85% and is operator under a Joint Venture Agreement
with Namibian co-venturer Paragon Holdings (Pty) Ltd
(“Paragon”) (15%).
The location of the PA and EL was selected over Blocks 2012B,
2112A and 2113B from a 30,000 sq km Reconnaissance
Licence awarded to Pancontinental in February 2007.
The EL gives exclusive rights to the holders for a first
exploration period of four years followed by two additional
periods of two years each and also provisions for the
continuation of the exclusive rights under any oil or gas
development.
Pancontinental holds the PA and EL 85% with Namibian
participant Paragon Holdings 15%. In exchange for certain
rights under the Joint Venture Agreement with Paragon signed
on 28 March 2011, Pancontinental has agreed to “free carry”
Paragon until the commencement of the development of
any oil or gas discovery. Paragon is a company based in the
Namibian capital Windhoek. Paragon is a leading Namibian
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
11
Review of Operations
NAMIBIA EL 0037
Fully Oil-Mature Source Rocks in “Inner Graben”
NAMIBIA EL 0037
Pancontinental 85% & Operator
•
17,295 km2 offshore
•
Awarded June 2011
•
• Water depth 0 - 1,500m
•
•
•
Turbidites, ponded fans, channels in graben and slope setting
Excellent regional source rock, oil maturity and reservoir/seal
Studies, seismic then drilling
Natural Oil Seepage “Bullseye” over
Inner Graben in EL 0037
(Data Source : HRT)
EL 0037
Predicted Present‐Day
Maturity for Early Aptian
Source Rock
NAMIBIA – PROSPECTIVITY
W
Base Tertiary to Breakup
Unconformity intrepretation–
A package of rich oil source rocks,
reservoirs and seals
S e a F l o o r
Oil Source Rocks
B a s e T e r t i a r y
EL LOCATION
E
Slope Channels and
Turbidite / Mass
Flow Deposits
Onlapping Turbidites
SLOPE ENVIRONMENT
Early Cretaceous
OUTER HIGH TREND
Ponded Turbidites & Basin Floor
Fans
Aeolian &
Shoreface
Sands
INNER GRABEN
Incised
Channels
REGIONAL SCHEMATIC
CROSS -SECTION
BASIN FLOOR FAN
REGIONAL EXAMPLE
SEISMIC SECTION
INCISED CHANNELS
REGIONAL EXAMPLE
SEISMIC SECTION
3
4
T
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12
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Review of Operations
Amplitude Cut-off
NAMIBIA EL 0037
SEISMIC CROSS -
SECTION
High Amplitude Slope Channel /
Turbidite Fan Sands
It is expected that at
least 6 exploration
wells will be drilled
offshore Namibia
before end 2012.
NAMIBIA EL 0037
SEISMIC CROSS -SECTION
High Amplitude
Source Interval
High Amplitude
Source Interval
Targets are
associated with a
restricted graben
trough interpreted to
hold rich and mature
oil source rocks
Flat Event
Channel Sand
Sequence
private equity and business management company with
diversified mining, retail and media interests.
Offshore Namibia is attracting significant international interest
as an emerging oil and gas province in southwest Africa.
Prospectivity offshore Namibia
Pancontinental will explore the ponded basin floor turbidites,
slope fans and channels seen under the company’s earlier
Reconnaissance Licence. These targets are associated with
a restricted graben trough interpreted to hold the rich and
mature oil source rocks identified in regional wells.
Offshore Namibia has the
potential to hold very large
oil and gas reserves and it is
significantly under-explored
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
13
Review of Operations
The potential reservoir rocks lay close to the oil source rocks.
Water depths are moderate by modern exploration standards,
with water depths between 0 and 1,500m in the blocks being
readily accessible for exploration.
Offshore Namibia is the part of the plate tectonic “conjugate”
of offshore Brazil, where world-scale oil and gas discoveries
have been made in recent years and it lies on the West African
continental margin adjacent to Angola, where there have also
been many major oil discoveries. The explorations “plays”
in the blocks are similar to some of those containing large oil
and gas reserves offshore elsewhere in West Africa.
Offshore Namibia is an extension of the West African
continental margin and in Pancontinental’s’ opinion offshore
Namibia has the potential to hold very large oil and gas
reserves and it is significantly under-explored. The very large
Kudu Gas Field offshore Namibia is under development
by Tullow, and other companies are actively exploring the
margin for oil.
The sparsely scattered well results show evidence of excellent
oil prone source rocks and Pancontinental interprets that
these will be mature to generate oil in the Inner Graben
covered by Pancontinental’s acreage. Other well results
show excellent reservoir rocks and seals.
Pancontinental’s 85% in the new blocks sees it well placed
amongst some major players offshore Namibia.
A number of major “deals” have been concluded recently
offshore Namibia and it is expected that at least 6 exploration
wells will be drilled offshore Namibia before the end of
2012, and a number of these will be close to Pancontinental’s
acreage.
Offshore Namibia is the part of
the plate tectonic “conjugate”
of offshore Brazil, where world-
scale oil and gas discoveries
have been made
Forward Work Programme
Pancontinental has commenced gathering data over the new
area and will remap existing seismic and map prospects and
leads for further work.
It is intended that 2D and 3D seismic data will be acquired
over several prospects and drilling will be considered on the
best of these.
MALTA
Area 5 and Block 3 within Area 4, offshore
Mediterranean Sea
Pancontinental 80%
Area 5 and Block 3 within Area 4 offshore Malta are held
by Pancontinental (80%) and Sun Resources NL (20%). The
combined project area is approximately 14,800 sq km in
water depths from 100 to 400 metres. The main prospects are
in the 200 to 300 metre range. Activities on the Exploration
Study Areas (“ESA”) have been suspended since September
2005 under force majeure provisions due to border issues
between Malta, Libya and Tunisia.
A number of very large Cretaceous and Tertiary carbonate
‘reef’ leads and prospects have been identified, similar
to those hosting large producing oil and gas fields in
neighbouring Tunisian and Libyan waters.
In early 2009 operatorship reverted to Pancontinental as
Anadarko International Energy Company, who farmed in
three years previously, withdrew from the permit due to
the lack of progress on the border issue. Since resuming
operatorship, Pancontinental has been engaged
in
communication with the Oil Exploration Department of the
Ministry of Resources and Rural Affairs of Malta (“OED”)
to refresh the licence title and allow exploration of the area
to recommence at some time in the future when the border
issues have been resolved.
In late May 2009, without any prior warning, Pancontinental
received a letter from the OED claiming that the ESA expired
in August 2008. Pancontinental has written to the OED
disputing the expiry of the ESA and seeking clarification
of the reasons for the OED’s claim and reserving its rights
and potential remedies. The OED responded in July 2009 by
stating that a July 2008 request via then Operator Anadarko
for the grant of a 2 year extension to the term of the ESAs
was not acceded to.
Pancontinental has sought legal advice from a firm of
Maltese lawyers and had meetings during the year with the
Maltese authorities. The company intends to proceed with
maintaining its rights under the agreements and resuming
exploration over the licence area.
14
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Review of Operations
MALTA AREA 5 & AREA 4 – BLOCK 3
MOROCCO
Mediterranee Est Block, offshore Mediterranean
Sea
Pancontinental 100%- Application
The Joint Venture is awaiting the formal issue of the
Reconnaissance Licence by the Minister. There has been
no progress of late and the Company believes that there is
a low probability of any advance in the foreseeable future;
consequently the Company will not report on this project
again until there is significant progress (if any).
AUSTRALIA
EP 104 & RL1, ONSHORE CANNING BASIN,
WESTERN AUSTRALIA
Pancontinental 10%
Pancontinental holds a 10% interest in both licence EP 104
and an extension over Retention Licence R1 in the Canning
Basin in north-western Western Australia. The Canning
Basin has a number of recognised petroleum systems, yet
it remains relatively under-explored.
The RL1 area has been excised from the EP 104 exploration
area to allow retention of the Point Torment gas discovery
and the Stokes Bay 1 area. RL1 was renewed by the
Minister of Mines and Petroleum of Western Australia for
a period of five years from 8 November 2010.
The EP 104 and RL1 areas are on-trend to the Blina and
other nearby oil fields and have similar exploration plays,
exploration targets and petroleum systems. The West Kora
oil discovery is 18 kilometres southeast and the nearest gas
discovery, Point Torment-1, is 4.5 kilometres southeast of
the Company’s current focus at Stokes Bay-1.
Stokes Bay-1 was drilled in 2007 to test any updip
continuation of the Point Torment gas discovery. Stokes
Bay 1 lost circulation of drilling mud into cavernous and
vugular porosity in the top 40 to 45 metres of the Nullara
Limestone. During operations to control the lost circulation
Stokes Bay-1 flowed back mud intermittently.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
15
Review of Operations
AUSTRALIA – EP 104 / R1 & L15
In September / October 2008 further testing attempted to lift
sufficient lost drilling mud to induce the flow of formation
fluid (oil, gas or water) from the Nullara. Some gas was
seen at the wellhead but again no definitive formation fluid
was recovered.
After a further testing phase, Pancontinental announced on
12 November 2010 that a coiled tubing unit (CTU) had
tested the Stokes Bay-1 well and had recovered saline
water interpreted to be formation fluid. The CTU injected
nitrogen into the tubing and casing already inside the well
bore to lift drilling mud remaining in the well bore and
from the Nullara Limestone Formation at the bottom of the
well. The coiled tubing unit commenced nitrogen lifting
operations on 11 November and these were completed on
the 14 November. The coiled tubing was released and the
well was left suspended.
The operations recovered some 2,760 barrels of interpreted
reservoir fluid consisting of water of high salinity (NaCl
17% compared to local sea water of 7% NaCl) that is
interpreted to be reservoir fluid and no hydrocarbons were
recovered.
AUSTRALIA
L15, ONSHORE CANNING BASIN, WESTERN
AUSTRALIA
Pancontinental 12%
Pancontinental and several co-venturers were granted
Production Licence L15 over the West Kora-1 oil discovery
well in the onshore Canning Basin of Western Australia in
April 2010. West Kora-1 was drilled in 1984 to a depth of
2606 metres and produced some 20,000 Barrels of oil with an
initial rate of 350 BOPD.
The L15 covers two graticular blocks “6054 and 6126” and
runs for 21 years from 1 April 2010.
