PANCONTINENTAL OIL & GA
S N
L –
A
P
A
N
C
O
N
T
I
N
E
N
T
A
L
O
I
L
&
G
A
S
N
L
-
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
6
N
N
U
A
L
R
E
P
O
R
T
2
0
1
6
Level One, 10 Ord Street
West Perth WA 6005
Telephone: +61 8 6363 7090
Facsimile: +61 8 6363 7099
Corporate Information
Corporate Information
Corporate Information
ABN 95 003 029 543
ABN 95 003 029 543
ABN 95 003 029 543
Directors
Directors
Henry David Kennedy
Directors
Henry David Kennedy
Roy Barry Rushworth
Henry David Kennedy
Roy Barry Rushworth
Ernest Anthony Myers
Roy Barry Rushworth
Ernest Anthony Myers
Anthony Robert Frederick Maslin
Ernest Anthony Myers
John Edward Leach
John Edward Leach
Company Secretary
Company Secretary
Vesna Petrovic
Company Secretary
Vesna Petrovic
Vesna Petrovic
Registered Office
Registered Office
Level One, 10 Ord Street
Registered Office
Level One, 10 Ord Street
West Perth WA 6005
Level One, 10 Ord Street
West Perth WA 6005
Telephone: +61 8 6363 7090
West Perth WA 6005
Telephone: +61 8 6363 7090
+61 8 6363 7099
Fax:
Telephone: +61 8 6363 7090
+61 8 6363 7099
Fax:
+61 8 6363 7099
Fax:
Share Register
Share Register
Advanced Share Registry Services
Share Register
Advanced Share Registry Services
PO Box 1156
Advanced Share Registry Services
PO Box 1156
Nedlands WA 6909
PO Box 1156
Nedlands WA 6909
Telephone: +61 8 9389 8033
Nedlands WA 6909
Telephone: +61 8 9389 8033
Telephone: +61 8 9389 8033
Auditors
Auditors
Rothsay Chartered Accountants
Auditors
Rothsay Chartered Accountants
Level 1, Lincoln House
Rothsay Chartered Accountants
Level 1, Lincoln House
4 Ventnor Avenue
Level 1, Lincoln House
4 Ventnor Avenue
West Perth WA 6005
4 Ventnor Avenue
West Perth WA 6005
West Perth WA 6005
Internet Address & Contact
Internet Address & Contact
www.pancon.com.au
Internet Address & Contact
www.pancon.com.au
info@pancon.com.au
www.pancon.com.au
info@pancon.com.au
info@pancon.com.au
ASX Code
ASX Code
PCL
ASX Code
PCL
PCL
Contents
Contents
Chairman’s Review
Contents
Chairman’s Review
Permit Schedule
Chairman’s Review
Permit Schedule
Review of Operations
Review of Operations
Review of Operations
Directors' Report
Directors' Report
Directors' Report
Corporate Governance Statement
Corporate Governance Statement
Corporate Governance Statement
Statement of Comprehensive Income
Statement of Comprehensive Income
Statement of Comprehensive Income
Statement of Financial Position
Statement of Financial Position
Statement of Financial Position
Statement of Changes in Equity
Statement of Changes in Equity
Statement of Changes in Equity
Statement of Cash Flows
Statement of Cash Flows
Statement of Cash Flows
Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements
Directors' Declaration
Directors' Declaration
Directors' Declaration
Independent Audit Report
Independent Audit Report
Independent Audit Report
ASX Additional Information
ASX Additional Information
(Non-Executive Chairman)
(Non-Executive Chairman)
(Executive Director & Chief Executive Officer)
(Non-Executive Chairman)
(Executive Director & Chief Executive Officer)
(Executive Finance Director)
(Executive Director & Chief Executive Officer)
(Executive Finance Director)
(Non-Executive Director)
(Executive Finance Director)
(Non-Executive Director)
(Non-Executive Director)
PANCONTINENTAL LOGO
The Pancontinental logo is in keeping
with the Pancontinental name and
technical ethic. The logo represents a
mapped view of the globe seen from
above the polar region. The green
sectors represent the continents and the
blue sectors represent the oceans.
2
2
3
XX
3
4
XX
4
15
15
XX
27
25
XX
42
39
XX
43
40
XX
44
41
XX
45
42
XX
46
43
XX
63
60
XX
64
61
XX
66
63
Corporate Information
Who we are
Pancontinental Oil & Gas NL is an Australian based
oil and gas exploration company with interests in
Africa
The company’s headquarters are in West Perth,
Western Australia
Exploration interests in Namibia cover an area of
17,295 square kilometres offshore in the Walvis Basin
Exploration interests in Kenya cover an area of 5,010
square kilometres onshore and offshore in the Lamu
Basin
The company is listed on the Australian Securities
Exchange under code PCL
Pancontinental is managed by a team of experienced
individuals from corporate, technical and financial
backgrounds
1
Chairman’s Review
Chairman’s Review
Permit Schedule
Permit Schedule
The unique times in which we are investing create
The unique times in which we are investing create
both challenges and opportunities. Pancontinental
both challenges and opportunities. Pancontinental
has maintained its asset portfolio and is in a good
has maintained its asset portfolio and is in a good
position to create shareholder value particularly from
position to create shareholder value particularly from
its upcoming exploration programme in Namibia.
its upcoming exploration programme in Namibia.
Dear Shareholder,
Dear Shareholder,
The Board of Directors of Pancontinental Oil & Gas NL is pleased to present to you the company’s
2016 Annual Report.
The Board of Directors of Pancontinental Oil & Gas NL is pleased to present to you the company’s
2016 Annual Report.
The company’s strategy over the past two years has included responding to global oil and gas
markets by adapting quickly and with that came a number of difficult decisions. Pancontinental is
The company’s strategy over the past two years has included responding to global oil and gas
now a leaner group with a zero cost exploration portfolio, low corporate cost structure and no debt.
markets by adapting quickly and with that came a number of difficult decisions. Pancontinental is
Drilling offshore Namibia is within the company’s sights and would create significant investor
now a leaner group with a zero cost exploration portfolio, low corporate cost structure and no debt.
interest.
Drilling offshore Namibia is within the company’s sights and would create significant investor
interest.
Pancontinental positioned itself in Namibia some 10 years ago with a large Reconnaissance Licence.
Areas within the licence with prime geological settings were chosen as the bid areas and awarded to
Pancontinental positioned itself in Namibia some 10 years ago with a large Reconnaissance Licence.
the company and its local partner in 2011. A subsidiary of Tullow Oil farmed into the licence in 2013
Areas within the licence with prime geological settings were chosen as the bid areas and awarded to
in exchange for a US $100 million plus exploration programme including seismic, processing,
the company and its local partner in 2011. A subsidiary of Tullow Oil farmed into the licence in 2013
interpretation, mapping and an exploration well. Thus far, the joint venture has completed the
in exchange for a US $100 million plus exploration programme including seismic, processing,
seismic components of the programme and on 8 April this year, operator Tullow confirmed that it
interpretation, mapping and an exploration well. Thus far, the joint venture has completed the
would continue to lead the joint venture into the drilling phase of the farmout agreement, the
seismic components of the programme and on 8 April this year, operator Tullow confirmed that it
successful outcome of which could be a game changer for Pancontinental.
would continue to lead the joint venture into the drilling phase of the farmout agreement, the
successful outcome of which could be a game changer for Pancontinental.
The progress on the company’s Kenyan acreage has been gradual with planning continuing for
exploration onshore by operator Milio International. Pancontinental is free carried for a programme
The progress on the company’s Kenyan acreage has been gradual with planning continuing for
of 2D seismic, and an onshore well. In addition, the company’s new venture personnel remain alert
exploration onshore by operator Milio International. Pancontinental is free carried for a programme
in seeking new opportunities where our technical know-how can best be utilised.
of 2D seismic, and an onshore well. In addition, the company’s new venture personnel remain alert
in seeking new opportunities where our technical know-how can best be utilised.
Pancontinental received cash injections from a share purchase plan and placements this financial
year. The company reached out to the UK market which provided support by way of a placement.
Pancontinental received cash injections from a share purchase plan and placements this financial
This years’ fundraising was the first since 2012 when funds were raised for working capital and an
year. The company reached out to the UK market which provided support by way of a placement.
exploration well which resulted in Kenya’s first ever offshore oil discovery.
This years’ fundraising was the first since 2012 when funds were raised for working capital and an
exploration well which resulted in Kenya’s first ever offshore oil discovery.
The Board welcomed Mr John Leach as Independent Non-Executive Director during the period. His
extensive global and executive experience will enable him to make a significant contribution to the
The Board welcomed Mr John Leach as Independent Non-Executive Director during the period. His
company. I would also like to acknowledge and thank outgoing Independent Non-Executive Director
extensive global and executive experience will enable him to make a significant contribution to the
Anthony Maslin for his time with Pancontinental.
company. I would also like to acknowledge and thank outgoing Independent Non-Executive Director
Anthony Maslin for his time with Pancontinental.
The company is looking toward the future in a positive light, in particular with the anticipation of
material progress towards a successful drilling programme offshore Namibia which would be an
The company is looking toward the future in a positive light, in particular with the anticipation of
excellent growth opportunity for the company.
material progress towards a successful drilling programme offshore Namibia which would be an
excellent growth opportunity for the company.
To Pancontinental’s Directors, Management and Staff, I thank you for your continued commitment
and effort. As always, I also thank you the company’s Shareholders for your ongoing support.
To Pancontinental’s Directors, Management and Staff, I thank you for your continued commitment
and effort. As always, I also thank you the company’s Shareholders for your ongoing support.
HD Kennedy
Chairman
HD Kennedy
Pancontinental Oil & Gas NL
Chairman
Pancontinental Oil & Gas NL
2
Pancontinental is a junior oil and gas exploration
company with a portfolio of high quality exploration
Pancontinental is a junior oil and gas exploration
company with a portfolio of high quality exploration
assets in prospective hydrocarbon provinces
assets in prospective hydrocarbon provinces
Namibia PEL 0037
Kenya L6
LOCATION:
Namibia PEL 0037
LOCATION:
Kenya L6
Walvis Basin, Offshore Namibia
Lamu Basin, Onshore /Offshore Kenya
LOCATION:
Walvis Basin, Offshore Namibia
PROJECT SIZE:
17,295 square kilometres
PROJECT SIZE:
17,295 square kilometres
JOINT VENTURE PARTNERS:
Tullow Kudu Limited (Operator)
65.00%
JOINT VENTURE PARTNERS:
Pancontinental Oil & Gas Group
Tullow Kudu Limited (Operator)
60.00%
Offshore
Paragon Oil & Gas (Pty) Ltd
Pancontinental Oil & Gas Group
40.00%
60.00%
Paragon Oil & Gas (Pty) Ltd
30.00%
65.00%
5.00%
30.00%
5.00%
LOCATION:
Lamu Basin, Onshore /Offshore Kenya
PROJECT SIZE:
5,010 square kilometres
PROJECT SIZE:
5,010 square kilometres
JOINT VENTURE PARTNERS:
Offshore
JOINT VENTURE PARTNERS:
FAR Limited (Operator)
Pancontinental Oil & Gas Group
FAR Limited (Operator)
Onshore
Pancontinental Oil & Gas Group
40.00%
Milio International Group (Operator)*
Pancontinental Oil & Gas Group
Milio International Group (Operator)*
FAR Limited
Pancontinental Oil & Gas Group
*after earn in
FAR Limited
60.00%
Onshore
16.00%
60.00%
24.00%
16.00%
24.00%
*after earn in
GEOLOGY:
A deep central graben in this area is
considered to be an oil and gas “source
GEOLOGY:
kitchen” and potential hydrocarbon
A deep central graben in this area is
trapping prospects have been identified
considered to be an oil and gas “source
adjacent to the area.
kitchen” and potential hydrocarbon
The Kifaru Prospect and Kifaru West
trapping prospects have been identified
Prospect are interpreted to be large
adjacent to the area.
stacked Miocene reefs, with interpreted
The Kifaru Prospect and Kifaru West
good lateral and top seals and close
Prospect are interpreted to be large
stacked Miocene reefs, with interpreted
to mature Eocene source
proximity
good lateral and top seals and close
The Tembo Prospect is a large tilted fault
to mature Eocene source
proximity
block trap, with interpreted sandstone
rocks.
reservoirs at a number of levels.
The Tembo Prospect is a large tilted fault
block trap, with interpreted sandstone
rocks.
reservoirs at a number of levels.
GEOLOGY:
The central part of an oil – mature
“Fairway” has been interpreted to extend
GEOLOGY:
through
PEL 0037.
Pancontinental
The central part of an oil – mature
believes that PEL 0037 covers one of the
“Fairway” has been interpreted to extend
few areas where an oil generating
PEL 0037.