While drilling West Kora-1 the Carboniferous aged Anderson
Formation demonstrated a number of oil shows. An extended
production test over the interval 1735-1751 metres in 1982
produced some 20,000 barrels of oil. The initial production
rate was 350 BOPD with 30% water cut, declining to 15% oil
cut / 85% water cut.
The Joint Venture is now considering the next steps in
exploring the licence areas.
In 1992, the interval 1693 to 1696 (the “1700 metre oil sand”)
was also perforated. A through-tubing bridge plug failed to
16
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Review of Operations
isolate water production in the well, considered to be likely
from the lower perforated intervals.
Additional Extended Production Tests were conducted in
1992 and 1997 / 1998. The results demonstrated the need
for a workover to isolate water production and reinstate
oil production and to determine the oil productivity and
reserves.
West Kora-1 remains as a completed oil well which is planned
to be placed back on production to the existing West Kora Tank
Farm production facility following a successful workover and
upgrade of the Tank Farm. The aim of the joint venture is to
re-establish cash flow from oil production from West Kora-
1 and to exploit any further oil potential in the surrounding
area.
The L 15 participants are considering a West Kora -1
workover programme. With improvements in technology and
significantly higher oil prices, revived production from West
Kora-1 could be feasible.
AUSTRALIA
The EP 110 and EP 424 exploration areas lie in the Flinders
Fault Zone trend of the Barrow Sub- Basin near the Roller,
Saladin and Skate oil fields and the onshore Tubridgi gas
field.
EP 110 is operated in conjunction with EP- 424. The parties
in EP-110 have identical equities to those in permit EP-424.
The Baniyas prospect is on-trend to the Roller, Saladin
and Skate oil fields. The crest of the Baniyas feature has
anomalous seismic amplitudes, consistent with the presence
of gas-over-oil or gas-over-water, although it is possible that
other factors may be responsible for the anomaly.
Commercial negotiations, conducted over several months,
to gain access to the entire Baniyas prospect have reached
a point where the operator is of the view that there is little
likelihood that the adjoining acreage can be secured.
Following a technical review of the Baniyas potential and
because of the absence of success in extending Joint Venture
access over all of the Baniyas Prospect, it was decided to
consider selling or otherwise disposing of the licences.
EP 424 and 110, offshore / onshore Carnarvon
Basin, Western Australia
AUSTRALIA
Pancontinental 38.462%
The Carnarvon Basin has yielded numerous oil and gas
discoveries over many years, commencing with the discovery
of the Barrow Island oil field in 1964.
AUSTRALIA – EP 424 & EP 110
EP 406, offshore Southern Carnarvon Basin
Pancontinental 5%
Pancontinental has an agreement with Victoria Petroleum
NL (“Victoria”) that provides for Victoria to earn a 95%
interest in the permit by drilling one well.
The licence is subject to a Marine Park and World Heritage
listing and activities are currently suspended. Exploration
will commence after renewal of the permit and receipt of the
necessary Environment Protection Authority approvals.
NEW VENTURES
Pancontinental continuously reviews new opportunities in
Australia and internationally. During the year a number of
new opportunities were assessed.
Pancontinental succeed in being awarded new offshore
Kenyan licences L10A and L10B (15%) and offshore
Namibian licence EL 0037 (15%) during the year.
A strategic alliance was formed with Jacka Petroleum
to examine other prospective opportunities elsewhere in
Africa.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
17
Directors’ Report
Your directors submit their report for the year ended 30 June 2011.
DIRECTORS
The names and details of the company’s directors in office during the financial year and until the date of this report are as follows. Directors were
in office for this entire period unless otherwise stated.
Names,
responsibilities
qualifications,
experience
and
special
Mr Henry David Kennedy MA
(Geology), SEG, PESA, AIG
(Non-Executive Chairman)
Mr Kennedy has had a long association
with Australian and New Zealand resource
companies and as a technical director has
been instrumental in the formation and/or
development of a number of successful listed companies. During
his term as executive director, these companies were involved in
discovery of the Tubridgi gas field, South Pepper, North Herald
and Chervil oil fields in Western Australia and the Kupe South
and Rua oil/gas condensate fields in New Zealand. Mr Kennedy
is currently a non-executive director of Norwest Energy NL (since
April 1997).
Mr Roy Barry Rushworth BSc
(Executive Director, Chief Executive
Officer)
Mr Rushworth has more than twenty five
years experience in petroleum exploration.
He is a graduate of Sydney University, with
a Bachelor of Science Degree in Geology
and Marine Sciences. Commencing with positions in exploration
operations, his career then extended to a period as Chief Geologist
and subsequently Exploration Manager for an Australian listed
company. A number of oil and gas discoveries were made by
the company during that time. More recently, as the General
Manager and Director of Afrex Limited, he was responsible
for acquiring international new venture opportunities for Afrex
Limited and its then co-venturer Pancontinental Oil & Gas NL.
In this position he identified and negotiated projects in Malta,
Kenya and Morocco. Following the merger of Afrex Limited
with Pancontinental in August 2005, he accepted the position of
Director - New Ventures for Pancontinental and is now the Chief
Executive Officer of the company.
Mr Ernest Anthony Myers CPA
(Executive Finance Director)
Mr Myers has over 30 years experience
in the resources industry. Mr Myers is an
accountant (CPA) who has held senior
management and executive roles within
listed companies.
a number of ASX
Mr Myers joined Pancontinental in March 2004 as Company
Secretary and was appointed Finance Director in January 2009. He
brings corporate and operational experience in a variety of fields
including project development, feasibility studies and both equity
and debt financing. Prior to his appointment with Pancontinental,
Mr Myers was CFO and Company Secretary of Dragon Mining
Limited for a period of six years during its transition from an
exploration company to a gold producer in Sweden. Mr Myers
has extensive experience in exploration and operational issues,
particularly in Kenya, Tanzania, Namibia and Eritrea. Mr Myers
has been an alternate director of East Africa Resources Limited
since June 2010.
Mr Anthony Robert Frederick Maslin
BBus
(Independent Non-Executive Director)
Mr Maslin is a stockbroker with corporate
experience
in both management and
promotion, along with an extensive
understanding of financial markets. Mr
Maslin has been instrumental in the capital raisings and promotion
of several resource development companies. Mr Maslin is also a
director of Buxton Resources Ltd (since November 2010).
Mr Ian Raymond (Inky) Cornelius
(Independent Non-Executive Director)
(Passed away 14 July 2010)
Mr Cornelius worked at the Western Australian Mines Department,
then as Mining Titles Officer of a multi national mining corporation
before going into business as a tenement consultant. He had many
years experience in the resources industry and has had great success
in the exploitation of several mineral deposits. Mr Cornelius was
also a director of East Africa Resources Ltd (since October 2003),
Montezuma Mining Company Limited (since August 2006) and
non-executive director of Alkane Exploration Ltd (since July
2006). On 14 July 2010, the company announced the sad passing
away of director Ian Raymond (Inky) Cornelius.
COMPANy SECRETARy
Mrs Vesna Petrovic BComm, CPA
Mrs Petrovic is a Certified Practicing
Accountant with 10 years’ experience in
the resources sector and has previously
held positions with numerous publicly
listed entities. In particular, Mrs Petrovic
has significant experience with companies
involved in Africa. Mrs Petrovic holds a Bachelor of Commerce,
Major in Accounting and Business Law and has completed
the Graduate Diploma in Applied Corporate Governance from
Chartered Secretaries Australia Ltd.
18
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Directors’ Report
The relevant interest of each director in the shares and options of the company as at 30 June 2011 is as follows:
Directors’ Interests
Henry David Kennedy
Roy Barry Rushworth
Ian Raymond (Inky) Cornelius (passed away 14 July 2010)
Anthony Robert Frederick Maslin
Ernest Anthony Myers
EARNINGS PER SHARE
Basic earnings (loss) per share
Diluted earnings (loss) per share
CORPORATE INFORMATION
Ordinary Shares
155,301,968
34,764,181
-
-
-
Options over Ordinary
Shares
1,500,000
3,000,000
1,500,000
-
1,000,000
Cents
(0.16)
(0.16)
Corporate structure
Pancontinental Oil & Gas NL is a no liability company incorporated and domiciled in Australia.
Nature of operations and principal activities
The principal activities during the year of entities within the consolidated entity were exploration for oil and gas.
There have been no significant changes in the nature of those activities during the year.
Employees
The consolidated entity had no employees as at 30 June 2011, (2010: no employees). The consolidated entity employs the services of
specialised consultants where and when needed.
OPERATING AND FINANCIAL REVIEW
Review of Operations
Offshore Kenya, the L8 joint venture (Pancontinental 15% after farmout) received 3D seismic report results which confirmed the oil and gas
potential of the giant Mbawa Prospect. Tullow Kenya B.V. signed an agreement to farmin to Pancontinental’s interest and Apache
Corporation also signed an agreement to farmin to joint venture partner Origin Energy’s interest.
In Kenya licence area L6 (Pancontinental 40%), focus shifted to offshore prospects and leads. A Farminee is sought for 3D seismic and
drilling.
Two new exploration licences offshore Kenya, L10A and L10B covering approximately 10,000 sq km, were awarded to Pancontinental and
its co-venturers, BG Group plc, Premier Oil Investments Limited and Cove Energy plc (Pancontinental 15%).
In Namibia, Pancontinental was awarded Exploration Licence EL 0037 and a corresponding Petroleum Agreement over a large northern area
of 17,000 sq km offshore Walvis Basin.
Offshore Carnarvon Basin (WA) the EP 424 / EP 110 joint venture continued efforts to acquire additional acreage over an extension of the
Baniyas Prospect (Pancontinental 38.462 %).
In the EP104 area in the Canning Basin (onshore WA, Pancontinental 10%) the joint venture will undertake an examination of the
prospectivity of the licence areas and plan the future exploration programme.
Elsewhere in the Canning Basin, the L15 joint venture (Pancontinental 12%) over the West Kora oil field commenced planning for the
rehabilitation of the existing production facilities.
The company continued negotiations in Malta with the aim of Pancontinental recommencing offshore exploration activities.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
19
Directors’ Report
Group Overview
Pancontinental Oil and Gas NL was incorporated in 1985 and listed on the Australian Securities Exchange in 1986.
Performance Indicators
The board closely monitors the group’s operating plans, financial budget and overall performance.
Dynamics of the Business
The company continues to develop its International and Australian acreage utilising the skills and experience of the existing operators.
Whilst the company is committed to further developing existing projects, emerging opportunities are reviewed on a timely basis.
Risk Management
The group takes a proactive approach to risk management. The board is responsible for ensuring that risks and opportunities are identified
on a timely basis and that the group's objectives and activities are aligned with the risks and opportunities identified by the board.
The group believes that it is crucial for all board members to be a part of this process, and as such the board has not established a separate
risk management committee. The board has a number of mechanisms in place to ensure that its objectives and activities are aligned with
the risks identified. These include the following:
Implementation of board approved operating plans and cash flow budgets and board monitoring of progress against these budgets.
Reports on specific business risks, including such matters as environmental issues and concerns.
The group has advised each director, manager and consultant that they must comply with a set of ethical standards maintaining
appropriate core company values and objectives. Such standards ensure shareholder value is delivered and maintained. Standards
cover legal compliance, conflict resolution, privileged information and fair dealing.
The board provides shareholders with information using a comprehensive Continuous Disclosure Policy which includes identifying
matters which have a material effect on the underlying security price. ASX announcements, the web page of the company and other
media resources are used to convey such information. The board encourages full participation by shareholders at the AGM and
shareholders are requested to vote on board and executive remuneration aggregates as well as the Employee Incentive Scheme.
20
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Directors’ Report
Operating Results for the Year
Summarised operating results are as follows:
Non-segment and unallocated revenues and results
Consolidated entity revenues and results from ordinary activities before income tax expense
Revenues
$
89,526
89,526
2011
Results
$
(967,031)
(967,031)
Shareholder Returns
The group is in the exploration phase and so returns to shareholders are primarily measured through capital growth.
Basic earning per share (cents)
Investments for Future Performance
2011
(0.16)
2010
(0.32)
2009
(1.26)
2008
(0.36)
2007
(0.6)
2006
(0.5)
The group continues to evaluate opportunities utilising in-house commercial expertise.
Review of Financial Condition
Capital Structure
The group has a sound capital structure from which to continue its development programmes. No options were issued to directors during
the year.
Treasury policy
The board has not considered it necessary to establish a separate treasury function because of the size and scope of the group's activities.
Liquidity and Funding
The group has sufficient liquidity and funding to continue operations into the foreseeable future.
All operating plans and budgets are approved by the board and progress is reviewed continuously with reference to the approved plan
and budget.
Statement of Compliance
The above report is based on the guidelines in The Group of 100 Incorporated publication Guide to the Review of Operations and Financial
Condition.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
No significant changes in the state of affairs of the company occurred during the financial year.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 5 July 2011, Pancontinental announced that the Ministry of Mines and Energy of Namibia had signed a Petroleum Agreement (“PA”)
and granted an Exploration Licence (“EL”) to Pancontinental over a large area offshore Northern Namibia. The PA and EL cover 17,295
sq km over prospective trends in the Walvis Basin. Pancontinental holds 85% and is Operator under a Joint Venture Agreement with
Namibian co-venturer Paragon Holdings (Pty) Ltd (15%).
Apart from the above, no matters or circumstances have arisen since the end of the financial year which significantly affected or may
significantly affect the operations of the company, the results of those operations, or the state of affairs of the company in future financial
years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The economic entity expects to maintain the present status and level of operations and hence there are no likely developments in the
entity's operations.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
21
Directors’ Report
ENVIRONMENTAL REGULATION AND PERFORMANCE
The company's operations are not regulated by a particular environmental regulation under a law of the Commonwealth or of a State or
Territory.
SHARE OPTIONS
Unissued shares
At the date of this report there were 13,750,000 unissued ordinary shares under options. Refer to the notes for further details on the options
outstanding.
Shares issued as a result of the exercise of Options
No options were exercised and no shares were issued as a result during the year.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Since the end of the previous financial year the company has paid insurance premiums in respect of directors' and officers' liability and
legal expenses insurance contracts. The directors have not included details of the nature of the liabilities covered or the amount of the
premium paid in respect of the directors and officers and legal expenses insurance contracts as such disclosure is prohibited under the terms
of the contract. The premiums were paid in respect of the following officers of the company and its controlled entities:
Mr HD Kennedy, Mr RB Rushworth, Mr IR Cornelius, Mr ARF Maslin, Mr EA Myers and Mrs V Petrovic.
22
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Directors’ Report
REMUNERATION REPORT
This report outlines the remuneration arrangements in place for directors and executives of Pancontinental Oil & Gas NL (“the company”).
Remuneration philosophy
A description of the remuneration structures in place is as follows: The non-executive directors received a fixed fee for their services.
They do not receive performance based remuneration. The chief executive officer received a fixed fee for his respective executive services
(with no bonus or other performance-based remuneration), and a separate fixed fee for his services as a director. Directors do not receive
any termination or retirement benefits.
Remuneration committee
The full board carries out the role of the remuneration committee.
Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive director and senior manager remuneration is separate
and distinct.
Non-executive director remuneration
Objective
The board seeks to set aggregate remuneration at a level which provides the company with the ability to attract and retain directors of the
highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from
time to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The
latest determination was at the Annual General Meeting held on 29 November 2007 when shareholders approved an aggregate
remuneration of $400,000 per year. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which
it is apportioned amongst directors is reviewed annually. The board considers advice from external consultants as well as the fees paid to
non-executive directors of comparable companies when undertaking the annual review process. The non-executive directors of the
company can participate in the Employee Option Incentive Plan with shareholder approval. The remuneration of executive and
non-executive directors for the period ending 30 June 2011 is detailed in Table 1 of this report.
Senior manager and executive director remuneration
Objective
The board seeks to set aggregate remuneration at a level which provides the company with the ability to attract and retain executives of the
highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
In determining the level and make up of executive remuneration, the board takes independent advice from external consultants when
necessary.
Fixed remuneration
Objective
The level of fixed remuneration is set so as to provide a base level which is both appropriate to the position and is competitive in the market.
Structure
Fixed primary remuneration is paid on a cash basis and there are no fringe benefits or other costs incurred by the company.
Company performance
Company performance is reflected in the movement in the company's share price over time. As the company is in an exploration phase,
returns to shareholders will primarily come through share price appreciation. The board’s strategy in achieving this aim is to acquire early
stage projects which can attract quality joint venture partners.
The company has developed skills in the acquisition of projects and also built strategic alliances with other companies to further develop its
project portfolio.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
23
Directors’ Report
Table 1: Director remuneration for the year ended 30 June 2011
Primary benefits
Salary & Fees Cash STI
Post Employment
Equity
Total
Superannuation Options (Issued)
Value of options as
proportion of
Revenue
Henry David Kennedy
(Non-Executive Chairman)
2011
2010
Roy Barry Rushworth
(Executive Director,
Chief Executive Officer)
2011
2010
Ian Raymond (Inky) Cornelius
(Non-Executive Director)
(Passed away 14 July 2010)
2011
2010
Anthony Robert Frederick Maslin
(Non-Executive Director)
2011
2010
Ernest Anthony Myers
(Executive Finance Director)
2011
2010
Total Remuneration
50,000
50,003
415,833
344,500
2,000
46,500
25,806
-
48,000
48,000
541,639
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
50,003
415,833
344.500
2,000
46,500
25,806
-
48,000
48,000
541,639
-
-
-
-
-
-
-
-
-
-
-
Table 2: Options granted as part of remuneration for the year ended 30 June 2011
(in accordance with the Employee Incentive Scheme)
Henry David Kennedy
Roy Barry Rushworth
Ian Raymond (Inky) Cornelius
Anthony Robert Frederick Maslin
Ernest Anthony Myers
Total Options Issued
Issued
-
-
-
-
-
-
From 1 July 2003, options granted as part of director and management remuneration have been valued using a Black-Scholes option pricing
model, in which the option exercise price, the current level and volatility of the underlying share price, the risk-free interest rate, expected
dividends on the underlying shares, the current market price of the underlying shares and the expected life of the options are taken into
account. See following table for further details. No options were granted to directors during the year.
24
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Directors’ Report
Fair values of options:
The fair value of each option is estimated on the date of grant using a Black-Scholes option pricing model.
Expected volatility
Risk-free interest rate
Expected life of option
2011
2010
-
-
-
-
-
-
2009
-
-
-
2008
113%
6.42%
5 years
2007
112%
5.75%
5 years
2006
77.9%
5.32%
5 years
Number of options
9,250,000
4,500,000
Grant date
29 Nov 06
29 Nov 07
Vesting date
28 May 07
28 May 08
Weighted average fair value
0.06
0.05
END OF REMUNERATION REPORT
DIRECTORS' MEETINGS
The numbers of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings
attended by each director were as follows:
Number of meetings held:
Number of meetings attended:
Henry David Kennedy
Roy Barry Rushworth
Ian Raymond (Inky) Cornelius
Anthony Robert Frederick Maslin
Ernest Anthony Myers
Directors'
Meetings
4
4
4
-
1
4
Notes
The directors are of the opinion that it is often more efficient to deal with matters by circular resolutions than by board meetings, and 7
matters were dealt with in such a manner during the year.
ROUNDING
The amounts contained in this report and in the financial report have been rounded to the nearest $1 (where rounding is applicable) under
the option available to the company under ASIC Class Order 98/0100. The company is an entity to which the Class Order applies.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor independence declaration is set out on the following page and reviews part of the Directors’ Report for the year ended 30
June 2011.
NON-AUDIT SERVICES
Rothsay did not receive any amounts for the provision of non-audit services during the year, although a total of $4,000 was accrued for
taxation services.
Signed in accordance with a resolution of the Directors.
Ernest Anthony Myers
Director
Perth 29 September 2011
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
25
Auditor Independence
Auditor Independence
AUDITOR INDEPENDENCE
The directors received the following declaration from the auditor of Pancontinental Oil & Gas NL:
Auditor's Independence Declaration to the Directors of Pancontinental Oil & Gas NL
In accordance with Section 307C of the Corporations Act 2001 (the “Act”) I hereby declare that to the best of my knowledge and belief
there have been:
i)
ii)
no contraventions of the auditor independence requirements of the Act in relation to the audit of the 30 June 2011 annual
financial statements; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Mr Graham Swan
Lead Auditor
29 September 2011
26
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Corporate Governance Statement
Corporate Governance Statement
In accordance with the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations ("ASX Principles
and Recommendations")1, Pancontinental Oil & Gas NL ("the company") has made it a priority to adopt systems of control and
accountability as the basis for the administration of corporate governance. Some of these policies and procedures are summarised in this
statement. Commensurate with the spirit of the ASX Principles and Recommendations, the company has followed each recommendation
where the board has considered the recommendation to be an appropriate benchmark for corporate governance practices, taking into
account factors such as the size of the company and the board, resources available and activities of the company. Where, after due
consideration, the company's corporate governance practices depart from the ASX Principles and Recommendations, the board has offered
full disclosure of the nature of and reason for the adoption of its own practice.