Pancontinental
“sweet spot” of oil prone source rocks
believes that PEL 0037 covers one of the
are sufficiently buried to generate oil.
few areas where an oil generating
through
A number of slope and basin floor
“sweet spot” of oil prone source rocks
turbidite
are sufficiently buried to generate oil.
forming very
fans,
large
Prospects and
A number of slope and basin floor
identified and mapped within
the
Leads, have been
forming very
large
turbidite
fans,
Fairway. The Prospects and Leads are
Leads, have been
Prospects and
closely associated with the interpreted
identified and mapped within
oil-generating source rocks.
Fairway. The Prospects and Leads are
the
closely associated with the interpreted
oil-generating source rocks.
Chairman’s Review
Chairman’s Review
Permit Schedule
Permit Schedule
Pancontinental is a junior oil and gas exploration
company with a portfolio of high quality exploration
Pancontinental is a junior oil and gas exploration
assets in prospective hydrocarbon provinces
company with a portfolio of high quality exploration
assets in prospective hydrocarbon provinces
Namibia PEL 0037
Kenya L6
LOCATION:
Namibia PEL 0037
LOCATION:
Kenya L6
Walvis Basin, Offshore Namibia
LOCATION:
Walvis Basin, Offshore Namibia
PROJECT SIZE:
17,295 square kilometres
PROJECT SIZE:
17,295 square kilometres
JOINT VENTURE PARTNERS:
Tullow Kudu Limited (Operator)
65.00%
JOINT VENTURE PARTNERS:
Pancontinental Oil & Gas Group
Tullow Kudu Limited (Operator)
30.00%
65.00%
Paragon Oil & Gas (Pty) Ltd
Pancontinental Oil & Gas Group
5.00%
30.00%
Paragon Oil & Gas (Pty) Ltd
5.00%
GEOLOGY:
PEL 0037.
PEL 0037.
The central part of an oil – mature
“Fairway” has been interpreted to extend
GEOLOGY:
Pancontinental
through
The central part of an oil – mature
believes that PEL 0037 covers one of the
“Fairway” has been interpreted to extend
few areas where an oil generating
through
Pancontinental
“sweet spot” of oil prone source rocks
believes that PEL 0037 covers one of the
are sufficiently buried to generate oil.
few areas where an oil generating
A number of slope and basin floor
“sweet spot” of oil prone source rocks
large
forming very
fans,
turbidite
are sufficiently buried to generate oil.
Leads, have been
Prospects and
A number of slope and basin floor
the
identified and mapped within
turbidite
forming very
large
fans,
Fairway. The Prospects and Leads are
Prospects and
Leads, have been
closely associated with the interpreted
the
identified and mapped within
oil-generating source rocks.
Fairway. The Prospects and Leads are
closely associated with the interpreted
oil-generating source rocks.
Lamu Basin, Onshore /Offshore Kenya
LOCATION:
Lamu Basin, Onshore /Offshore Kenya
PROJECT SIZE:
5,010 square kilometres
PROJECT SIZE:
5,010 square kilometres
JOINT VENTURE PARTNERS:
Offshore
JOINT VENTURE PARTNERS:
FAR Limited (Operator)
60.00%
Offshore
Pancontinental Oil & Gas Group
FAR Limited (Operator)
40.00%
60.00%
Onshore
Pancontinental Oil & Gas Group
40.00%
Milio International Group (Operator)*
60.00%
Onshore
Pancontinental Oil & Gas Group
Milio International Group (Operator)*
16.00%
60.00%
FAR Limited
Pancontinental Oil & Gas Group
24.00%
16.00%
*after earn in
FAR Limited
24.00%
*after earn in
GEOLOGY:
A deep central graben in this area is
considered to be an oil and gas “source
GEOLOGY:
kitchen” and potential hydrocarbon
A deep central graben in this area is
trapping prospects have been identified
considered to be an oil and gas “source
adjacent to the area.
kitchen” and potential hydrocarbon
The Kifaru Prospect and Kifaru West
trapping prospects have been identified
Prospect are interpreted to be large
adjacent to the area.
stacked Miocene reefs, with interpreted
The Kifaru Prospect and Kifaru West
good lateral and top seals and close
Prospect are interpreted to be large
to mature Eocene source
proximity
stacked Miocene reefs, with interpreted
rocks.
good lateral and top seals and close
The Tembo Prospect is a large tilted fault
proximity
to mature Eocene source
block trap, with interpreted sandstone
rocks.
reservoirs at a number of levels.
The Tembo Prospect is a large tilted fault
block trap, with interpreted sandstone
reservoirs at a number of levels.
3
The unique times in which we are investing create
The unique times in which we are investing create
both challenges and opportunities. Pancontinental
both challenges and opportunities. Pancontinental
has maintained its asset portfolio and is in a good
has maintained its asset portfolio and is in a good
position to create shareholder value particularly from
position to create shareholder value particularly from
its upcoming exploration programme in Namibia.
its upcoming exploration programme in Namibia.
Dear Shareholder,
Dear Shareholder,
2016 Annual Report.
2016 Annual Report.
The Board of Directors of Pancontinental Oil & Gas NL is pleased to present to you the company’s
The Board of Directors of Pancontinental Oil & Gas NL is pleased to present to you the company’s
The company’s strategy over the past two years has included responding to global oil and gas
markets by adapting quickly and with that came a number of difficult decisions. Pancontinental is
The company’s strategy over the past two years has included responding to global oil and gas
now a leaner group with a zero cost exploration portfolio, low corporate cost structure and no debt.
markets by adapting quickly and with that came a number of difficult decisions. Pancontinental is
Drilling offshore Namibia is within the company’s sights and would create significant investor
now a leaner group with a zero cost exploration portfolio, low corporate cost structure and no debt.
Drilling offshore Namibia is within the company’s sights and would create significant investor
interest.
interest.
Pancontinental positioned itself in Namibia some 10 years ago with a large Reconnaissance Licence.
Areas within the licence with prime geological settings were chosen as the bid areas and awarded to
Pancontinental positioned itself in Namibia some 10 years ago with a large Reconnaissance Licence.
the company and its local partner in 2011. A subsidiary of Tullow Oil farmed into the licence in 2013
Areas within the licence with prime geological settings were chosen as the bid areas and awarded to
in exchange for a US $100 million plus exploration programme including seismic, processing,
the company and its local partner in 2011. A subsidiary of Tullow Oil farmed into the licence in 2013
interpretation, mapping and an exploration well. Thus far, the joint venture has completed the
in exchange for a US $100 million plus exploration programme including seismic, processing,
seismic components of the programme and on 8 April this year, operator Tullow confirmed that it
interpretation, mapping and an exploration well. Thus far, the joint venture has completed the
would continue to lead the joint venture into the drilling phase of the farmout agreement, the
seismic components of the programme and on 8 April this year, operator Tullow confirmed that it
successful outcome of which could be a game changer for Pancontinental.
would continue to lead the joint venture into the drilling phase of the farmout agreement, the
successful outcome of which could be a game changer for Pancontinental.
The progress on the company’s Kenyan acreage has been gradual with planning continuing for
exploration onshore by operator Milio International. Pancontinental is free carried for a programme
The progress on the company’s Kenyan acreage has been gradual with planning continuing for
of 2D seismic, and an onshore well. In addition, the company’s new venture personnel remain alert
exploration onshore by operator Milio International. Pancontinental is free carried for a programme
in seeking new opportunities where our technical know-how can best be utilised.
of 2D seismic, and an onshore well. In addition, the company’s new venture personnel remain alert
in seeking new opportunities where our technical know-how can best be utilised.
Pancontinental received cash injections from a share purchase plan and placements this financial
year. The company reached out to the UK market which provided support by way of a placement.
Pancontinental received cash injections from a share purchase plan and placements this financial
This years’ fundraising was the first since 2012 when funds were raised for working capital and an
year. The company reached out to the UK market which provided support by way of a placement.
exploration well which resulted in Kenya’s first ever offshore oil discovery.
This years’ fundraising was the first since 2012 when funds were raised for working capital and an
exploration well which resulted in Kenya’s first ever offshore oil discovery.
The Board welcomed Mr John Leach as Independent Non-Executive Director during the period. His
extensive global and executive experience will enable him to make a significant contribution to the
The Board welcomed Mr John Leach as Independent Non-Executive Director during the period. His
company. I would also like to acknowledge and thank outgoing Independent Non-Executive Director
extensive global and executive experience will enable him to make a significant contribution to the
Anthony Maslin for his time with Pancontinental.
company. I would also like to acknowledge and thank outgoing Independent Non-Executive Director
Anthony Maslin for his time with Pancontinental.
The company is looking toward the future in a positive light, in particular with the anticipation of
material progress towards a successful drilling programme offshore Namibia which would be an
The company is looking toward the future in a positive light, in particular with the anticipation of
excellent growth opportunity for the company.
material progress towards a successful drilling programme offshore Namibia which would be an
excellent growth opportunity for the company.
To Pancontinental’s Directors, Management and Staff, I thank you for your continued commitment
and effort. As always, I also thank you the company’s Shareholders for your ongoing support.
To Pancontinental’s Directors, Management and Staff, I thank you for your continued commitment
and effort. As always, I also thank you the company’s Shareholders for your ongoing support.
HD Kennedy
Chairman
HD Kennedy
Pancontinental Oil & Gas NL
Chairman
Pancontinental Oil & Gas NL
Review of Operations
Namibia
Pancontinental and its joint venture
partners have completed the seismic
agreed work
components
programme and are now working towards
confirming a drillable prospect as the
location of an exploration well
the
of
In Namibia, oil and gas exploration wells were first drilled in the 1960s. Following a number of dry
wells, the Kudu Gas Field was discovered in 1974. The historic discovery confirmed that the
geological structures offshore Namibia could contain hydrocarbons. Subsequent to Namibia gaining
independence from South Africa, the country’s oil and gas industry regained momentum with large
multinational companies returning to the West African nation in search of commercial oil and gas.
In 2013, HRT Participações em Petróleo S.A. (now PetroRio) drilled the Wingat-1 well in the licence
immediately to the south of Pancontinental’s PEL 0037 in the Walvis Basin. The well struck oil and
found two well-developed oil source rocks as well as several turbidite reservoirs saturated with oil.
For the first time, the reported oil and source rocks verified a working oil system in the basin.
Although the oil that was recovered was of good quality, the exploration find was not commercially
viable. However it did bring hope that Namibia could hold potential for discoveries as elsewhere
around the African continent.
Pancontinental first entered Namibia some ten years ago when it was awarded a Reconnaissance
Licence. The licence enabled the company to conduct technical analysis and build on its database of
seismic and well data. In 2011, Pancontinental and its joint venture partner Paragon Oil & Gas (Pty)
Ltd signed a Petroleum Agreement and Petroleum Exploration Licence 0037 over three blocks;
2012B, 2112A and 2113B in the Walvis Basin. The licence covers blocks which were selected as the
prime areas for oil generation after preliminary work carried during the Reconnaissance Licence
period.
Source, seal, trap and reservoir are the four key elements required for a hydrocarbon accumulation.
Industry activity in recent years has demonstrated that these elements are present offshore Namibia
and Pancontinental is very encouraged by the possibility of drilling in this geological environment.
The geological environment offshore Namibia
4
Review of Operations
Namibia
Pancontinental and its joint venture
partners have completed the seismic
components
of
the
agreed work
programme and are now working towards
confirming a drillable prospect as the
location of an exploration well
In Namibia, oil and gas exploration wells were first drilled in the 1960s. Following a number of dry
wells, the Kudu Gas Field was discovered in 1974. The historic discovery confirmed that the
geological structures offshore Namibia could contain hydrocarbons. Subsequent to Namibia gaining
independence from South Africa, the country’s oil and gas industry regained momentum with large
multinational companies returning to the West African nation in search of commercial oil and gas.
In 2013, HRT Participações em Petróleo S.A. (now PetroRio) drilled the Wingat-1 well in the licence
immediately to the south of Pancontinental’s PEL 0037 in the Walvis Basin. The well struck oil and
found two well-developed oil source rocks as well as several turbidite reservoirs saturated with oil.
For the first time, the reported oil and source rocks verified a working oil system in the basin.
Although the oil that was recovered was of good quality, the exploration find was not commercially
viable. However it did bring hope that Namibia could hold potential for discoveries as elsewhere
around the African continent.
Pancontinental first entered Namibia some ten years ago when it was awarded a Reconnaissance
Licence. The licence enabled the company to conduct technical analysis and build on its database of
seismic and well data. In 2011, Pancontinental and its joint venture partner Paragon Oil & Gas (Pty)
Ltd signed a Petroleum Agreement and Petroleum Exploration Licence 0037 over three blocks;
2012B, 2112A and 2113B in the Walvis Basin. The licence covers blocks which were selected as the
prime areas for oil generation after preliminary work carried during the Reconnaissance Licence
period.