Further information about the company's corporate governance practices is set out on the company's website at www.pancon.com.au. In
accordance with the ASX Principles and Recommendations, information published on the company's website includes charters (for the
board and its committees), the company's code of conduct and other policies and procedures relating to the board and its responsibilities.
EXPLANATIONS FOR DEPARTURES FROM BEST PRACTICE RECOMMENDATIONS
During the company's 2010/2011 financial year ("reporting period") the company has followed each of the ASX Principles and
Recommendations, other than in relation to the matters specified below.
Principle 2
Recommendation 2.1: A majority of the board should be independent directors
Notification of Departure:
Only one director was considered
Mr Cornelius until 14 July 2010. After Mr Cornelius’ sad passing, Mr Maslin was considered to be the only independent director.
the year ended 30 June 2011 – Non-Executive Director
independent during
to be
Explanation for Departure:
Given the size and scope of the company's operations the board considers that it is appropriately structured to discharge its duties in a
manner that is in the best interests of the company. The board believes its current composition is in line with the long term interests of
shareholders. Furthermore, mechanisms are in place so that if a director considers it necessary, they may obtain independent professional
advice. The board considers independence, amongst other things, when recommending new directors to the board.
Principle 2
Recommendation 2.2: The chair should be an independent director
Notification of Departure
The chair is not considered to be independent.
Explanation for Departure
Mr Kennedy is not independent by virtue of his substantial shareholding in the company. However, the board considers that Mr Kennedy's
interests are aligned with the long term interests of shareholders. Given Mr Kennedy's extensive experience and qualifications, the board
believes Mr Kennedy is the most appropriate director to carry out the role of chair.
1 A copy of the ASX Principles and Recommendations is set out on the company’s website under the Section entitled "Corporate Governance".
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
27
Corporate Governance Statement
Principle 2
Recommendation 2.4: The board should establish a nomination committee
Notification of Departure:
The full board fulfils the role of a nomination committee.
Explanation for Departure:
The full board considers those matters that would usually be the responsibility of a nomination committee. The board considers that no
efficiencies or other benefits would be gained by establishing a separate nomination committee. The board has adopted a nomination
committee charter, which it applies when convening as the nomination committee.
Principle 4
Recommendation 4.1: The board should establish an audit committee
Recommendation 4.2: Structure of the audit committee
Notification of Departure:
The full board fulfils the role of an audit committee.
Explanation for Departure:
The composition of the board is not suitable for the formation of a separate audit committee in accordance with the recommendation.
Further, the independent director does not possess the requisite financial expertise recommended in an audit committee. The board has
adopted an audit committee charter to assist with its function as an audit committee. The audit committee charter provides that independent
directors may meet with the external auditor.
Principle 7
Recommendation 7.2: Implement, manage and report on risk management system
Notification of Departure:
The board has not received a formal documented report from management on the effectiveness of their management of the company’s
material business risks other than verbal updates at board meetings.
Explanation for Departure:
Although a formal report has not been presented to the board, the board has encouraged an increased focus on risk management
implementation and reporting by completion of a risk questionnaire and risk register. These documents form the foundation for reporting
on the company’s risk profile which is vital in developing and strengthening the company’s risk management policies.
Principle 8
Recommendation 8.1: The board should establish a remuneration committee
Recommendation 8.2: Structure of the remuneration committee
Notification of Departure:
The board fulfils the function of a remuneration committee.
Explanation for Departure:
Given the size and composition of the board, it is not practicable that a separate committee be formed. To assist it to carry out its function
in relation to remuneration matters, the board has adopted a remuneration committee charter.
28
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Corporate Governance Statement
COMMITTEE MEETINGS
Due to the size of the current board, the functions of the Nomination, Audit and Remuneration Committees were carried out by the full
board during the financial year. As such, no separate meetings were held for the Nomination and Remuneration Committees. The board
agenda incorporated these items and appropriate discussions were held on each issue at the board meetings.
Details of each of the director's qualifications are set out in the Directors’ Report. All of the directors have substantial industry experience
and consider themselves to be financially literate. Mr Myers is a Certified Practising Accountant and therefore meets the tests of financial
expertise.
OTHER
Skills, Experience, Expertise and term of office of each Director
A profile of each director containing the skills, experience, expertise and term of office of each director is set out in the Directors' Report.
Identification of Independent Directors
In considering the independence of directors, the board refers to the criteria for independence as set out in Box 2.1 of the ASX Principles
and Recommendations ("Independence Criteria"). To the extent that it is necessary for the board to consider issues of materiality, the board
refers to the thresholds for qualitative and quantitative materiality as adopted by the board and contained in the board charter, which is
disclosed in full on the company’s website.
Applying the Independence Criteria, the independent director of the company for the year ended 30 June 2011 was Mr Cornelius until his
passing on 14 July 2010 and then Mr Maslin was appointed and became the independent director.
Corporate Reporting
ASX Principle 7.3 requires the board to disclose whether it has received assurance from the Chief Executive Officer (or equivalent) and the
Chief Financial Officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on
a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to
financial reporting risks. The board confirms that such assurance has been received.
Statement concerning availability of Independent Professional Advice
If a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his/her office as a
director, then, provided the director first obtains approval for incurring such expense from the chair, the company will pay the reasonable
expenses associated with obtaining such advice.
Confirmation of whether performance Evaluation of the Board and its members has taken place and how it was conducted
During the reporting period a formal evaluation of the board and its members was not carried out as it was not considered to be a beneficial
procedure given the size and composition of the board and the nature of the company's operations. However, the composition of the board
and its suitability to carry out the company's objectives is discussed on an as-required basis during regular meetings of the board and any
adjustments are made accordingly.
Existence and Terms of any Schemes for Retirement Benefits for Executive and Non-Executive Directors
There are no termination or retirement benefits for non-executive directors.
Directors’ Terms in Office
Name
Henry David Kennedy
Roy Barry Rushworth
Ian Raymond Cornelius
Term in office
12 years
6 years
18 years
Ernest Anthony Myers
2 years
For additional details regarding board appointments, please refer to the Pancontinental website.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
29
Corporate Governance Statement
Diversity – Board Composition
The mix of skills and diversity for which the company is looking to achieve in membership of the board is one that is as diverse as
practicable given the size and scope of the company’s operations. The company has adopted a Diversity Policy which is available on the
company’s website under the Corporate Governance section.
Diversity – Measurable Objectives
The company’s primary objectives with regard to diversity are as follows:
the company’s composition of board, executive, management and employees to be as diverse as practicable; and
to provide equal opportunities for all positions within the company and continue the company’s commitment to employment
based on merit.
Primary objectives set by the company with regard to diversity have been met, as described below:
blend of skills – wide range of backgrounds; geology, petroleum exploration, finance and corporate experience;
cultural backgrounds – Australian, European and American;
gender – both male and female members; and
age – the age range spans over 40 years.
The above points relate to the composition of the board, as the company does not have any employees.
Diversity – Annual Reporting
The company’s annual reporting on the percentage of females in the organisation is as follows:
Employees
% Female
N/A [no employees]
Executives & Board Members
20%
30
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Statement of Comprehensive Income
Statement of Comprehensive Income
YEAR ENDED 30 JUNE 2011
Notes
Revenue from operating activities
Interest received
Other
Total revenues from operating activities
Depreciation and amortisation expenses
Salaries, fees and benefits
Audit fees
Generative exploration expenditure and write off
Annual report costs
ASX fees
Administration, accounting and secretarial fees
Insurance
Legal fees
Share registry costs
Rent and outgoings
Travel
Other revenues and expenses
Provision for loss on investments
Profit/(Loss) before Income Tax Expense
Income Tax Expense
Profit/(Loss) for the Period
Other Comprehensive Income/(Loss)
Other comprehensive income
Other Comprehensive Income/(Loss) for the Period, Net
of Income Tax
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE
PERIOD
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2, 6
2
3
10
15
CONSOLIDATED
2010
$
2011
$
89,526
-
89,526
(1,183)
(322,999)
(45,500)
(58,387)
(17,291)
(35,435)
(240,404)
(22,167)
(55,425)
(20,351)
(92,380)
(100,998)
(44,037)
-
(967,031)
-
(967,031)
-
-
33,070
8,782
41,852
(1,633)
(380,939)
(35,500)
(65,542)
(16,945)
(23,857)
(218,441)
(22,420)
(13,493)
(17,400)
(103,417)
(45,968)
(49,537)
(833,414)
(1,786,654)
-
(1,786,654)
-
-
(967,031)
(1,786,654)
(0.16)
(0.16)
(0.32)
(0.32)
The Statement of Comprehensive Income is to be read in conjunction with the Notes to the Financial Statements.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
31
Statement of Financial Position
Statement of Financial Position
AT 30 JUNE 2011
Notes
CURRENT ASSETS
Cash assets
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Deferred exploration, evaluation and development costs
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Parent entity interest
Contributed equity
Reserves
Accumulated losses
Total parent entity interest in equity
TOTAL EQUITY
4
6
7
8
9a
10
10
CONSOLIDATED
2011
2010
$
$
5,710,905
44,028
5,754,933
1,639,859
19,318
1,659,177
2,404
9,879,712
9,882,116
2,280
10,129,621
10,131,901
15,637,049
11,791,078
187,740
187,740
106,993
106,993
187,740
106,993
15,449,309
11,684,085
38,166,253
764,258
(23,481,202)
15,449,309
15,449,309
33,433,998
1,187,215
(22,937,128)
11,684,085
11,684,085
The Statement of Financial Position is to be read in conjunction with the Notes to the Financial Statements.