Source, seal, trap and reservoir are the four key elements required for a hydrocarbon accumulation.
Industry activity in recent years has demonstrated that these elements are present offshore Namibia
and Pancontinental is very encouraged by the possibility of drilling in this geological environment.
Review of Operations
Namibia Offshore PEL 0037
Location:
Walvis Basin
Project Size:
17,295 square kilometres
JV Partners:
Tullow Kudu Limited (Operator)
Pancontinental
Paragon Oil & Gas (Pty) Ltd
65.00%
30.00%
5.00%
In 2011, Pancontinental along with its local partner Paragon Oil & Gas (Pty) Ltd were awarded blocks
offshore Namibia in the Walvis Basin, under Petroleum Exploration Licence 0037. Once early
technical analysis was complete, Pancontinental high-graded the project and negotiated with its local
partner for an additional 10% to add to its original 85% stake.
Pancontinental built a theory on the geological makeup of the area and prospectivity for oil
generation. The company’s groundwork was examined by Tullow Oil (“Tullow”), a multinational oil
and gas exploration company founded in Tullow, Ireland. As a result, in 2013 Tullow Kudu Limited (a
subsidiary of Tullow Oil) entered the joint venture with a 65% interest in exchange for wholly
funding a seismic and drilling programme.
Under the terms of the farmout agreement, Tullow had the option of continuing in or withdrawing
from the project prior to the drilling phase commitment. In April 2016 Tullow notified Pancontinental
of its intention to continue as operator and to lead the joint venture to potential drilling.
The seismic programme consisting of 3,000 km2 of 3D seismic (covering approximately 17% of the
licence), 1,000km of 2D seismic, processing, interpretation and mapping has been completed at a
cost in excess of US $34 million. Having discovered several Prospects as well as additional Leads,
the joint venture is now working toward confirming a drillable prospect suitable for exploratory
drilling.
The geological environment offshore Namibia
The location of PEL 0037 offshore Namibia
5
Review of Operations
PEL 0037 joint venture’s seismic database
consists of newly acquired 3D and 2D as well as
legacy 2D which covers a sizeable portion of the
licence. Data from regional wells drilled has
been integrated with the seismic to provide a
model of the geological setting within the
licence. Ongoing studies will assist in updating
the risk profiles of the Prospects and Leads in
the three blocks.
Four Prospects and three Leads have been
mapped on 3D seismic with more anticipated as
further exploration studies continue.
The Cormorant Prospect, located on the western
side of the north block is the current most likely
turbidite drilling target and the main focus of
ongoing exploration work. The Prospect is a
Cretaceous base-of-slope turbidite fan which lies
over the central part of the oil source rock
fairway.
The Albatross Prospect is a Cretaceous slope and
base-of-slope turbidite fan which is also located
west in the northern block. Albatross overlies the
thickest and most mature area of the oil source
rock fairway.
The Prospects are all located in an area where
turbidite sands have cascaded over the edge of a
marine shelf, down the palaeoslope and onto the
basin floor. The geological architecture in PEL
0037 may hold the elements required for a
hydrocarbon discovery. This will be tested once
a drillable prospect is confirmed and a forward
drilling programme agreed.
Under the terms of the farmout agreement,
drilling is required by March 2017, one year
earlier than the licence requirement of March
2018.
Map of seismic available within PEL 0037
Map of seismic available within PEL 0037
The location of PEL 0037 offshore Namibia
Prospects within PEL 0037 (3D area only)
The Cormorant Prospect
6
The Albatross Prospect
PEL 0037 joint venture’s seismic database
consists of newly acquired 3D and 2D as well as
legacy 2D which covers a sizeable portion of the
licence. Data from regional wells drilled has
been integrated with the seismic to provide a
model of the geological setting within the
licence. Ongoing studies will assist in updating
the risk profiles of the Prospects and Leads in
the three blocks.
Four Prospects and three Leads have been
mapped on 3D seismic with more anticipated as
further exploration studies continue.
The Cormorant Prospect, located on the western
side of the north block is the current most likely
turbidite drilling target and the main focus of
ongoing exploration work. The Prospect is a
Cretaceous base-of-slope turbidite fan which lies
over the central part of the oil source rock
fairway.
The Albatross Prospect is a Cretaceous slope and
base-of-slope turbidite fan which is also located
west in the northern block. Albatross overlies the
thickest and most mature area of the oil source
rock fairway.
The Prospects are all located in an area where
turbidite sands have cascaded over the edge of a
marine shelf, down the palaeoslope and onto the
basin floor. The geological architecture in PEL
0037 may hold the elements required for a
hydrocarbon discovery. This will be tested once
a drillable prospect is confirmed and a forward
drilling programme agreed.
Under the terms of the farmout agreement,
drilling is required by March 2017, one year
earlier than the licence requirement of March
2018.
Map of seismic available within PEL 0037
The location of PEL 0037 offshore Namibia
Prospects within PEL 0037 (3D area only)
Review of Operations
Review of Operations
Pancontinental has estimated the Prospective Resource potential of the Prospects mapped to date
using factors including estimates of the area of the Prospects, of to what level the Prospects may be
oil filled, the thickness, geometry, porosity and net to gross factors of the potential reservoirs, oil
saturations and commercial recovery factors. The estimates have been made on a deterministic
basis and no probabilistic estimates or chances of drilling success have therefore been made in this
case. Details of the Prospects and Leads mapped to date are as follows: (see Cautionary Statement
below and Disclaimers on the last pages of the Review of Operations)
PROSPECT / LEAD
STATUS
AREA
(Sq Km)
PROSPECTIVE
RESOURCE 100%
(MmBbls)*
Albatross
Prospect
Seagull & Gannet S
Prospect
Seagull & Gannet N
Prospect
Cormorant
Upper Fan 2
Lower Fan 3
Lower Fan 4
Prospect
Lead
Lead
Lead
293
273
90
120
85
352
170
349
338
104
124
NET TO
NET
JOINT VENTURE
PANCONTINENTAL
SHARE (MmBbls)
(MmBbls)
331.6
321.1
98.8
117.8
99.5
96.3
29.6
35.3
TOTAL (Prospects Only)
915*
869.3
260.7
Table of PEL 0037 Prospects and Leads areas and Prospective Resource Volumes evaluated as at 28 September 2015
Cautionary Statement - The estimated quantities of petroleum that may potentially be recovered by the
application of a future development project(s) relate to undiscovered accumulations. These estimates have both an
associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to
determine the existence of a significant quantity of potentially moveable hydrocarbons. The resources referred
to above were announced 28 September 2015. The company confirms that it is not aware of any new
information or data that, in its opinion, materially affects the information included in the relevant market
announcement and that all the material assumptions and technical parameters underpinning the estimates in the
relevant market announcement continue to apply and have not materially changed.
* Prospective Resources – Best Estimate, 100% Basis – See Disclaimers for further information
The Cormorant Prospect
The Albatross Prospect
7
Review of Operations
Kenya
Pancontinental’s geological principles of
offshore Kenya have been proven with
the company sharing in two historic
discoveries in recent years. The company
is now focusing on its L6 onshore
/offshore acreage
Over the past decade Pancontinental has built a catalogue of seismic and well data supporting its
views on the geological settings offshore Kenya. In the company’s modelling of the region, the Tana
River plays an important part as it is the source of sediments and nutrients which have travelled
from the river into the Indian Ocean and formed interesting geological formations which
Pancontinental believes are ideal conditions for the generation of hydrocarbons.
Tana River Delta Offshore Kenya
Kenya’s first two offshore discoveries, for both of which, Pancontinental was a joint venture partner,
give weight to the arguments and thesis formed by the company –
2012
Mbawa-1, Kenya L8
The first ever gas discovery offshore Kenya; and
2014
Sunbird-1, Kenya L10A
The first ever oil discovery offshore Kenya.
8
Review of Operations
Review of Operations
Kenya
Pancontinental’s geological principles of
offshore Kenya have been proven with
the company sharing in two historic
discoveries in recent years. The company
is now focusing on its L6 onshore
/offshore acreage
Kenya Onshore/Offshore Block L6
Location:
Lamu Basin
Project Size:
5,010 square kilometres
JV Partners
Offshore:
FAR Limited (Operator)
Pancontinental
JV Partners
Onshore:
Milio International (Operator)
Pancontinental
FAR Limited
60.00%
40.00%
60.00%
16.00%
24.00%
Over the past decade Pancontinental has built a catalogue of seismic and well data supporting its
views on the geological settings offshore Kenya. In the company’s modelling of the region, the Tana
River plays an important part as it is the source of sediments and nutrients which have travelled
from the river into the Indian Ocean and formed interesting geological formations which
Pancontinental believes are ideal conditions for the generation of hydrocarbons.
Kenya’s onshore /offshore block L6 in the Lamu Basin was granted in 2002 with Pancontinental the
founding member and initial operator. The offshore area is located in water depths of 400 metres
and covers approximately two thirds of the block, with the remaining acreage onshore. A number of
exploration campaigns have been carried out on the block from 2D and 3D seismic programmes,
desktop studies, Falcon airborne gravity and magnetics surveys.
Pancontinental’s joint venture partners in the
L6 Block include FAR Limited (ASX:FAR) and
Milio
are
International. Both operators
successful; FAR Limited is an Australian oil and
gas explorer with high potential exploration
assets in Africa and Milio International are a
multinational group with interests in Africa that
include commercial LPG imports into Mombasa
Port, offtaker and marketer of African crude as
well as seismic operations.
The geology within offshore L6 contains a deep
central graben which is thought to be an oil
and gas “source kitchen” with hydrocarbon
trapping prospects identified close by. The
largest prospect is the Kifaru Prospect which is
situated in water depths of 80m to 100m in the
southwest of the L6 area. 3D seismic has
covered the Kifaru Prospect as well as several
others. In 2014, a joint venture led by BG
Group and with Pancontinental as a partner
drilled Sunbird-1 in Block L10A offshore Kenya
and with a discovery opened up a new play in
the area.
Outline of Block L6 showing source kitchen within
Outline of block L6 showing source kitchen within
Tana River Delta Offshore Kenya
Kenya’s first two offshore discoveries, for both of which, Pancontinental was a joint venture partner,
give weight to the arguments and thesis formed by the company –
2012
Mbawa-1, Kenya L8
The first ever gas discovery offshore Kenya; and
2014
Sunbird-1, Kenya L10A
The first ever oil discovery offshore Kenya.
Location of Block L6 onshore /offshore Kenya
9
Review of Operations
Review of Operations
Milio International who are a Dubai based group are joint venture partners and operators of the
onshore portion of the L6 block. Seismic operations carried out on their L20 block to the west of
block L6 led the group to discover the potential in the area. As such, the group farmed into the block
for a 60% interest by funding a 2D seismic work programme and an onshore exploration well at no
cost to Pancontinental who retained a 16% interest.
Prospective Resource Estimates Cautionary Statement
DISCLAIMERS & NOTES - NAMIBIA
Prospects onshore include:
Kudu;
Mamba; and
Boundary Anticline.
The prospects are a combination of Eocene and Cretaceous clastics (sandstones).
The onshore exploration work programme has seen a number of setbacks which has been outside
the control of the partners. Discussions are continuing with the Government of Kenya with the aim
of planning suitable arrangements so that the activities pursuant to the Petroleum Sharing Contract
can continue.
According to an assessment by operator FAR Limited, the L6 area has potential to contain
approximately 3.7 billion barrels of oil or 10.2 trillion cubic feet of gas prospective resources on a
gross, un-risked, best estimate basis. The three prospects covered by new 3D seismic (Kifaru, Kifaru
West and Tembo) have combined potential for approximately 630 million barrels of oil on an un-
risked, best estimate, undivided 100% basis.
The details of the prospective resource estimates are shown in the table below:
Prospects and Leads
Cautionary Statement - The estimated quantities of petroleum that may potentially be recovered by the
application of a future development project(s) relate to undiscovered accumulations. These estimates have both an
associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to
determine the existence of a significant quantity of potentially moveable hydrocarbons. See Disclaimers and Notes
for further details. The resources referred to above were announced 27 February 2013. The company
confirms that it is not aware of any new information or data that, in its opinion, materially affects the information
included in the relevant market announcement and that all the material assumptions and technical parameters
underpinning the estimates in the relevant market announcement continue to apply and have not materially
changed.
10
The estimated quantities of petroleum in this report that may potentially be recovered by the application
of a future development project(s) relate to undiscovered accumulations. These estimates have both an
associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is
required to determine the existence of a significant quantity of potentially moveable hydrocarbons.