32
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Statement of Changes in Equity
Statement of Changes in Equity
AT 30 JUNE 2011
Consolidated
Share Capital
Balance at 1 July 2010
Profit or loss
Other comprehensive income/(loss)
Shares issued (net of costs)
Share options
Balance at 30 June 2011
Balance at 1 July 2009
Profit or loss
Shares issued (net of costs)
Shares on acquisition
Share options
Balance at 30 June 2010
$
33,433,998
-
-
4,732,255
38,166,253
30,361,641
-
2,238,943
833,414
-
33,433,998
Retained
Earnings
$
(22,937,128)
(967,031)
-
-
422,957
(23,481,202)
(21,219,786)
(1,786,654)
-
-
69,312
(22,937,128)
Option
Reserve
$
1,187,215
-
-
-
(422,957)
764,258
1,256,527
-
-
-
(69,312)
1,187,215
Total
Equity
$
11,684,085
(967,031)
-
4,732,255
-
15,449,309
10,398,382
(1,786,654)
2,238,943
833,414
-
11,684,085
The above Statement of Changes in Equity is to be read in conjunction with the Notes to the Financial Statements.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
33
Statement of Cash Flows
Statement of Cash Flows
YEAR ENDED 30 JUNE 2011
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Sundry income – reimbursement of exploration expenditure
Expenditure on exploration interests
NET CASH FLOWS FROM/(USED IN)
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
NET CASH FLOWS FROM/(USED IN)
INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares
Share issue costs
NET CASH FLOWS FROM/(USED IN)
FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH HELD
Add opening cash brought forward
Effects of exchange rate changes
CLOSING CASH CARRIED FORWARD
11(a)
6
11(b)
CONSOLIDATED
2010
2011
$
$
(1,044,789)
89,526
1,083,151
(789,097)
(1,043,732)
38,805
283,995
(597,838)
(661,209)
(1,318,770)
-
-
-
-
5,000,000
(267,745)
2,446,575
(208,831)
4,732,255
2,237,744
4,071,046
1,639,859
-
5,710,905
918,974
720,804
81
1,639,859
The above Statement of Cash Flows is to be read in conjunction with the Notes to the Financial Statements.
34
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Notes to the Financial Statements
Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This financial report was authorised for issue by the directors on 29 September 2011.
Statement of Compliance
This financial report is a general purpose financial report, which has been prepared in accordance with Australian Accounting Standards
(AASBs), adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. International Financial
Reporting Standards (IFRSs) form the basis of AASBs adopted by the AASB, and for the purpose of this report are called Australian
equivalents to IRFS (AIFRS) to distinguish from previous Australian GAAP. The financial report complies with IFRSs and
interpretations adopted by the International Accounting Standards Board.
Basis of preparation
The report has been prepared on the basis of historical costs and except where stated does not take into account changing money values
or current valuation of non-current assets. The accounting policies adopted are consistent with those of the previous year. The following
specific accounting policies have been consistently applied, unless otherwise stated.
(a) Income Tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except
to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, and any adjustment to tax payable in respect of prior years.
Deferred tax is provided using the balance sheet liability method, providing for temporary difference between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax asset is recognised only
to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.
(b) Exploration Expenses
Exploration, evaluation and development costs are accumulated in respect of each separate area of interest. Such costs are carried
forward where they are expected to be recouped through successful development and exploitation of the area of interest or alternatively,
by its sale, or where activities in the area of interest have not yet reached a stage to allow a reasonable assessment regarding the existence
of economically recoverable reserves.
(c) Principles of consolidation
The consolidated financial statements are those of the consolidated entity, comprising Pancontinental Oil & Gas NL (the parent entity)
and all entities which Pancontinental Oil & Gas NL controlled from time to time during the year and at balance date.
Information from the financial statements of subsidiaries is included from the date the parent company obtains control until such time as
control ceases. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the
reporting period during which the parent company has control.
All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in
full.
(d) Foreign currencies
Translation of foreign currency transactions
Transactions in foreign currencies of entities within the consolidated entity are converted to local currency at the rate of exchange ruling
at the date of the transaction.
Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising under foreign currency
contracts where the exchange rate for that monetary item is fixed in the contract) are translated using the spot rate at the end of the
financial year.
A monetary item arising under a foreign currency contract outstanding at the reporting date where the exchange rate for the monetary
item is fixed in the contract is translated at the exchange rate fixed in the contract.
All resulting exchange differences arising on settlement or re-statement are recognised as revenues and expenses for the financial year.
Any gains or costs on entering a hedge are deferred and amortised over the life of the contract.
(e) Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market investments readily
convertible to cash within two working days, net of outstanding bank overdrafts.
Interest expense is charged as an expense as it accrues.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
35
Notes to the Financial Statements
(f) Receivables
Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for
doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred.
Receivables from related parties are recognised and carried at the nominal amount due. Bills of exchange and promissory notes are
measured at the lower of cost and net realisable value.
(g) Investments
Investments in controlled entities are carried in the company’s financial statements at the lower of cost and recoverable amount.
(h) Recoverable Amount
The carrying amounts of non-current assets valued on the cost basis, other than exploration and evaluation expenditure carried forward
are reviewed to determine whether they are in excess of their recoverable amount at reporting date. If the carrying amount of a non-
current asset exceeds its recoverable amount, the asset is written down to the lower amount. The write down is expensed in the reporting
period in which it occurs.
(i) Property, plant and equipment
Cost and valuation
Property, plant and equipment is measured at cost.
Depreciation
Depreciation is provided on a straight line basis on all property, plant and equipment.
Major depreciation rates are:
Plant and equipment:
2011
30%
2010
30%
(j) Joint ventures
Interests in the joint venture operations are brought to account by including in the respective classifications, the share of individual assets
employed and share of liabilities and expenses incurred.
In the company’s financial statements, investments in joint venture operations were carried at the lower of cost and recoverable amount.
(k) Going concern
The directors consider that the going concern basis for the consolidated entity is appropriate and recognise that additional funding is
required to ensure the consolidated entity can continue its operations for the twelve month period from the date of this financial report
and to fund the continued development of the consolidated entity’s exploration assets. This basis has been determined after consideration
of the following factors:
The ability to issue additional share capital under the Corporations Act 2001, if required, by a share purchase plan, share placement
or rights issue;
The option of farming out all or part of the consolidated entity’s exploration projects; and
The ability, if required to dispose of interests in exploration and development assets.
Accordingly, the directors believe that the consolidated entity will obtain sufficient cash inflows to enable it to continue as a going
concern and that it is appropriate to adopt that basis of accounting in the preparation of the financial statements.
(l) Payables
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for
goods and services received, whether or not billed to the consolidated entity.
Payables to related parties are carried at the principal amount.
Deferred cash settlements are recognised at the present value of the outstanding consideration payable on the acquisition of an asset
discounted at prevailing commercial borrowing rates.
(m) Provisions
Provisions are recognised when the economic entity has a legal, equitable or constructive obligation to make a future sacrifice of
economic benefits to other entities as a result of past transactions or other past events, it is probable that a future sacrifice of economic
benefits will be required and a reliable estimate can be made of the amount of the obligation.
(n) Contributed equity
Issued and paid up capital is recognised at the fair value of the consideration received by the company.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds
received.
36
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Notes to the Financial Statements
(o) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably
measured. The following specific recognition criteria must also be met before revenue is recognised:
Rendering of Services
Where the contract outcome can be reliably measured, control of the right to be compensated for the services and the stage of completion
can be reliably measured. Stage of completion is measured by reference to the labour hours incurred to date as a percentage of total
estimated labour hours for each contract.
Where the contract outcome cannot be reliably measured, revenue is recognised only to the extent that costs have been incurred.
Interest Revenue
Control of the right to receive the interest payment. Interest revenue is recognised as it accrues, taking into account the effective yield on
the financial asset.
(p) Taxes
Tax-effect accounting is applied using the income statement liability method whereby income tax is regarded as an expense and is
calculated on the accounting profit after allowing for permanent differences. To the extent timing differences occur between the time
items are recognised in the financial statements and when items are taken into account in determining taxable income, the net related
taxation benefit or liability, calculated at current rates, is disclosed as a future income tax benefit or a provision for deferred income tax.
The net future income tax benefit relating to tax losses and timing differences is not carried forward as an asset unless the benefit is
virtually certain of being realised.
Where assets are revalued no provision for potential capital gains tax has been made.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(q) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits
include wages and salaries, annual leave, sick leave and long service leave.
Liabilities arising in respect of wages and salaries, annual leave, sick leave and any other employee benefits expected to be settled within
twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid
when the liability is settled.
Employee benefit expenses and revenues arising in respect of the following categories:
wages and salaries, non-monetary benefits, annual leave, long service leave, sick leave and other leave benefits; and
other types of employee benefits
are charged against profits on a net basis in their respective categories.
(r) Earnings per share
Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and
preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit attributable to members, adjusted for:
costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses;
and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary
shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
(s) Comparatives
Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
37
Notes to the Financial Statements
(t) Financial Instruments
See financial instruments note for compliance notes with AASB 7, financial instruments : disclosures.
(u) New accounting standards and interpretations
The financial report is presented in Australian dollars which is the company’s functional currency. The following standards, amendments
to standards and interpretations have been identified as those which may impact the entity in the period of initial application.
AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2013)
This Standard is applicable retrospectively and includes revised requirements for the classification and measurement of financial
instruments, as well as recognition and derecognition requirements for financial instruments. The Company has not yet determined any
potential impact on the financial statements.
The key changes made to accounting requirements include:
simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;
simplifying the requirements for embedded derivatives;
removing the tainting rules associated with held-to-maturity assets;
removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost;
allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not
held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be
recognised in profit or loss and there is no impairment or recycling on disposal of the instrument;
requiring financial assets to be reclassified where there is a change in an entity’s business model as they are initially classified based
on: (a) the objective of the entity’s business model for managing the financial assets; and (b) the characteristics of the contractual
cash flows; and
requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to
changes in the entity’s own credit risk in other comprehensive income, except when that would create an accounting mismatch. If such a
mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the
credit risk of the liability) in profit or loss.
AASB 124: Related Party Disclosures (applicable for annual reporting periods commencing on or after 1 January 2011)
This Standard removes the requirement for government-related entities to disclose details of all transactions with the government and
other government-related entities and clarifies the definition of a “related party” to remove inconsistencies and simplify the structure of
the Standard. No changes are expected to materially affect the Company.
AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010–2: Amendments to Australian Accounting
Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121,
123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17, 127, 129 & 1052]
(applicable for annual reporting periods commencing on or after 1 July 2013)
AASB 1053 establishes a revised differential financial reporting framework consisting of two tiers of financial reporting requirements for
those entities preparing general purpose financial statements:
Tier 1: Australian Accounting Standards; and
Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.
Tier 2 of the framework comprises the recognition, measurement and presentation requirements of Tier 1, but contains significantly
fewer disclosure requirements.
for-profit private sector entities that have public accountability; and
the Australian Government and state, territory and local governments.
The following entities are required to apply Tier 1 reporting requirements (ie full IFRS):
Since the Company is a for-profit private sector entity that has public accountability, it does not qualify for the reduced disclosure
requirements for Tier 2 entities.
AASB 2010–2 makes amendments to Australian Accounting Standards and Interpretations to give effect to the reduced disclosure
requirements for Tier 2 entities. It achieves this by specifying the disclosure paragraphs that a Tier 2 entity need not comply with as well
as adding specific “RDR” disclosures.
AASB 2009–12: Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and
Interpretations 2, 4, 16, 1039 & 1052] (applicable for annual reporting periods commencing on or after 1 January 2011)
This Standard makes a number of editorial amendments to a range of Australian Accounting Standards and Interpretations, including
amendments to reflect changes made to the text of IFRSs by the IASB. The Standard also amends AASB 8 to require entities to exercise
judgment in assessing whether a government and entities known to be under the control of that government are considered a single
customer for the purposes of certain operating segment disclosures. The amendments are not expected to impact the Company.
38
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Notes to the Financial Statements
AASB 2009–14: Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement [AASB Interpretation 14]
(applicable for annual reporting periods commencing on or after 1 January 2011)
This Standard amends Interpretation 14 to address unintended consequences that can arise from the previous accounting requirements
when an entity prepays future contributions into a defined benefit pension plan.
This Standard is not expected to impact the Company.
AASB 2010–4: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB
7, AASB 101 & AASB 134 and Interpretation 13] (applicable for annual reporting periods commencing on or after 1 January 2011)
This Standard details numerous non-urgent but necessary changes to Accounting Standards arising from the IASB’s annual
improvements project. Key changes include:
clarifying the application of AASB 108 prior to an entity’s first Australian-Accounting-Standards financial statements;
adding an explicit statement to AASB 7 that qualitative disclosures should be made in the context of the quantitative disclosures to
better enable users to evaluate an entity’s exposure to risks arising from financial instruments;
amending AASB 101 to the effect that disaggregation of changes in each component of equity arising from transactions recognised in
other comprehensive income is required to be presented, but is permitted to be presented in the statement of changes in equity or in
the notes;
adding a number of examples to the list of events or transactions that require disclosure under AASB 134; and
making sundry editorial amendments to various Standards and Interpretations.
This Standard is not expected to impact the Company.
AASB 2010–5: Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139,
140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042] (applicable for annual reporting periods beginning on or after
1 January 2011)
This Standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including
amendments to reflect changes made to the text of IFRSs by the IASB. However, these editorial amendments have no major impact on
the requirements of the respective amended pronouncements.
AASB 2010–6: Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7]
(applicable for annual reporting periods beginning on or after 1 July 2011)
This Standard adds and amends disclosure requirements about transfers of financial assets, especially those in respect of the nature of the
financial assets involved and the risks associated with them. Accordingly, this Standard makes amendments to AASB 1: First-time
Adoption of Australian Accounting Standards, and AASB 7: Financial Instruments: Disclosures, establishing additional disclosure
requirements in relation to transfers of financial assets.
This Standard is not expected to impact the Company.
AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102,
108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (applies to periods
beginning on or after 1 January 2013)
This Standard makes amendments to a range of Australian Accounting Standards and Interpretations as a consequence of the issuance of
AASB 9: Financial Instruments in December 2010. Accordingly, these amendments will only apply when the entity adopts AASB 9.
As noted above, the Company has not yet determined any potential impact on the financial statements from adopting AASB 9.
AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112] (applies to
periods beginning on or after 1 January 2012)
This Standard makes amendments to AASB 112: Income Taxes.
The amendments brought in by this Standard introduce a more practical approach for measuring deferred tax liabilities and deferred tax
assets when investment property is measured using the fair value model under AASB 140: Investment Property.
Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to
recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely
through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume
substantially all of the economic benefits embodied in the investment property over time, rather than through sale.
The amendments brought in by this Standard also incorporate Interpretation 121 into AASB 112.
The amendments are not expected to impact the Company.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
39
Notes to the Financial Statements
AASB 2010–9: Amendments to Australian Accounting Standards – Severe Hyperinflation and Removal of Fixed Dates for First-time
Adopters [AASB 1] (applies to periods beginning on or after 1 July 2011)
This Standard makes amendments to AASB 1: First-time Adoption of Australian Accounting Standards.
The amendments brought in by this Standard provide relief for first-time adopters of Australian Accounting Standards from having to
reconstruct transactions that occurred before their date of transition to Australian Accounting Standards.
Furthermore, the amendments brought in by this Standard also provide guidance for entities emerging from severe hyperinflation either
to resume presenting Australian-Accounting-Standards financial statements or to present Australian-Accounting-Standards financial
statements for the first time.
This Standard is not expected to impact the Company.
AASB 2010–10: Further Amendments to Australian Accounting Standards – Removal of Fixed Dates for First-time Adopters [AASB
2009–11 & AASB 2010–7] (applies to periods beginning on or after 1 January 2013)
This Standard makes amendments to AASB 2009–11: Amendments to Australian Accounting Standards arising from AASB 9, and
AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010).
The amendments brought in by this Standard ultimately affect AASB 1: First-time Adoption of Australian Accounting Standards and
provide relief for first-time adopters from having to reconstruct transactions that occurred before their transition date.
[The amendments to AASB 2009–11 will only affect early adopters of AASB 2009–11 (and AASB 9: Financial Instruments that was
issued in December 2009) as it has been superseded by AASB 2010–7.]
This Standard is not expected to impact the Company.
None of the other amendments or Interpretations are expected to affect the accounting policies of the Company.
40
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Notes to the Financial Statements
2.
DEPRECIATION AND WRITE OFF
Notes
Expenses
Depreciation of non-current assets:
Office furniture and equipment
Generative exploration and write off:
Exploration, evaluation and development costs
3.
INCOME TAX
(a)
Income Tax (Benefit)/Expense
The prima facie tax, using tax rates applicable in the
country of operation, on profit and extraordinary items
differs from the income tax provided in the financial
statements as follows:
Prima facie tax on profit from ordinary activities
Tax effect of permanent differences:
Other items (net)
Amount not brought to account as a carried forward
future income tax benefit
Income tax expense attributable to ordinary activities
(b) Future Income Tax Benefit not taken into account
The potential future income tax benefit calculated at 30% in respect of :
CONSOLIDATED
2011
2010
$
$
1,183
58,387
1,633
65,542
CONSOLIDATED
2011
$
2010
$
(290,109)
(535,996)
-
55,879
290,109
-
480,117
-
-
-
5,267,832
5,267,832
4,929,565
4,929,565
Adjustments to carry forward tax losses
Tax Losses not brought to account
Total
This future income tax benefit will only be obtained if:
(a)
(b)
(c)
future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;
the conditions for deductibility imposed by tax legislation continue to be complied with; and
no changes in tax legislation adversely affect the consolidated entity in realising the benefit.
4.
RECEIVABLES (CURRENT)
Sundry receivables
Total
CONSOLIDATED
2011
$
44,028
44,028
2010
$
19,318
19,318
(a) Terms and conditions
(i) Trade debtors are non-interest bearing and generally on 30 day terms.
(ii) Sundry debtors and other receivables are non-interest bearing and have repayment terms between 30 and 90 days.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
41
Notes to the Financial Statements
5.
INTERESTS IN SUBSIDIARIES
Name
Starstrike Resources Ltd *
Provision for diminution in value of investment
Loan to Starstrike Resources Ltd
Provision for loss on loan to Starstrike Resources Ltd
Euro Pacific Energy Pty Ltd
Provision for diminution in value of investment
Loan to Euro Pacific Energy Pty Ltd
Provision for loss on loan to Euro Pacific Energy Pty Ltd
Afrex Ltd *
Provision for diminution in value of investment
Loan to Afrex Ltd
Provision for loss on loan to Afrex Ltd
Total
Country of
incorporation
Percentage of equity
interest held by the
consolidated entity
2011
%
2010
%
British Virgin Islands
100
100
Australia
100
100
Saint Lucia
100
100
Investment
2011
$
380,000
(380,000)
50,096
-
2
(2)
(165,048)
-
10,584,107
(4,489,014)
699,121
-
6,679,262
2010
$
380,000
(380,000)
44,764
(44,764)
2
(2)
(165,881)
-
10,584,106
(4,461,793)
592,702
-
6,549,134
*Indicates companies not audited by Rothsay Chartered Accountants.
6.
PROPERTY, PLANT AND EQUIPMENT
Office equipment
At cost
Less: Accumulated depreciation
Total written down amount
Reconciliations
Reconciliations of the carrying amounts of property, plant and equipment
Office equipment
Carrying amount opening balance
Additions
Depreciation expense
Total written down amount
CONSOLIDATED
2011
2010
$
$
50,737
(48,333)
2,404
49,429
(47,149)
2,280
2,280
1,307
(1,183)
2,404
3,913
-
(1,633)
2,280
42
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Notes to the Financial Statements
7.
DEFERRED EXPLORATION, EVALUATION AND DEVELOPMENT COSTS
CONSOLIDATED
2011
2010
$
$
Exploration, evaluation and development costs carried forward
Pre-production:
exploration and evaluation phases:
9,765,421
Carrying amount at 1 July
388,648
Expenditure during the year
(24,448)
Exploration expenditure written off
-
Recovery of past exploration expenditure *
Carrying amount at 30 June
10,129,621
The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and
commercial exploitation or sale of the respective mining areas.
10,129,621
836,297
(3,055)
(1,083,151)
9,879,712
* The Company received reimbursement for past exploration costs during the financial year with regard to its Kenyan blocks L8, L10A and
L10B.
8.
TRADE and OTHER PAYABLES (CURRENT)
Trade creditors
Total
9.