Prospective Resources
All Prospective Resource estimates in this report with regard to Namibian operations are prepared as of
28 September 2015. The estimates have been prepared in accordance with the definitions and
guidelines set forth in the Petroleum Resource Management System 2007 approved by the Society of
Petroleum Engineers and have been prepared using deterministic methods. Unless otherwise stated the
estimates provided in this report are Best Estimates. The estimates are unrisked and have not been
adjusted for an associated risk of discovery and risk of development. The 100% basis refers to the total
resource while the Net to Pancontinental basis is adjusted for the Government Royalty of 5% under
Production Sharing Contracts and Pancontinental’s percentage entitlement under Joint Venture
contracts.
Prospective Resources estimates in this report have been made by Pancontinental Oil & Gas NL and may
be subject to revision if amendments to mapping or other factors necessitate such revision.
The meanings of “Prospects” and “Leads” in this report are in accordance with the Petroleum Resource
Management System 2007 approved by the Society of Petroleum Engineers. A Prospect is a project that
is sufficiently well defined to represent a viable drilling target. A Lead is a project associated with a
potential accumulation that is currently poorly defined and requires more data acquisition and / or
evaluation to be classified as a Prospect.
Competent Person Statement Information
The hydrocarbon resource estimates in this report have been prepared by Mr Roy Barry Rushworth the
Chief Executive Officer and Executive Director of Pancontinental Oil & Gas NL. Mr Rushworth has more
than 30 years’ experience in practising petroleum geology and exploration management.
Mr Rushworth consents to the inclusion in this report of information relating to the hydrocarbon
Prospective Resources in the form and context in which it appears.
Forward Looking Statements
This document may include forward looking statements. Forward looking statements include, are not
necessarily limited to, statements concerning Pancontinental Oil & Gas NL’s planned operation
programme and other statements that are not historic facts. When used in this document, the words
such as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should” and similar
expressions are forward looking statements. Although Pancontinental believes its expectations reflected
in these are reasonable, such statements involve risks and uncertainties, and no assurance can be given
that actual results will be consistent with these forward looking statements.
Review of Operations
Review of Operations
Milio International who are a Dubai based group are joint venture partners and operators of the
onshore portion of the L6 block. Seismic operations carried out on their L20 block to the west of
block L6 led the group to discover the potential in the area. As such, the group farmed into the block
for a 60% interest by funding a 2D seismic work programme and an onshore exploration well at no
cost to Pancontinental who retained a 16% interest.
Prospects onshore include:
Kudu;
Mamba; and
Boundary Anticline.
The prospects are a combination of Eocene and Cretaceous clastics (sandstones).
The onshore exploration work programme has seen a number of setbacks which has been outside
the control of the partners. Discussions are continuing with the Government of Kenya with the aim
of planning suitable arrangements so that the activities pursuant to the Petroleum Sharing Contract
can continue.
According to an assessment by operator FAR Limited, the L6 area has potential to contain
approximately 3.7 billion barrels of oil or 10.2 trillion cubic feet of gas prospective resources on a
gross, un-risked, best estimate basis. The three prospects covered by new 3D seismic (Kifaru, Kifaru
West and Tembo) have combined potential for approximately 630 million barrels of oil on an un-
risked, best estimate, undivided 100% basis.
Prospective Resource Estimates Cautionary Statement
DISCLAIMERS & NOTES - NAMIBIA
The estimated quantities of petroleum in this report that may potentially be recovered by the application
of a future development project(s) relate to undiscovered accumulations. These estimates have both an
associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is
required to determine the existence of a significant quantity of potentially moveable hydrocarbons.
Prospective Resources
All Prospective Resource estimates in this report with regard to Namibian operations are prepared as of
28 September 2015. The estimates have been prepared in accordance with the definitions and
guidelines set forth in the Petroleum Resource Management System 2007 approved by the Society of
Petroleum Engineers and have been prepared using deterministic methods. Unless otherwise stated the
estimates provided in this report are Best Estimates. The estimates are unrisked and have not been
adjusted for an associated risk of discovery and risk of development. The 100% basis refers to the total
resource while the Net to Pancontinental basis is adjusted for the Government Royalty of 5% under
Production Sharing Contracts and Pancontinental’s percentage entitlement under Joint Venture
contracts.
Prospective Resources estimates in this report have been made by Pancontinental Oil & Gas NL and may
be subject to revision if amendments to mapping or other factors necessitate such revision.
The details of the prospective resource estimates are shown in the table below:
Prospects and Leads
Cautionary Statement - The estimated quantities of petroleum that may potentially be recovered by the
application of a future development project(s) relate to undiscovered accumulations. These estimates have both an
associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to
determine the existence of a significant quantity of potentially moveable hydrocarbons. See Disclaimers and Notes
for further details. The resources referred to above were announced 27 February 2013. The company
confirms that it is not aware of any new information or data that, in its opinion, materially affects the information
included in the relevant market announcement and that all the material assumptions and technical parameters
underpinning the estimates in the relevant market announcement continue to apply and have not materially
changed.
The meanings of “Prospects” and “Leads” in this report are in accordance with the Petroleum Resource
Management System 2007 approved by the Society of Petroleum Engineers. A Prospect is a project that
is sufficiently well defined to represent a viable drilling target. A Lead is a project associated with a
potential accumulation that is currently poorly defined and requires more data acquisition and / or
evaluation to be classified as a Prospect.
Competent Person Statement Information
The hydrocarbon resource estimates in this report have been prepared by Mr Roy Barry Rushworth the
Chief Executive Officer and Executive Director of Pancontinental Oil & Gas NL. Mr Rushworth has more
than 30 years’ experience in practising petroleum geology and exploration management.
Mr Rushworth consents to the inclusion in this report of information relating to the hydrocarbon
Prospective Resources in the form and context in which it appears.
Forward Looking Statements
This document may include forward looking statements. Forward looking statements include, are not
necessarily limited to, statements concerning Pancontinental Oil & Gas NL’s planned operation
programme and other statements that are not historic facts. When used in this document, the words
such as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should” and similar
expressions are forward looking statements. Although Pancontinental believes its expectations reflected
in these are reasonable, such statements involve risks and uncertainties, and no assurance can be given
that actual results will be consistent with these forward looking statements.
11
Review of Operations
DISCLAIMERS & NOTES - KENYA
In respect of the Competent Persons Statement regarding the information contained in preceding pages
with regard to Kenya L6 resources, the reader is directed to the announcement of 27 February 2013 by
FAR Limited.
Notes to the table
1. The recoverable hydrocarbon volume estimates prepared by FAR Limited and stated in the table above
have been prepared in accordance with the definitions and guidelines set forth in the Petroleum
Resources Management System, 2007 approved by the Society of Petroleum Engineers.
2. The prospective resource estimates have been estimated using probabilistic methods and are
dependent upon a hydrocarbon discovery being made.
3. The Low Estimates, Best Estimates and High Estimates represent respectively that there is a 90%,
50% and 10% probability that the actual resource volume will be in excess of these amounts.
4. The estimates for unrisked prospective resources have not been adjusted for both an associated
chance of discovery and a chance of development.
5. The Gross (100% working interest) prospective resource estimates include Government share of
production applicable under the Production Sharing Contract.
6. The estimates for unrisked Prospective Resources for Kenya Block L6 are reported in oil or gas. There
is insufficient geological and engineering data to make an assessment as to the likely ratio of oil or gas in
a given discovery in Kenya Block L6, hence the estimates provided are for either all oil or all gas. The oil
and gas estimates reported should not be added together.
7. Prospective resources means those quantities of petroleum which are estimated, as of a given date to
be potentially recoverable from undiscovered accumulations by application of future development
projects. Prospective resources have both an associated chance of discovery and a chance of
development.
8. bcf means Billion Cubic Feet of gas at standard temperature and pressure conditions.
9. mmbbls means Million Standard barrels of oil or condensate.
12
Review of Operations
Review of Operations
DISCLAIMERS & NOTES - KENYA
In respect of the Competent Persons Statement regarding the information contained in preceding pages
with regard to Kenya L6 resources, the reader is directed to the announcement of 27 February 2013 by
Corporate
FAR Limited.
Notes to the table
1. The recoverable hydrocarbon volume estimates prepared by FAR Limited and stated in the table above
have been prepared in accordance with the definitions and guidelines set forth in the Petroleum
Resources Management System, 2007 approved by the Society of Petroleum Engineers.
Fundraising
2. The prospective resource estimates have been estimated using probabilistic methods and are
dependent upon a hydrocarbon discovery being made.
The company’s previous significant fundraising was in 2012. From that time until the present, the
company has contributed to working capital as well as an exploratory drilling well in 2014 from the
funds received in 2012 without the need for further assistance from equity markets.
3. The Low Estimates, Best Estimates and High Estimates represent respectively that there is a 90%,
50% and 10% probability that the actual resource volume will be in excess of these amounts.
During the year the company was supported in Australia and UK through placements and by its
shareholders by way of a Share Purchase Plan. A breakdown of the funds received is as follows:
Placement to professional and sophisticated investors
Placement to directors approved at general meeting
Share purchase plan
Total funds raised
AU $1,438,000
AU $ 500,000
AU $ 286,000
AU $2,224,000
Executive Director Remuneration Reductions
In the 2015 financial year, the directors of the company offered to take remuneration reductions.
The reductions have resulted in savings of $351,000 for the company from the previous financial
year as detailed below:
8. bcf means Billion Cubic Feet of gas at standard temperature and pressure conditions.
9. mmbbls means Million Standard barrels of oil or condensate.
Henry David Kennedy
(Non-Executive Chairman)
Roy Barry Rushworth
2016
2015
50,000
50,000
4. The estimates for unrisked prospective resources have not been adjusted for both an associated
chance of discovery and a chance of development.
5. The Gross (100% working interest) prospective resource estimates include Government share of
production applicable under the Production Sharing Contract.
6. The estimates for unrisked Prospective Resources for Kenya Block L6 are reported in oil or gas. There
is insufficient geological and engineering data to make an assessment as to the likely ratio of oil or gas in
a given discovery in Kenya Block L6, hence the estimates provided are for either all oil or all gas. The oil
and gas estimates reported should not be added together.
7. Prospective resources means those quantities of petroleum which are estimated, as of a given date to
be potentially recoverable from undiscovered accumulations by application of future development
projects. Prospective resources have both an associated chance of discovery and a chance of
development.
(Executive Director, Chief Executive Officer)
343,750
643,750
Ernest Anthony Myers
(Executive Finance Director)
John Edward Leach
200,000
245,000
(Non-Executive Director_from Feb 16)
16,000
-
Anthony Robert Frederick Maslin
(Non-Executive Director_to Jan 16)
Total Remuneration
Reduction in Remuneration
26,000
48,000
635,750
986,750
-351,000
13
Review of Operations
Roadshows – Australia & UK
During the financial year Pancontinental executives participated in various Australian and UK based
investor presentations. The roadshow campaigns updated existing and new investors on the planned
activities for Pancontinental in the coming year.
Finance Director Ernie Myers and
CEO/Executive Director Barry Rushworth
Independent Non-Executive Director Appointment & Resignation
In February 2016, the company was pleased to welcome Mr John Leach
to the board as an independent Non-Executive Director.
Mr Leach is an accountant by profession and has experience in cross-
border trade and finance transactions, corporate governance and
international operations and strategy developments.
With his extensive corporate experience the board is confident he will
make a considerable contribution to the company.
The board would also like to thank resigning Non-Executive Director Mr
Anthony Maslin for his service to the company from 2010 to January
2016.
14
Review of Operations
Directors’ Report
Roadshows – Australia & UK
Your Directors submit their report for the year ended 30 June 2016.
During the financial year Pancontinental executives participated in various Australian and UK based
investor presentations. The roadshow campaigns updated existing and new investors on the planned
activities for Pancontinental in the coming year.
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, qualifications, experience and special responsibilities
Finance Director Ernie Myers and
CEO/Executive Director Barry Rushworth
Independent Non-Executive Director Appointment & Resignation
In February 2016, the company was pleased to welcome Mr John Leach
to the board as an independent Non-Executive Director.
Mr Leach is an accountant by profession and has experience in cross-
border trade and finance transactions, corporate governance and
international operations and strategy developments.
With his extensive corporate experience the board is confident he will
make a considerable contribution to the company.
The board would also like to thank resigning Non-Executive Director Mr
Anthony Maslin for his service to the company from 2010 to January
2016.