CONTRIBUTED EQUITY
(a) Issued and paid up capital
Ordinary shares fully paid
Total
(b) Movements in shares on issue
Beginning of the financial year
Issued during the year:
public equity raising (net costs)
shares on acquisition
End of the financial year
CONSOLIDATED
2011
2010
$
$
187,740
187,740
106,993
106,993
CONSOLIDATED
2011
2010
$
$
38,166,253
38,166,253
33,433,998
33,433,998
2011
2010
Number of
shares
592,286,658
$
33,433,998
Number of
shares
510,050,826
$
30,361,641
68,493,151
-
660,779,809
4,732,255
-
38,166,253
82,235,832
-
592,286,658
2,238,943
833,414
33,433,998
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
43
Notes to the Financial Statements
10. RESERVES AND ACCUMULATED LOSSES
Reserves
Beginning of the financial year
Directors and employee options issued
Options expired
End of the financial year
Accumulated losses
Beginning of the financial year
Net loss attributable to members of Pancontinental Oil & Gas NL
Share options expired
Total available for appropriation
End of the financial year
11. STATEMENT OF CASH FLOWS
(a) Reconciliation of the net loss after tax to the net cash flows from operations
Net loss
Non-Cash Items, Non-Operating Items
Depreciation of non-current assets
Options
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in property, plant & equipment
(Increase)/decrease in exploration, evaluation & development
(Increase)/decrease in interests in subsidiaries
(Decrease)/increase in trade and other payables
(Decrease)/increase in employee entitlements
Other non-cash
Effect of exchange rate changes
Net cash flow from operating activities
(b) Reconciliation of cash
Cash balance comprises:
cash assets
Closing cash balance
12. EXPENDITURE COMMITMENTS
Capital expenditure commitments
Estimated capital expenditure contracted for at reporting date, but not provided for, payable:
not later than one year
other
later than one year and not later than five years
other
later than five years
Total
CONSOLIDATED
2011
$
2010
$
1,187,215
-
(422,957)
764,258
1,256,527
-
(69,312)
1,187,215
(22,937,128)
(967,031)
422,957
(23,481,202)
(23,481,202)
(21,219,786)
(1,786,654)
69,312
(22,937,128)
(22,937,128)
CONSOLIDATED
2011
$
2010
$
(967,031)
(1,786,654)
1,183
-
1,633
-
(24,710)
(1,307)
249,909
-
80,747
-
-
-
(661,209)
268,389
-
(364,200)
-
(272,471)
-
833,604
929
(1,318,770)
5,710,905
5,710,905
1,639,859
1,639,859
CONSOLIDATED
2011
$
2010
$
460,653
430,653
3,744,326
1,992,628
4,204,979
2,423,281
44
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Notes to the Financial Statements
13. EMPLOYEE BENEFITS
Employee Share Scheme
Information with respect to the number of options under the employee share incentive scheme is as follows:
Balance at beginning of year
expired
Balance at end of year
2011
2010
Number of
options
23,250,000
(9,500,000)
13,750,000
Weighted
average
exercise price
0.09
0.09
0.08
Number of
options
27,225,000
(3,975,000)
23,250,000
Weighted
average
exercise price
0.10
0.15
0.09
Options held at the end of the reporting period
The following table summarises information about options held by directors and employees as at 30 June 2011:
Number of options
9,250,000
4,500,000
Grant date
29 Nov 06
29 Nov 07
Expiry date
28 Nov 11
28 Nov 12
Weighted average exercise price
0.0960
0.0590
14. SUBSEQUENT EVENTS
On 5 July 2011, Pancontinental announced that the Ministry of Mines and Energy of Namibia had signed a Petroleum Agreement
(“PA”) and granted an Exploration Licence (“EL”) to Pancontinental over a large area offshore Northern Namibia. The PA and EL
cover 17,295 sq km over prospective trends in the Walvis Basin. Pancontinental holds 85% and is Operator under a Joint Venture
Agreement with Namibian co-venturer Paragon Holdings (Pty) Ltd (15%).
Apart from the above, no matters or circumstances have arisen since the end of the financial year which significantly affected or may
significantly affect the operations of the company, the results of those operations, or the state of affairs of the company in future financial
years.
15. EARNINGS PER SHARE
CONSOLIDATED
2011
$
The following reflects the income and share data used in the calculations of basic and diluted earnings per share:
Net profit
Adjustments:
Earnings used in calculating basic and diluted earnings per share
(967,031)
(967,031)
2010
$
(1,786,654)
(1,786,654)
Number of shares
Number of shares
Weighted average number of ordinary shares used in calculating
basic earnings per share
Effect of dilutive securities:
Share options
Adjusted weighted average number of ordinary shares used in
calculating diluted earnings per share
605,985,288
13,750,000
619,735,288
16. AUDITORS' REMUNERATION
Amounts received or due and receivable by Rothsay for:
an audit or review of the financial report of the entity and
any other entity in the consolidated entity
other services in relation to the entity and any other entity
in the consolidated entity
556,906,878
-
556,906,878
CONSOLIDATED
2011
2010
$
$
45,500
4,000
49,500
35,500
-
35,500
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
45
Notes to the Financial Statements
17. DIRECTOR AND EXECUTIVE DISCLOSURES
(a) Details of Specified Directors and Specified Executives
(i) Specified Directors
Henry David Kennedy
Roy Barry Rushworth
Ian Raymond (Inky) Cornelius
Ernest Anthony Myers
Anthony Robert Frederick Maslin Non-Executive Director
(ii) Specified Executives
Vesna Petrovic
Company Secretary
Non-Executive Chairman
Executive Director, Chief Executive Officer
Non-Executive Director (passed away 14 July 2010)
Executive Finance Director
Total remuneration for all non-executive directors, last voted upon by shareholders at the 2007 AGM, is not to exceed $400,000 per annum
and is set with reference to fees paid to other non-executive directors of comparable companies.
Non-executive and executive directors do not receive performance related remuneration but they are eligible to participate in the Employee
Option Scheme approved by shareholders.
Directors do not receive any termination or retirement benefits.
(b) Remuneration of Specified Directors /Officers
Salary
& Fees
Primary
Cash
Bonus
Non
Monetary
benefits
Post Employment
Superannuation Retirement
Equity
Options
Other
Bonuses
Total
benefits
50,000 -
50,003 -
-
-
-
-
-
-
-
-
-
-
50,000
50,003
Specified
Directors/Officers
Henry David Kennedy
2011
2010
Roy Barry Rushworth
2011
2010
Ian Raymond (Inky) Cornelius
(Passed away 14 July 2010)
415,833
344,500
-
-
-
-
-
-
-
-
-
-
-
-
415,833
344,500
2011
2010
2,000
46,500
-
-
-
-
-
-
-
-
-
-
-
-
2,000
46,500
Anthony Robert Frederick Maslin
2011
2010
25,806
-
-
-
-
-
-
-
- -
-
-
-
-
25,806
-
Ernest Anthony Myers
2011
2010
Vesna Petrovic
2011
2010
48,000
48,000
-
-
-
-
-
-
- -
-
-
-
-
48,000
48,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total Remuneration: Specified Directors /Officers
541,639 -
489,003 -
2011
2010
-
-
-
-
-
-
-
-
-
-
541,639
489,003
Mrs Petrovic received no direct remuneration from the company for her services as company secretary however during the year the
company paid fees to Resource Services International (Aust) Pty Limited totalling $238,000 (2010: $216,000) for the provision of
corporate, accounting and administration services. Mrs Petrovic is employed by Resource Services International (Aust) Pty Limited.
See Note 20 for further information.
46
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Notes to the Financial Statements
(c) Remuneration options: Granted and vested during the year
Granted
Number
Grant Date
Terms & Conditions for Each Grant
Exercise Price per
share ($)
Value per
option at
grant date ($)
First Exercise
Date
Last Exercise Date
Specified Directors
Henry David Kennedy
Roy Barry Rushworth
Ian Raymond (Inky) Cornelius
(passed away 14 July 2010)
Anthony Robert Frederick Maslin
Ernest Anthony Myers
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(d) Option holdings of specified directors and specified executives
Balance at
beginning of period
1 July 2010
Granted as
Remuneration
Options Exercised/
(Expired)
Specified Directors
Henry David Kennedy
Roy Barry Rushworth
Ian Raymond (Inky) Cornelius
(passed away 14 July 2010)
Anthony Robert Frederick Maslin
Ernest Anthony Myers
Total
2,250,000
4,500,000
2,250,000
-
2,000,000
11,000,000
-
-
-
-
-
-
(750,000)
(1,500,000)
(750,000)
-
(1,000,000)
(4,000,000)
-
-
-
-
-
-
period
30 June 2011
1,500,000
3,000,000
1,500,000
-
1,000,000
7,000,000
Net Change Other Balance at end of
(e) Shareholdings of Specified Directors and Specified Executives
Ordinary Shares held in Pancontinental Oil & Gas NL
Specified Directors
Henry David Kennedy
Roy Barry Rushworth
Ian Rayond (Inky) Cornelius
Anthony Robert Frederick Maslin
Ernest Anthony Myers
Total
Balance
1 July 2010
155,301,968
34,764,181
-
-
-
190,066,149
Acquisitions
(Disposals)
Balance
30 June 2011
-
-
-
-
-
-
155,301,968
34,764,181
-
-
-
190,066,149
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
47
Notes to the Financial Statements
18. SEGMENT INFORMATION
Segment accounting policies
The economic entity operates predominately in the petroleum exploration industry in the Australasian-Pacific and the North
and East African geographic region, however internal reporting is conducted on an entity wide basis. As such, segment
information is presented on the same basis as that used for internal reporting purposes provided to the chief operating
decision maker. The chief operating decision maker has been identified as the board of directors who make strategic
decisions.
19. FINANCIAL INSTRUMENTS
Financial risk management
Overview:
The company and group have exposure to the following risks from their use of financial instruments:
(a) credit risk
(b) liquidity risk
(c) market risk
This note presents information about the company’s and group’s exposure to each of the above risks, their objectives,
policies and processes for measuring and managing risk, and the management of capital.
The board of directors has overall responsibility for the establishment and oversight of the risk management framework.
Management monitors and manages the financial risks relating to the operations of the group through regular reviews of the
risks.
(a) 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 joint venture re-charges and recuperations
of cost. For the company it arises from receivables due from subsidiaries and re-charges to joint venture partners.
(i) Trade and other receivables:
The group operates predominantly in the oil and gas exploration sector, it does not have trade receivables and is therefore
not exposed to credit risk in relation to trade receivables.
The company’s and group’s exposure to credit risk is influenced directly and indirectly by the individual characteristics of
each joint venture. The balance of any outstanding amounts is monitored and payments are received promptly from joint
venture partners.
The company has established an allowance for impairment that represents their estimate of incurred losses in respect of
intra-group loans. The management does not expect any counterparty to fail to meet its obligations.
Geographically, there is no concentration of credit risk.