Henry David Kennedy MA (Geology), SEG (Non-Executive Chairman)
Mr Kennedy is a Geologist with a background in African, Australian and New Zealand
oil and gas businesses. Numerous discoveries in both Western Australia and New
Zealand were made by companies established, developed and managed by Mr
Kennedy. Since August 1999 Mr Kennedy has been a Director of Pancontinental, with
the Company benefiting from Mr Kennedy’s broad knowledge base through ongoing
support in achieving the Company’s strategic goals.
Mr Kennedy is currently a Non-Executive Director of Norwest Energy NL (since April
1997) and was an East Africa Resources Limited Non-Executive Director (since March
2013) but resigned from the position in April 2015.
Roy Barry Rushworth, BSc (Executive Director, Chief Executive Officer)
Mr Rushworth is a Geologist with international petroleum exploration experience. With
roles such as Chief Geologist and Exploration Manager, Mr Rushworth helped guide an
Australian listed company to a number of oil and gas finds during his tenure. Since his
appointment with Pancontinental, Mr Rushworth has been responsible for identifying,
negotiating and acquiring international new venture opportunities particularly in Kenya
and Namibia. In addition, he has a trusted contact base which has assisted him to
attract international major companies as joint venture partners to Pancontinental’s
projects.
Mr Rushworth has been a Director of Pancontinental since August 2005 and Chief
Executive Officer since November 2008.
Ernest Anthony Myers CPA (Executive Finance Director)
Mr Myers is an Accountant who has held senior management, executive and board
participation roles in ASX listed companies. During his career he has had considerable
experience in all corporate matters from capital raisings to financial management of
these companies. He has had relevant African experience through involvement in
exploration projects in Eritrea, Kenya, Namibia and Tanzania. Mr Myers joined
Pancontinental in March 2004 as Company Secretary and was appointed Finance
Director in January 2009.
Mr Myers was an alternate Director of East Africa Resources Limited from June 2010,
to April 2015.
John Edward Leach BArts (Economics) CA, MBA (Independent Non-Executive
Director)
Mr Leach has completed a degree in Economics, is a Chartered Accountant and holds a
Master of Business Administration. Experience in the mining industry along with senior
management and director positions have provided Mr Leach with extensive experience
in financial management, fundraising and strategic planning. Mr Leach joined
Pancontinental’s board in February 2016.
Mr Leach held the position of Executive Finance Director for Cyprus based Atalaya
Mining from 2007 to July 2015 and is currently a Director of Kefi Minerals plc (since
2007). Kefi Minerals plc is an exploration and development company which is also
based in Cyprus and has interests in Ethiopia.
15
Directors’ Report
FORMER DIRECTOR
Anthony Robert Frederick Maslin BBus (Independent Non-Executive Director)
Mr Maslin has been a Director of Pancontinental since December 2010 having held the position of Independent
Non-Executive Director since his appointment until 15 January 2016 when he resigned from the position.
The Board would like to express their sincere thanks to Mr Maslin for his contribution to the company during his
tenure.
COMPANY SECRETARY
Vesna Petrovic, BComm, CPA
Mrs Petrovic is an Accountant who holds a Bachelor of Commerce, Major in Accounting
and Business Law and has completed the Graduate Diploma in Applied Corporate
Governance from the Governance Institute of Australia.
During her professional life she has had public listed company experience in numerous
companies, particularly with those who hold interests in Africa. Mrs Petrovic fulfils both
the accounting and governance functions at Pancontinental.
Mrs Petrovic was appointed Company Secretary in April 2010.
DIRECTORS' INTERESTS
The relevant interest of each Director in the shares and options of the Company as at 30 June 2016 is as
follows:
Henry David Kennedy
Roy Barry Rushworth
Ernest Anthony Myers
John Edward Leach (appointed 26 February 2016)
Anthony Robert Frederick Maslin (resigned 15 January 2016)
DIRECTORS' MEETINGS
Ordinary Shares
Options over
Ordinary Shares
270,101,602
36,835,610
1,650,715
-
14,583
500,000
1,000,000
750,000
-
500,000
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
Ernest Anthony Myers
John Edward Leach (from 26/2/16)
Anthony Robert Frederick Maslin (to 15/1/16)
Directors'
Meetings
6
6
6
6
4
0
Notes
The Directors discussed and agreed various matters throughout the financial year which were resolved by
circular resolution; 5 matters were dealt with in such a manner during the year.
16
Directors’ Report
CORPORATE INFORMATION
Corporate structure
Pancontinental Oil & Gas NL is a no liability company incorporated and domiciled in Australia. The Company’s
ACN is 003 029 543.
Nature of operations and principal activities
The principal activity during the year of entities within the consolidated entity was exploration for oil and gas.
There have been no significant changes in the nature of those activities during the year.
Objectives
Objectives of the group include:
Continued exploration on the company’s current portfolio of permits;
Maximise value of the Company’s existing assets ;
Seek new ventures;
Manage risks involved in the exploration industry; and
Maintain liquidity.
The group’s targets and strategies for meeting the above objectives include:
Approve work programmes best suited for exploration success which are within the Company’s financial
capacity;
Consider strategic alliances through joint ventures to minimise risks and costs to the group;
Continuing focus on cost cutting in non-essential areas; and
Review of appropriate fundraising proposals.
Earnings (loss) per share
Basic earnings (loss) per share
Diluted earnings (loss) per share
The main contributing factor to the Earnings per Share result this financial year was the write off of exploration
carrying balances.
(0.40)
(0.40)
Cents
Employees
The consolidated entity had four (4) employees as at 30 June 2016, (2015: five (5)). The consolidated entity
employs the services of specialised consultants where and when needed.
OPERATING AND FINANCIAL REVIEW
Review of Operations
Namibia PEL 0037 [30% Offshore]
Pancontinental is in joint venture over an offshore area in the Walvis Basin, Namibia. As an original bidder for
the area, Pancontinental was awarded a significant stake in the licence which it then farmed out to Tullow Oil
(“Tullow”), a multinational oil and gas company. In return for a 60% stake in the licence, Tullow committed to
an exploration programme of potentially more than US$100 million, including an exploration well, in which
Pancontinental is free carried.
In the three years since the farmout, operator Tullow has expended approximately US$34 million on exploration
to gain further understanding of the geology in the offshore area. Initial indications show that there are four
main prospects to be further worked up to drillable status.
On 8 April 2016, Tullow advised Pancontinental that it would continue in the joint venture and as such commit
to the provisions of the farmout agreement. Tullow has completed the seismic programme and is working
towards identifying a drillable prospect for future drilling.
17
Directors’ Report
Kenya L6 [40% offshore, 16% onshore]
Pancontinental holds an interest in the L6 block onshore/offshore Kenya. The company has been a participant in
the block since its award in 2002 and has completed various work programmes in joint venture over the area.
In recent years the onshore portion of the block was of geological interest to neighbouring block holder Milio
International (“Milio”). Milio farmed into the onshore portion of the block for 60%, in exchange for a free carried
programme consisting of 2D seismic, interpretation, mapping and an onshore well. Although Milio have
experienced several setbacks to the expected exploration work programme, Pancontinental is in discussions
with joint venture partner FAR Limited (“FAR”) (24%) and is anticipating progress on the issue with regard to
the status of Milio.
Pancontinental holds a 40% interest over the offshore area which has seen a number of exploration campaigns
including both 3D and 2D in Kenyan waters. Pancontinental is in continuing discussions with operator FAR
(60%) as to the future activities planned for block L6.
Group Overview
Pancontinental Oil and Gas NL was incorporated in 1985 and listed on the Australian Securities Exchange in
1986.
The Pancontinental group is comprised of the parent company along with four subsidiary companies.
Dynamics of the Business
The company is committed to further development of existing projects, but at the same time continues to look
for new opportunities, particularly in Africa.
Performance Indicators
The Board closely monitors and considers the group’s operating plans, financial budget and overall operating
and share market performance.
The underlying drivers which contribute to the company’s performance and can be managed internally include a
disciplined approach to investment of resources and allocating funds to those areas which have the greatest
potential to add shareholder value. The company’s share price is often influenced by factors outside the control
of Management and the Board, such as market conditions.
Operating Results for the Year
Summarised operating results are as follows:
2016
Revenues
$
Results
$
Non-segment and unallocated revenues and results
Consolidated entity revenues and results from
ordinary activities before income tax expense
The main contributing factor to the Earnings per Share result this financial year was the write off of exploration
expenditure.
(5,472,381)
(5,472,381)
16,893
16,893
Shareholder Returns
The group is in the exploration phase and so returns to Shareholders are primarily measured through capital
growth.
Profit attributable to owners
of the company
Basic earnings per share
(cents)
Share price
2016
2015
(5,472,381) (41,878,638) (19,068,997)
2014
2013
2012
(662,822)
(1,805,773)
(0.40)
(3.64)
(1.66)
(0.06)
(0.23)
$0.003
$0.006
$0.023
$0.050
$0.175
18
Directors’ Report
Risk Management
Risk management is the process by which an organisation identifies, analyses, responds, gathers information
about and monitors strategic risks that could actually or potentially impact the organisation’s ability to achieve
its mission and objectives. The Board and Management assess risk as part of the ordinary course of business
activities such as strategic planning, promotion, budgets, mergers and acquisitions, strategic partnerships,
legislative changes and conducting business abroad.
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 operating plans and cash flow budgets by Management and Board monitoring of
progress against these budgets.
Ongoing analysis of business risks specific to the exploration industry.
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. Standards cover legal
compliance, conflict resolution, privileged information and fair dealing.
The Board has 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 Employee Incentive Schemes.
The risk assessment process takes into account the following steps:
Condition – What is the particular problem that has been identified?;
Criteria – What is the standard that was not met? This may be an internal benchmark or industry
standard;
Cause – Why did the problem occur?;
Consequence – What is the risk, negative outcome or opportunity foregone due to the finding?; and
Corrective action – What should Management and the Board do to correct the finding and implement
procedures for the continued monitoring of the risk?.
The continued monitoring of risk within the group is directed at evaluating:
The effectiveness and efficiency of operations;
The reliability of financial and management internal processes and reporting; and
Compliance with laws and regulations
to enable the group to safeguard its assets.
Review of Financial Condition
Capital Structure
During the year, the Company added to its cash reserves through two placements and a share purchase plan.
These were the first funds raised since 2012.
Share Capital
Beginning of the financial year
Issued during the year:
End of the financial year
Number of shares
$
99,411,998
2,133,969
1,717,494,096 101,545,967
1,150,994,096
566,500,000
No options have been granted since the end of the previous financial year.
No options of the company expired during the year:
Option Reserve
Balance at beginning of year
expired
Balance at end of year
All unissued shares are ordinary shares of the company.
19
Number
of
options
2,750,000
-
Weighted
average
exercise price
0.12
-
2,750,000
0.12
Directors’ Report
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 Company conducted its last significant fundraising in 2012. Since then, the Group has maintained adequate
cash reserves to fund ongoing operations including paying its own way through a drilling programme. During
the current financial year, the company raised funds by way of placements and a share purchase plan. UK
investors showed support for the company via their participation in one of the placements completed during the
year.
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.
SHARE OPTIONS
Unissued shares
At the date of this report there were 2,750,000 unissued ordinary shares under options. Refer to the notes for
further details on the options outstanding.
During the year, no options expired.
Shares issued as a result of the exercise of Options
There were no shares issued as a result of the exercise of options during the financial year.
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
There were no significant events after balance date.
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.
ENVIRONMENTAL REGULATION AND PERFORMANCE
Pancontinental is committed to complying with any requirement for environmental management in any
jurisdiction and country that it operates.
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:
HD Kennedy, RB Rushworth, EA Myers, JE Leach, ARF Maslin (prior to his resignation) and V Petrovic.
20
Directors’ Report
REMUNERATION REPORT (Audited)
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 receive a fixed
fee for their services, they do not receive performance based remuneration. The Chief Executive Officer
receives a fixed fee for his respective executive services (with no bonus or other performance-based
remuneration). Executive Directors are paid a salary. 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 and Executive
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 sources as well as the fees paid to Non-Executive Directors of comparable companies when
undertaking reviews. The Non-Executive Directors of the Company can participate in Employee Option
Incentive Schemes with Shareholder approval. The remuneration of Executive and Non-Executive Directors for
the period ending 30 June 2016 is detailed in Table 1 of this report.
Senior Management 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 may take independent advice
from external sources when necessary. Details of the CEO’s contract are as follows:
Basic Sum:
Capacity:
Commencement
Termination Period: 6-12 months
Date:
$375,000 (reduced from $750,000 contract)
Chief Executive Officer
1 July 2012
The Board regularly reviews compensation levels to take into account market-related factors such as cost of
living changes, any change to the scope of the role performed and any other relevant factors of influence. As
such, Executive Director remuneration was reduced by $435,000 per annum in the last financial year and
those remuneration reductions have stayed in place for the current financial year.
Fixed remuneration
Objective
The level of fixed Directors’ fees 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.
21
Directors’ Report
Directors’ Report
Table 1: Director remuneration for the year ended 30 June 2016
Post
Table 1: Director remuneration for the year ended 30 June 2016
Salary &
Fees
Cash STI
Options
(Issued)
Super-
Post
annuation
Employment Equity
Primary benefits
Primary benefits
Employment Equity
Henry David Kennedy
(Non-Executive Chairman)
2016
2015
2016
2015
Henry David Kennedy
(Non-Executive Chairman)
Roy Barry Rushworth
(Executive Director,
Chief Executive Officer)
Roy Barry Rushworth
(Executive Director,
Chief Executive Officer)
Ernest Anthony Myers
(Executive Finance Director)
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Ernest Anthony Myers
(Executive Finance Director)
John Edward Leach
(Non-Executive Director_from Feb 16)
John Edward Leach
(Non-Executive Director_from Feb 16)
Anthony Robert Frederick Maslin
(Non-Executive Director_to Jan 16)
Anthony Robert Frederick Maslin
(Non-Executive Director_to Jan 16)
Total Current Year
2016
Remuneration
2015
26,000
635,7501
48,000
Salary &
Fees
50,000
50,000
50,000
50,000
343,750
643,750
343,750
643,750
200,000
245,000
200,000
245,000
16,000
-
16,000
-
26,000
48,000
Cash STI
Super-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
annuation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Options
(Issued)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
Total
50,000
50,000
50,000
50,000
343,750
643,750
343,750
643,750
200,000
245,000
200,000
245,000
16,000
-
16,000
-
26,000
48,000
26,000
635,750
48,000
Value of
options as
proportion
Value of
of Revenue
options as
proportion
of Revenue
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
-
0.0%
Total Current Year
Note 1. The remuneration received in the 2016 financial year was $351,000 less than that in the 2015
Remuneration
financial year.
635,7501
635,750
-
-
-
-
The Remuneration Report of a listed company is subject to a non-binding vote of adoption by shareholders at
Note 1. The remuneration received in the 2016 financial year was $351,000 less than that in the 2015
the Annual General Meeting. Where 25 percent or more of the votes cast at the most recent Annual General
financial year.
Meeting were against adoption of that report, the subsequent remuneration report must include an explanation
The Remuneration Report of a listed company is subject to a non-binding vote of adoption by shareholders at
of the board’s actions in response.
the Annual General Meeting. Where 25 percent or more of the votes cast at the most recent Annual General
At the company’s 2015 Annual General Meeting, shares voted for the Remuneration Report resolution were as
Meeting were against adoption of that report, the subsequent remuneration report must include an explanation
follows:
of the board’s actions in response.
At the company’s 2015 Annual General Meeting, shares voted for the Remuneration Report resolution were as
Vote
follows:
For
Against
Vote
Abstain
For
Chairman
Against
Excluded
Abstain
Chairman
Excluded
Shares Voted %
91,792,918
67.2
28.0
38,260,190
Shares Voted %
N/A
105,000
67.2
91,792,918
4.8
6,565,489
28.0
38,260,190
N/A
133,731,667
N/A
105,000
4.8
6,565,489
N/A
133,731,667
The percentage voted against the remuneration report as per the above table totalled 28%. The total number
of holders that voted against the resolution were 7, from a potential 3,905 holders eligible to vote. One of the
holders who voted against the resolution held 36,606,136 shares which accounted for 96% of the “against”
The percentage voted against the remuneration report as per the above table totalled 28%. The total number
vote.
of holders that voted against the resolution were 7, from a potential 3,905 holders eligible to vote. One of the
holders who voted against the resolution held 36,606,136 shares which accounted for 96% of the “against”
The Board has put in requisite measures to reduce not only remuneration expenditure of the company but has
vote.
reduced all non-core expenditure. This can be evidenced by analysis of the company’s Statement of
Comprehensive Income. Director remuneration as per the above table of $635,750 is $351,000 less this current
The Board has put in requisite measures to reduce not only remuneration expenditure of the company but has
financial year than that of the previous 2015 financial year, a reduction of 36%.
reduced all non-core expenditure. This can be evidenced by analysis of the company’s Statement of
Comprehensive Income. Director remuneration as per the above table of $635,750 is $351,000 less this current
financial year than that of the previous 2015 financial year, a reduction of 36%.
22
Directors’ Report
Table 2: Options granted as part of remuneration for the year ended 30 June 2016
(as approved by Shareholders)
There were no options granted as part of remuneration for the year ended 30 June 2016 (30 June 2015: Nil).
Over the past five years options granted as part of Director and Management remuneration have been valued
using an appropriate 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.
Fair values of options:
The fair value of each option is estimated on the date of grant using an appropriate option pricing model.
Expected volatility
Risk-free interest rate
Expected life of option
2016
2015
2014
2013
2012
2011
-
-
-
-
-
-
-
-
-
120%
110%
3.57%
2.74%
4 years 3 years
-
-
-
Total number of options:
Number of options
Grant date
Vesting date
Weighted average fair
value
2,750,000
30 Nov 12
30 Nov 12
0.06
Company Performance
Company performance can be reflected in the movement of 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 quality projects and has also built strategic alliances
with other companies to further develop its project portfolio.
Consequences of Performance on Shareholder Wealth
Return on Equity
Share price at 30 June
Average equity
Net Profit /(Loss)
Return on Equity in %
2016
$0.003
11,954,797
(5,472,381)
(45.78)%
2015
$0.006
34,563,322
(41,878,638)
(121.16)%
2014
$0.023
65,037,139
(19,068,997)
(29.32)%
2013
$0.050
72,686,103
(662,822)
(0.91)%
2012
$0.175
43,124,939
(1,805,773)
(4.19)%
END OF REMUNERATION REPORT
23
Directors’ Report
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 2016.
NON-AUDIT SERVICES
Rothsay did not receive any payment for non-audit services during the year.
Signed in accordance with a resolution of the Directors.
Ernest Anthony Myers
Director
Perth 30 September 2016
24
25
Corporate Governance Statement
The Company’s 2016 Corporate Governance Statement is presented below and can also be accessed at
http://pancon.com.au/about-us/corporate-governance/. The Statement has been approved by the Board of
Pancontinental Oil & Gas NL and is current as at 30 September 2016.
Pancontinental’s Corporate Governance Statement outlines the Company’s governance practices throughout
the financial year and the extent of the Company’s compliance, as at 30 June 2016 with the ASX Corporate
Governance Council’s third edition of Corporate Governance Principles and Recommendations.
The Company will regularly review its current practices to ensure they evolve with good practice methods
recommended by regulatory bodies while taking into account factors such as the size, nature and activities
of the Company.
Corporate Governance Council Recommendation followed by Pancontinental Oil & Gas NL
Corporate Governance Comments
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
1.1 A listed entity should disclose:
(a) the respective roles and responsibilities of its board and management; and
(b) those matters expressly reserved to the board and those delegated to management.
Adopted - Pancontinental has adopted a Board Charter which can be found on the Company’s
website at http://pancon.com.au/about-us/corporate-governance/ The Charter outlines the
roles and responsibilities of Board and Management including the responsibilities for not only the
Board as a whole but also the Chairman, Chief Executive Officer and Non-Executive /
Independent Directors.
The Charter contains a list of responsibilities for the Board which cannot be directly delegated to
Senior Management, however day-to-day activities required to fulfil those responsibilities may
be assigned to Senior Management.
1.2 A listed entity should:
(a) undertake appropriate checks before appointing a person, or putting forward to security
holders a candidate for election, as a director; and
(b) provide security holders with all material information in its possession relevant to a decision
on whether or not to elect or re-elect a director.
Adopted – The Company’s Nomination Committee Charter which has been disclosed on the
Pancontinental website http://pancon.com.au/about-us/corporate-governance/ outlines the role
of the Nomination Committee including the oversight of the Company’s selection and
appointment practices for Directors.
As part of its Corporate Governance Manual the Company has also adopted a Policy and
Procedure
found at
for Selection and (Re)Appointment of Directors which can be
http://pancon.com.au/about-us/corporate-governance/ The Policy and Procedure outlines the
process for the evaluation and appointment of new Board members, as well as listing
information that is required to be provided to Shareholders so that they may make an informed
decision regarding the election of a proposed candidate.
The Nomination Committee Charter empowers the Directors to engage external consultants such
as Employment Screening Australia who are a CrimTrac accredited information agent that
adheres to the Australian Standard AS 4811-2006 Employment Screening.
1.3 A listed entity should have a written agreement with each director and senior executive setting
out the terms of their appointment.
Adopted – Each Director is in possession of a written agreement setting out the terms of their
appointment including their right to independent professional advice if required to fulfil their
capacity as Director.
Material terms of any employment, service or consultancy agreement are disclosed.
1.4 The company secretary of a listed entity should be accountable directly to the board, through the
chair, on all matters to do with the proper functioning of the board.
Adopted – The Company Secretary is accountable to the Board through the Chairman on matters
relating to the proper functioning of the Board.
26
Corporate Governance Statement
The Company Secretary completes and circulates board papers, records minutes of the business
discussed at Board Meetings and communicates with the Board on: governance matters,
application of the Company’s Constitution, the ASX Listing Rules and other relevant laws. They
are a point of reference between the Board and Management.
1.5 A listed entity should:
(a) have a diversity policy which includes requirements for the board or a relevant committee
of the board to set measurable objectives for achieving gender diversity and to assess
annually both the objectives and the entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and
(c) disclose as at the end of each reporting period the measurable objectives for achieving
gender diversity set by the board or a relevant committee of the board in accordance with
the entity’s diversity policy and its progress towards achieving them and either:
1. the respective proportions of men and women on the board, in senior executive positions
and across the whole organisation (including how the entity has defined “senior
executive” for these purposes); or
2.
if the entity is a “relevant employer” under the Workplace Gender Equality Act, the
entity’s most recent “Gender Equality Indicators”, as defined in and published under that
Act.
Adopted – Pancontinental has formally adopted a Diversity Policy which can be found at
http://pancon.com.au/about-us/corporate-governance/
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 practical given the size and scope of the Company’s operations.
In considering new member appointments, the Board evaluates the candidate’s ability to actively
participate in Board matters by exercising sensible business judgement and committing the time
required to fulfil the role effectively so that the Company can move towards achieving its
strategic goals.
Diversity – Measurable Objectives
The main objectives with regard to diversity include:
The Company’s composition of Board, Executive, Management and Employees to be as
diverse as practicable;
To provide equal opportunities for all positions within the Group and continue the Group’s
commitment to employment based on merit;
Periodic review of the Group’s workforce structure and assessment of where and how
improvements can be implemented incorporating greater diversity.
The above 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 and European;
Gender – both male and female; and
Age – the age range spans over 40 years.
Diversity – Annual Reporting
Board & Company Secretary
Employees
Total Workforce
2016
20%
75%
43%
2015
20%
67%
37%
The Australian Government’s Workplace Gender Equality Agency periodically releases statistics
with regard to the gender composition of the Australian workforce by industry. With reference to
its latest data, Pancontinental far exceeds the industry average of 15.3% of women.
27
Corporate Governance Statement
1.6 A listed entity should:
a) have and disclose a process for periodically evaluating the performance of the board, its
committees and individual directors; and
b) disclose, in relation to each reporting period, whether a performance evaluation was
undertaken in the reporting period in accordance with that process.
Adopted – The Company’s website includes a policy with regard to the Process for Performance
Evaluation which can be found at http://pancon.com.au/about-us/corporate-governance/
During the reporting period a formal evaluation of the Board and its members was not carried
out however the composition of the Board, its suitability to carry out the Company’s objectives
and remuneration levels are reviewed on an as required basis. For example, during the 2015
financial year market conditions dictated the oil and gas environment prompting companies to
review expenditures in order to preserve cash balances. As such, Pancontinental reduced
Executive Director salaries by $435,000 per annum to adapt to market circumstances. Although
the instability in the oil and gas industry is not attributable to the Directors it does show the
willingness of the Board to put requisite measures in place when industry settings change.
1.7 A listed entity should:
a) have and disclose a process for periodically evaluating the performance of its senior
executives; and
b) disclose, in relation to each reporting period, whether a performance evaluation was
undertaken in the reporting period in accordance with that process.
Adopted – The Company’s website includes a policy with regard to the process for performance
evaluation which can be found at http://pancon.com.au/about-us/corporate-governance/
With regard to the current financial reporting period, a formal evaluation of the performance of
Senior Executives was not carried out as the suitability and size of the Company’s workforce is
reviewed by the Board on an as required basis.
28
1.6 A listed entity should:
a) have and disclose a process for periodically evaluating the performance of the board, its
committees and individual directors; and
b) disclose, in relation to each reporting period, whether a performance evaluation was
undertaken in the reporting period in accordance with that process.