48
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Notes to the Financial Statements
19. FINANCIAL INSTRUMENTS (cont’d)
Exposure to credit risk
The carrying amount of the company’s and group’s financial assets represents the maximum credit exposure. The maximum
exposure to credit risk at the reporting date was:
Consolidated
Carrying amount
Trade and other receivables
Cash and cash equivalents
Total
Impairment losses:
Note
4
2011
$
44,028
5,710,905
5,754,933
2010
$
19,318
1,639,859
1,659,177
None of the company’s or group’s receivables are past due at 30 June 2011, (2010: nil).
An impairment write down in respect of inter-group loans and shares was recognised during the current year from an analysis of the
subsidiaries respective financial positions. The total impairment write down recognised through impairment of loans to subsidiaries and
shares held in subsidiaries during the current period was $17,542 (2010: $858,947).
Whilst the loans were not payable at 30 June 2011 a provision for impairment based/reversed on the subsidiaries financial position was
carried forward from previous periods. The balance of this provision may vary due to performance of a subsidiary in a given year.
(b) 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, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to the group’s reputation.
The group manages liquidity risk by maintaining adequate cash reserves through continuously monitoring forecast and actual cash flows.
(c) 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:
The group is exposed to currency risk on investments, and foreign currency denominated purchases in a currency other than the respective
functional currencies of group entities, primarily the Australian dollar (AUD). The other currency that these transactions are denominated
in is the (USD).
The group has not entered into any derivative financial instruments to hedge such transactions and anticipated future receipts or payments
that are denominated in a foreign currency.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
49
Notes to the Financial Statements
19. FINANCIAL INSTRUMENTS (cont’d)
Exposure to currency risk:
The group’s exposure to foreign currency risk at balance date was as follows, based on notional amounts:
AUD
30 June 2011
USD
AUD
Trade and other receivables
Trade and other payables
19,318
(187,740)
Net balance sheet exposure
(168,422)
-
-
-
Total
AUD
19,318
(187,740)
(168,422)
19,318
(106,993)
(87,675)
30 June 2010
USD
-
-
Total
19,318
(106,993)
-
(87,675)
The following significant exchange rates applied during the year:
AUD : USD
Sensitivity analysis:
Average rate
Reporting date spot rate
2011
0.989
2010
0.882
2011
1.060
2010
0.856
A 10 percent strengthening of the Australian dollar against the USD at 30 June would have increased (decreased) equity and profit or 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 2010.
Effect in AUD
30 June 2011
10% strengthening
30 June 2010
10% strengthening
Consolidated
Equity
Profit or loss
-
-
-
-
A 10 percent weakening of the Australian dollar against the USD at 30 June would have had the equal but opposite effect on the above
currencies to the amounts shown above, on the basis that all other variables remain constant.
Interest rate risk:
At balance date the group had minimal exposure to interest rate risk, through its cash and equivalents held within financial institution.
Variable rate instruments
Cash and cash equivalents
Fair value sensitivity analysis for fixed rate instruments:
Consolidated Carrying Amount
30 June 2011
30 June 2010
5,710,905
1,639,859
The company and group do not account for any fixed rate financial assets at fair value through profit or loss. Therefore, a change in
interest rates at reporting date would not affect profit or loss or equity.
50
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Notes to the Financial Statements
19.
FINANCIAL INSTRUMENTS (cont’d)
Fair value sensitivity analysis for variable rate instruments:
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the
amounts shown below. The analysis assumes that all other variables remain constant. The analysis is performed on the same basis for
2010.
Consolidated
Profit or loss
Equity
100 bp increase
100bp decrease
100 bp increase
100 bp decrease
30 June 2011
Cash and cash equivalents
30 June 2010
Cash and cash equivalents
Fair values:
-
-
-
-
-
-
-
-
The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:
Consolidated
30 June 2011
30 June 2010
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Carrying amount
Fair value
44,028
5,710,905
(187,740)
5,567,193
44,028
5,710,905
(187,740)
5,567,193
Carrying amount
19,318
1,639,859
(106,993)
1,552,184
Fair value
19,318
1,639,859
(106,993)
1,552,184
The basis for determining fair values is disclosed in note [ 1 ].
Capital 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 board of directors monitors the return on capital, which the group defines as net
operating income divided by total shareholders’ equity, excluding non-redeemable preference shares and minority interests.
Equity attributable to shareholders of the Company
Minorities
Equity
Total assets
Equity ratio in %
Average equity
Net Profit
Return on Equity in %
2011
-
15,449,309
15,637,049
98.80%
13,566,697
(967,031)
(7.13)%
2010
-
11,684,085
11,791,078
99.09%
11,041,234
(1,786,654)
(16.18)%
There were no changes in the group’s approach to capital management during the year.
Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements.
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
51
Notes to the Financial Statements
20. RELATED PARTY
(a) During the year the company paid fees to Resource Services International Limited, a company in which Mr Kennedy has a financial
interest, for consulting services. The amount paid to was $50,000 (2010: $50,003). Refer note 17.
(b) During the year the company paid fees to Goldtrek Pty Ltd, trustee for the Lewis Trust, of which Mr Cornelius is a beneficiary, for
consulting services. The amount paid to Goldtrek Pty Ltd was $2,000 (2010: $46,500). Refer note 17.
(c) During the year the company paid fees to Resource Services International (Aust) Pty Limited, a company of which Mr Myers is a
director, to cover the provision of corporate, accounting and administration services. The amount paid to Resource Services
International (Aust) Pty Limited was $238,000 (2010: $216,000). Amounts were billed based on normal market rates for such services
and were due and payable under normal payment terms. The fees are not related to the management of the company, therefore no
amounts are attributable to directors, and have not been included in directors’ remuneration.
(d) The company has effected Directors and Officers Liability Insurance.
21. PARENT INFORMATION
The Group has applied amendments to the Corporations Act (2001) which remove the requirement for the Group to lodge parent entity
financial statements. Parent entity financial statements have been replaced by the specific parent entity disclosures below.
AT 30 JUNE 2011
STATEMENT OF COMPREHENSIVE INCOME
Profit/(Loss) for the period
TOTAL COMPREHENSIVE INCOME/(LOSS)
STATEMENT OF FINANCIAL POSITION
Assets
Current assets
TOTAL ASSETS
Liabilities
Current liabilities
TOTAL LIABILITIES
Equity
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
2011
2010
$
$
(914,717)
(1,768,817)
(914,717)
(1,768,817)
2011
2010
$
$
5,710,905
1,628,116
15,520,246
11,623,962
185,740
185,740
106,993
106,993
38,166,253
764,258
(23,596,005)
15,334,506
33,433,998
1,187,215
(23,104,245)
11,516,969
52
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Directors’ Declaration
Directors' Declaration
In accordance with a resolution of the directors of Pancontinental Oil & Gas NL, I state that:
(1)
In the opinion of the directors:
(a)
the financial statements and notes of the company and of the consolidated entity are in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2011 and of their
performance for the year ended on that date; and
(ii) complying with Accounting Standards and 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) This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A
of the Corporations Act 2001 for the financial period ending 30 June 2011.
On behalf of the Board
Ernest Anthony Myers
Director
Perth 29 September 2011
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
53
Independent Audit Report
54
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
Independent Audit Report
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
55
ASX Additional Information
ASX Additional Information
Additional information required by the ASX Ltd and not shown elsewhere in this report is as follows. The information is current as at
30 September 2011.
(a) Distribution of equity securities
The number of shareholders, by size of holding, in each class of share are:
Ordinary shares
1
1,001
5,001
10,001
100,001
-
-
-
-
1,000
5,000
10,000
100,000
and over
The number of shareholders holding less than a marketable parcel of shares are:
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Sundowner International Limited
Indago Resources Limited
HSBC Custody Nominees
CM Skye Trustees Limited
J P Morgan Nominees Australia
Citicorp Nominees Pty Limited
Mr Roy Barry Rushworth
CIMB Securities (Singapore)
Mr Robert Albert Boas
National Nominees Limited
Mrs Helen Joy Alexander
M & M Family Pty Ltd
Mr Peter John Brunton
Gascorp Australia Pty Ltd
RBC Dexia Investor Services
Mr William John Tyler & Mrs Sybil Tyler
Huxide Pty Limited
Mr Bradley William Green
Mr Michael Alexander Slivkoff & Mrs Nora Slivkoff
Calm Holdings Pty Ltd
Number of holders
Number of shares
87,884
486,703
1,805,322
49,221,701
609,178,199
660,779,809
651,281
377
152
212
1070
640
2,451
543
Listed ordinary shares
Number of shares
132,171,113
58,212,292
33,574,366
25,706,511
22,552,382
13,396,253
9,057,670
8,100,000
7,525,000
6,808,345
6,600,000
5,500,000
5,130,825
5,000,000
4,794,520
3,500,000
3,200,000
3,000,000
3,000,000
3,000,000
359,829,277
Percentage of
ordinary shares
20.002
8.810
5.081
3.890
3.413
2.027
1.371
1.226
1.139
1.030
0.999
0.832
0.776
0.757
0.726
0.530
0.484
0.454
0.454
0.454
54.455
56
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
ASX Additional Information
(c) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
(d) Substantial Shareholders
The details of substantial shareholders as disclosed in substantial shareholder notices received by the
Number of Shares
Company are set out below:
Sundowner International Limited, Indago Resources Limited and HSBC Custody Nominees
223,957,771
Roy Barry Rushworth and CM Skye Trustees Limited as trustee for the Mulberry Trust
34,764,181
(e) Permit Schedule
Permits and Licence Interests
Permit reference
Interest
Petroleum prospects
Western Australia
Western Australia
Malta
Malta
Kenya
Namibia
Kenya
Morocco
**In suspension
Namibia
Morocco
**In suspension
L15
L15
EP 104 (R1)
EP 104 (R1)
EP 110
EP 110
EP 424
EP 424
Area 5**
Area 5**
Block 3 of Area 4**
L6
Block 3 of Area 4**
EL 0037
L6
L8
Mediterranee Est. Block**
L8
L10A
L10A
L10B
12 %
12 %
10 %
10 %
38.462%
38.462%
38.462%
38.462%
80%
80%
80%
40%
80%
85%
40%
15%
100% - diluting to 80%
15%
15%
15%
15%
EL 0037
L10B
85%
15%
Mediterranee Est. Block**
100% - diluting to 80%
PANCONTINENTAL OIL & GAS NL – ANNUAL REPORT 2011
57
288 Stirling Street
Perth WA 6000
Telephone: +61 8 9227 3220
Fax: +61 8 9227 3211