Adopted – The Company’s website includes a policy with regard to the Process for Performance
Evaluation which can be found at http://pancon.com.au/about-us/corporate-governance/
During the reporting period a formal evaluation of the Board and its members was not carried
out however the composition of the Board, its suitability to carry out the Company’s objectives
and remuneration levels are reviewed on an as required basis. For example, during the 2015
financial year market conditions dictated the oil and gas environment prompting companies to
review expenditures in order to preserve cash balances. As such, Pancontinental reduced
Executive Director salaries by $435,000 per annum to adapt to market circumstances. Although
the instability in the oil and gas industry is not attributable to the Directors it does show the
willingness of the Board to put requisite measures in place when industry settings change.
1.7 A listed entity should:
executives; and
b) disclose, in relation to each reporting period, whether a performance evaluation was
undertaken in the reporting period in accordance with that process.
Adopted – The Company’s website includes a policy with regard to the process for performance
evaluation which can be found at http://pancon.com.au/about-us/corporate-governance/
With regard to the current financial reporting period, a formal evaluation of the performance of
Senior Executives was not carried out as the suitability and size of the Company’s workforce is
reviewed by the Board on an as required basis.
Corporate Governance Statement
Corporate Governance Statement
PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE
2.1 The board of a listed entity should:
(a) have a nomination committee which:
(1) has at least three members, a majority of whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number of times the committee met
throughout the period and the individual attendances of the members at those meetings;
or
(b) if it does not have a nomination committee, disclose that fact and the processes it employs
to address board succession issues and to ensure that the board has the appropriate
balance of skills, knowledge, experience, independence and diversity to enable it to
discharge its duties and responsibilities effectively.
a) have and disclose a process for periodically evaluating the performance of its senior
Not Adopted – The full Board fulfils the role of the Nomination Committee.
The Board considers those matters that would ordinarily be the responsibility of a Nomination
Committee and no separate meetings were held as the Nomination Committee during the year.
The Board has adopted a Nomination Committee Charter which is disclosed on the Company’s
website at http://pancon.com.au/about-us/corporate-governance/ The Charter as well as the
Company’s Policy and Procedure
for Selection and (Re) Appointment of Directors
http://pancon.com.au/about-us/corporate-governance/ and Succession Plan Policy are applied
when convening to discuss Nomination Committee matters.
In assessing the Company’s diversity objectives, the composition of the Board is considered with
regard to blend of skills, experience, independence and diversity. The Directors consider that the
current Board has the appropriate balance to successfully carry out the duties required of them
as Officers of the Company.
2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and
diversity that the board currently has or is looking to achieve in its membership.
Adopted – The Board is seeking Directors who collectively have the skills, knowledge and
experience to govern and direct the Company effectively. The below table shows the key skills
and experience the Board as a whole possess.
Board Expertise
Board Experience
Commercial
Compliance
Corporate
Ethics
Exploration
Finance
Geology
Governance
Risk
Strategy
●
●
●
●
●
●
●
●
●
●
Capital Raisings
Company Promotion
Financial Management
Former Board Experience
International Business
Listed Company Management
Mergers & Acquisitions
Mineral Exploration
Mineral Production
Oil & Gas Exploration
●
●
●
●
●
●
●
●
●
●
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 and Mr Leach are qualified accountants and therefore meets the tests of financial
expertise.
29
Corporate Governance Statement
Pancontinental acknowledges that the skills, knowledge and experience required on the Board
will change as the Organisation evolves however under the current circumstances, the mix of
expertise and experience identified above is beneficial in meeting the current challenges faced by
the Group.
2.3 A listed entity should disclose:
(a) the names of the directors considered by the board to be independent directors;
(b) if a director has an interest, position, association or relationship of the type described in
Box 2.3 but the board is of the opinion that it does not compromise the independence of the
director, the nature of the interest, position, association or relationship in question and an
explanation of why the board is of that opinion; and
(c) the length of service of each director.
Adopted – see table below.
Director
Position
Tenure
Independent
HD Kennedy
Non-Executive Chairman
17 years
No
Shareholder
-
Substantial
RB Rushworth Executive Director, Chief Executive
11 years
No - Executive Director
Officer
EA Myers
Executive Finance Director
7 years
No - Executive Director
JE Leach
Independent Non-Executive Director < 1 year
Yes
ARF Maslin
Independent Non-Executive Director 5 years
Yes
(resigned
15-1-16)
In considering the independence of Directors, the Board refers to the criteria for independence
as set out in Box 2.3 of the ASX Corporate Governance Council’s third edition of Corporate
Governance Principles and Recommendations. 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 on
the Company’s website.
Box 2.3’s independence criteria has been applied in the above table and although the only
Director considered to be independent is Mr Leach, the Board believes its current composition is
in line with the long term interests of Shareholders. The Board also acknowledges the need for
independent judgement on all Board decisions, irrespective of each individual Director’s
independence and as such has implemented a Policy on Independent Professional Advice.
2.4 A majority of the board of a listed entity should be independent directors.
Not Adopted – Currently the only Director considered independent is Mr Leach.
The Board acknowledges Recommendation 2.4 in that the majority of the Board of a listed entity
should be independent Directors, however the Board is of the belief that each area of expertise
required for a Company of Pancontinental’s size is well represented and that there are long term
benefits to be gained from the current combination of Directors’ skills, experience and expertise.
Although the Board of Directors are able to exercise objective business judgement, a Policy on
Independent Professional Advice has been implemented to assist if required. If a Director
considers it necessary to obtain professional advice to properly discharge the responsibility for
their office as a Director, then the Company will pay reasonable expenses associated with
obtaining such advice.
2.5 The chair of the board of a listed entity should be an independent director and, in particular,
should not be the same person as the CEO of the entity.
Not Adopted – As recommended, the Chairman and the CEO are not the same person, however
the Chairman of the Board is Mr Kennedy, who is not independent by virtue of this substantial
shareholding in the Company.
Leadership of the Board rests with the Chairman who oversees its operation ensuring that it is
run effectively. The Board believes Mr Kennedy’s interests are aligned with the long term
interests of Shareholders and given his extensive experience and qualifications, believes Mr
Kennedy is the most appropriate Director to carry out the role of the Chairman.
30
Corporate Governance Statement
2.6 A listed entity should have a program for inducting new directors and provide appropriate
professional development opportunities for directors to develop and maintain the skills and
knowledge needed to perform their role as directors effectively.
Adopted – The Company has devised an Induction Programme for new Directors, Executives and
Employees.
The goal of the Induction Programme is to assist new Directors in participating fully and actively
in Board decision making at the earliest opportunity by providing them with the necessary
Company knowledge as well as information pertaining to the industry within which it operates. A
Directors’ Pack is made available which includes key information on Board Members, Board
Charters, Duties Imposed on Directors of Public Companies, Directors’ Disclosure Obligations,
Declaration of Interest Forms and Overall Responsibility amongst other Policies and Procedures
implemented by the Company.
New Directors are given the opportunity to review the Company’s operations and meet with key
Executives in the Exploration, Geology, Finance and Corporate areas.
Professional development opportunities arise when there are new corporate, legal, tax,
accounting or geological developments within Australia or in overseas countries where the
Company operates. The Board is briefed by Management on any new standards or matters of
interest that are relevant in the Company continuing its business effectively. In addition, a
number of professional bodies with which the Company is associated run regular seminars or
conferences at which attendance is encouraged.
PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY
3.1 A listed entity should:
(a) have a code of conduct for its directors, senior executives and employees; and
(b) disclose that code or a summary of it.
Adopted – A summary of
http://pancon.com.au/about-us/corporate-governance/
the Company’s Code of Conduct can be
found at
The Company’s Code of Conduct sets out the principles and standards which the Board,
Management and employees of the Company are encouraged to strive towards when dealing
with each other, Shareholders, Stakeholders and the broader community.
The Code of Conduct covers the Company’s core values and beliefs including the following:
Integrity and Honesty
Responsibility to Shareholders
Respect for the Law
Conflicts of Interest
Protection of Assets
Confidential Information
Employment Practices
Responsibility to the Community
Responsibility to the Individual
Obligations Relative to Fair Trading and Dealing
Financial and other Inducements
Compliance with the Code of Conduct
In addition, a Whistleblower Policy forms part of the Company’s Corporate Governance Manual.
The Policy covers the following:
Reporting and Investigating Officers
Reporting Responsibility
No Retaliation
Reporting Violations
Accounting and Auditing Matters
Acting in Good Faith
Confidentiality
Handling of Reported Violations
The Policy was adopted so that any concerns regarding contraventions of the Code of Conduct
could be addressed in a safe and formal manner without fear of reprisal.
31
Corporate Governance Statement
PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE REPORTING
4.1
The board of a listed entity should:
(a) have an audit committee which:
(1) has at least three members, all of whom are non-executive directors and a majority of
whom are independent directors; and
(2) is chaired by an independent director, who is not the chair of the board,
and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and experience of the members of the committee; and
(5) in relation to each reporting period, the number of times the committee met throughout
the period and the individual attendances of the members at those meetings; or
(b) if it does not have an audit committee, disclose that fact and the processes it employs that
independently verify and safeguard the integrity of its corporate reporting, including the
processes for the appointment and removal of the external auditor and the rotation of the
audit engagement partner.
Not Adopted – The full Board fulfils the role of the Audit Committee.
The Board considers those matters that would ordinarily be the responsibility of an Audit
Committee and no separate meetings were held as the Audit Committee during the year. The
Board has adopted an Audit Committee Charter which is disclosed on the Company’s website at
http://pancon.com.au/about-us/corporate-governance/ The Charter as well as the Company’s
Procedure
External Auditor
http://pancon.com.au/about-us/corporate-governance/ is applied when convening to discuss
Audit Committee matters.
the Selection, Appointment
and Rotation
for
of
An External Auditor is appointed to independently verify and safeguard the integrity of the
Company’ corporate reporting, in addition when discussing Audit Committee matters, the Board
reviews annual action points such as:
Review of financial statements
Assess Management’s selection of accounting policies and principles
Consider the external audit report and whether it is consistent with the Board’s
information and knowledge
Consider the Company’s internal controls
Assess if the external audit report is adequate for Shareholder needs
Discuss any significant findings with the External Auditor
Confirm the independence of the External Auditor
Ensure that the External Auditor is requested to attend the Annual General Meeting
The Board in conjunction Management’s input, review the suitability of existing audit
arrangements and the scope of the audit on a periodic basis. The Board is responsible for the
appointment of a new external auditor should a vacancy arise, however the appointment must
be ratified by Shareholders at the next Annual General Meeting.
The Board of Directors also review the current circumstances in light of Section 324D (1) and (2)
of the Corporations Act 2001 which stipulates that an individual may not play a significant role in
the audit of a listed entity for more than five out of seven successive financial years.
4.2
The board of a listed entity should, before it approves the entity’s financial statements for a
financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial
records of the entity have been properly maintained and that the financial statements comply
with the appropriate accounting standards and give a true and fair view of the financial position
and performance of the entity and that the opinion has been formed on the basis of a sound
system of risk management and internal control which is operating effectively.
Adopted – A Directors’ Declaration under Subsection 295(4) of the Corporations Act 2001 is only
made after each person who performs:
a) A Chief Executive Officer function; or
b) A Chief Financial Officer function
in relation to the Company, has given the Directors a declaration whether, in their opinion:
a) The financial records of the Company for the financial year have been properly
maintained in accordance with Section 286 of the Corporations Act 2001;
32
Corporate Governance Statement
b) The financial statements and notes for the financial year comply with the accounting
standards;
c) The financial statements and notes for the financial year give a true and fair view;
d) Any other matters that are prescribed by the regulations in relation to the financial
statements and notes for the financial year are satisfied.
In addition, that the opinion has been formed on the basis of a sound system of risk
management and internal controls which is operating effectively.
The declaration is made:
a) In writing;
b) Specifying the date the declaration is made;
c) Specifying the capacity in which the person is making the declaration; and
d) Signed by the person making the declaration.
4.3 A listed entity that has an AGM should ensure that its external auditor attends its AGM and is
available to answer questions from security holders relevant to the audit.
Adopted – During Annual General Meeting planning, the External Auditors are consulted to
ensure that they are available to attend the meeting and answer questions from Shareholders
with regard to the conduct of the audit and the Auditor’s Report.
PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE
5.1 A listed entity should:
(a) have a written policy for complying with its continuous disclosure obligations under the
Listing Rules; and
(b) disclose that policy or a summary of it.
Adopted – A summary of the Company’s Policy on ASX Listing Rule Compliance can be found at
http://pancon.com.au/about-us/corporate-governance/
As a Company listed on the Australian Securities Exchange, Pancontinental is obliged to disclose
certain information under a continuous disclosure regime to keep the market informed of events
and developments as they occur. The Company promotes timely and balanced disclosure of all
material matters concerning the Company. All Investors should have equal and timely access to
material information. The Company has adopted certain procedures to ensure that it complies
with its continuous disclosure obligations and has appointed a Responsible Officer for ensuring
the procedures are complied with.
The Policy sets out details with regards to:
The Responsible Officer
The concept of timely announcements
Types of information that needs to be disclosed
Board Notification – informing the Board and ongoing monitoring
Avoiding a false market
Safeguarding confidentiality of corporate information to avoid premature disclosure
Media contact and comment
External communications such as analyst briefings and responses to Shareholder
questions
Reporting
Required actions in the case of non-compliance
Updating compliance procedures
Guide to drafting company announcements
PRINCIPLE 6 – RESPECT THE RIGHTS OF SECURITY HOLDERS
6.1 A listed entity should provide information about itself and its governance to investors via its
website.
Adopted – The Company’s website includes a Corporate Governance landing page which can be
found at http://pancon.com.au/about-us/corporate-governance/
The Corporate Governance page shows an introduction to the Corporate Governance of the
Company by referring to the Corporate Governance Manual adopted, in addition, Investors can
find Board Charters as well as an extract of Policies and Procedures included in the manual.
33
Corporate Governance Statement
Links to the Investor Centre can also be opened from the Corporate Governance page where ASX
releases, the Company’s share price, financial reports, broker reports, media coverage and
company presentations can be accessed. Subscriptions to the Company’s mailing list can also be
submitted from this page.
Furthermore, general and detailed project information is available for the Investor’s perusal from
the Corporate Governance page.
6.2 A listed entity should design and implement an investor relations program to facilitate effective
two-way communication with investors.
Adopted – The Company has adopted a Shareholder Communication Policy which can be found
on the Company’s website at http://pancon.com.au/about-us/corporate-governance/
The Policy aims to ensure that Shareholders are informed of all major developments affecting
the Company and that there are means available to facilitate two-way communication. If
Investors have a greater understanding of the business they are able to make informed
investment decisions.
Information is communicated to Investors by:
Company announcements
Information briefings to media and analysts
Notices of Meeting and explanatory material
Website updates
Board and Management addresses and presentations at meetings
Investors can express their views or present queries to the Company by:
Financial information including annual reports
Utilising the Contact Us section of the website http://pancon.com.au/contact-us to send
direct communications to the Company
The Contact Us section http://pancon.com.au/contact-us as well as any ASX or media
updates include the contact details of the Company such as address and telephone
number. These details can be used to initiate written or verbal contact with the Company
The Company provides Shareholders with a Notice of Meeting detailing matters such as
the agenda, location and time of the meeting so that Shareholders can make
arrangements to attend and speak to Company representatives. Notices of Meeting are
available on the ASX platform under the code PCL or the Company website so that
Investors who are not currently Shareholders can also attend the meeting.
6.3 A listed entity should disclose the policies and processes it has in place to facilitate and
encourage participation at meetings of security holders.
Adopted – The Company has adopted a Shareholder Communication Policy which can be found
on the Company’s website at http://pancon.com.au/about-us/corporate-governance/
The Policy covers the Company’s belief that general meetings are an effective means of
communicating with Shareholders. The Company provides information in the Notice of Meeting
that is presented in a clear, concise and effective manner. Meetings are held during business
hours, at a central location convenient for the largest number of Investors to attend.
Shareholders are encouraged to attend and take note of the Chairman’s address as well as vote
on the resolutions presented to the meeting. Upon completion of formal matters, the Chief
Executive Officer provides attendees with an update of activities via a company presentation.
This provides Investors with an opportunity to ask questions, express their views or just meet
the Company representatives.
6.4 A listed entity should give security holders the option to receive communications from, and send
communications to, the entity and its security registry electronically.
Adopted – Security holders have the option of receiving communications from the Company and
its Share Registry electronically. The Contact Us section of the Company’s website
http://pancon.com.au/contact-us provides an opportunity
for security holders to send
communications to the Company electronically. The website has been specifically designed so
that it is user friendly on all devices from laptops to phones.
Electronic communication is not only cost effective, it provides Investors with real time updates
on the activities of the Company.
The Company’s website provides a tab where Stakeholders can join the Company’s mailing list
which will enable them to receive electronic communication each time the Company lodges an
announcement on the ASX or provides a media update.
34
Corporate Governance Statement
Advanced Share Registry and the Company review and monitor opportunities to increase the use
of electronic communication with its Shareholders.
PRINCIPLE 7 – RECOGNISE AND MANAGE RISK
7.1
The board of a listed entity should:
(a) have a committee or committees to oversee risk, each of which:
(1) has at least three members, a majority of whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number of times the committee met
throughout the period and the individual attendances of the members at those meetings;
or
(b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact
and the processes it employs for overseeing the entity’s risk management framework.
Not Adopted - The full Board fulfils the role of the Risk Committee.
The Board considers those matters that would ordinarily be the responsibility of a Risk
Committee and no separate meetings were held as the Risk Committee during the year. The
found at
Company’s Risk Management Policy
http://pancon.com.au/about-us/corporate-governance/)
reviewing and
discussing risk management matters.
summary of which
is applied when
can be
(a
In managing risk, it is the Company’s practice to take advantage of potential opportunities while
managing potential adverse effects. The Company’s Risk Management Policy sets out the
Company’s risk management system and processes as well as the Company’s Risk Profile.
The Policy covers the following risk related points and is used as a means to assess the
Company’s risk management structure:
The role of the Board and delegated responsibility – ultimate responsibility rests with the
Board, however day to day management of risk is the responsibility of the CEO with the
assistance of Senior Management
The role of the CEO and accountabilities
Authority of the CEO
Risk Profile
Audit Committee Charter
Regular budgeting and financial reporting
Clear limits and authorities for expenditure levels
Procedures for compliance with continuous disclosure obligations under the Listing Rules
Procedures to assist with establishing and administering corporate governance systems
and disclosure requirements
Responsibility to Stakeholders
Continuous improvement
7.2
The board or a committee of the board should:
(a) review the entity’s risk management framework at least annually to satisfy itself that it
continues to be sound; and
(b) disclose, in relation to each reporting period, whether such a review has taken place.
Adopted – The Board and Management assess risk as part of the ordinary course of business
activities such as strategic planning, promotion, budgets, mergers and acquisitions, strategic
partnerships, legislative changes and conducting business abroad. Each Board Meeting is used as
a platform for the review and assessment of the Company’s risk profile.
7.3 A listed entity should disclose:
(a) if it has an internal audit function, how the function is structured and what role it performs;
or
(b) if it does not have an internal audit function, that fact and the processes it employs for
evaluating and continually improving the effectiveness of its risk management and internal
control processes.
35
Corporate Governance Statement
Adopted – The Company discloses that it does not have an internal audit function.
The Company’s risk management system is overseen by Management who ensure that the
identification, monitoring and response of business risks.
The Board reviews Management’s assessment of the efficiency of the system and according to
the Risk Management Policy is required to satisfy itself that Management has developed and
implemented a sound system of risk management and internal control.
7.4 A listed entity should disclose whether it has any material exposure to economic, environmental
and social sustainability risks and, if it does, how it manages or intends to manage those risks.
Adopted – The Company values economic, environmental and social sustainability in areas
within which it operates.
The Company has adopted a Corporate Governance Manual which sets outs the policies and
procedures in place which apply to the Board, Management, Employees and the entire business.
The policies and procedures are designed to assist in identifying relevant risks and having
processes in place to mitigate if not eliminate the risk.
Economic sustainability refers to the ability of a listed entity to continue operating at a
particular level of economic production over the long term.
Environmental sustainability refers to the ability of a listed entity to continue operating
in a manner that does not compromise the health of the ecosystems in which it operates
over the long term.
Social sustainability is the ability of a listed entity to continue operating in a manner that
meets accepted social norms and needs over the long term.
Risks identified that may have a material effect on the Company include:
Oil price volatility as well as currency fluctuations in the Australian and United States
dollars. The state of the oil and gas industry has been affected by the uncertainty in the
oil price. Although the Company is not in production and there is not a material business
risk in that regard, the Company’s operations are affected due to reduced exploration
budgets and reduced overall activity in the exploration sector;
Currently all of Pancontinental’s assets are managed by Joint Venture Operators who are
responsible for the day to day operations of the permits. As such, regular review of the
Joint Venture activities is crucial in safeguarding the assets of the Company. Technical
and financial Executives review the work programmes and budgets in place to ensure
compliance with approved documents. Updates on operational activities are provided by
the Joint Venture partners on a regular basis and will include any environmental
operational issues if applicable;
Conducting business in foreign jurisdictions carries with it a risk of change in business,
legal, tax, accounting, political, environmental and technical practices for example,
which may have a material effect on the Company. Pancontinental monitors joint
venture partners working in those jurisdictions as well as local news developments to
ensure that if a risk presents itself the Company is well equipped with sufficient time to
decide on a course of action;
The Company is committed to providing all Employees, Executives and Directors with a
safe and productive work environment. There are environmental and location risks that
the Company may face, however the Corporate Governance Manual and the procedures
and policies within it should assist in assessing the best course of action to mitigate or
eliminate the risk;
For expenditure that the Company has control of, it will endeavour to use sustainable
and ethically sourced products that have little or no impact on the environment.
36
Corporate Governance Statement
PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY
8.1
The board of a listed entity should:
(a) have a remuneration committee which:
(1) has at least three members, a majority of whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number of times the committee met
throughout the period and the individual attendances of the members at those meetings;
or
(b) if it does not have a remuneration committee, disclose that fact and the processes it
employs for setting the level and composition of remuneration for directors and senior
executives and ensuring that such remuneration is appropriate and not excessive.
Not Adopted – The full Board fulfils the role of the Remuneration Committee.
The Board considers those matters that would ordinarily be the responsibility of a Remuneration
Committee and no separate meetings were held as the Remuneration Committee during the
year. The Board has adopted a Remuneration Committee Charter which is disclosed on the
Company’s website at http://pancon.com.au/about-us/corporate-governance/ The Charter as
well as the Company’s Remuneration Policy is applied when convening to discuss Remuneration
Committee matters.
Emoluments of Directors and Senior Executives are set by reference to payments made by other
companies of a similar size and industry, and by reference to the skills and experience of the
Directors and Executives. Details of the nature and amount of emoluments of each Director of
the Company are disclosed annually in the Company’s annual report.
Should circumstances arise where the Board needs assistance on a remuneration matter, the
Board after requisite approval may engage a remuneration consultant to ensure the level of
remuneration in the Company is appropriate for its size, level of activity and industry.
8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of
non-executive directors and the remuneration of executive directors and other senior executives.
Adopted - The Company has adopted a Remuneration Committee Charter which can be found on
the Company’s website at http://pancon.com.au/about-us/corporate-governance/ The Charter
separately discloses the processes regarding the remuneration of Non-Executive Directors and
the remuneration of Executive Directors and other Senior Executives.
Executive Remuneration
In considering the level of remuneration for Executives, the matters that are taken into account
include:
Remuneration which motivates Executives to pursue the long term growth and success of
the Company within an appropriate control framework;
A clear correlation between performance and remuneration;
Align the interests of key leadership with the long term interests of the Company’s
Shareholder; and
Prohibit Executives from entering into transactions which limit the economic risk of
participating in unvested entitlement.
Non-Executive Remuneration
Matters of consideration include:
Fees paid to Non-Executive Directors are within the aggregate amount approved by
Shareholders;
Non-Executive Directors to be remunerated by way of fees;
Non-Executive Directors are not provided with retirement benefits other than statutory
superannuation; and
Non-Executive Directors are not entitled to participate in equity-based remuneration
schemes designed for Executives without due consideration and appropriate disclosure to
the Company Shareholders.
37
Corporate Governance Statement
8.3 A listed entity which has an equity-based remuneration scheme should:
(a) have a policy on whether participants are permitted to enter into transactions (whether
through the use of derivatives or otherwise) which limit the economic risk of participating in
the scheme; and
(b) disclose that policy or a summary of it.
Adopted - The Company has adopted a Policy for Trading in Company Securities which can be
found on the Company’s website at http://pancon.com.au/about-us/corporate-governance/
Directors, Officers and Employees who wish to trade in Company securities must first have
regard to the statutory provisions of the Corporations Act 2001 dealing with insider trading, in
conjunction with the Company’s Policy for Trading in Company Securities. The policy has been
developed so that all Company employees and representatives are clear as to their obligations
with regard to trading while in possession of insider information.
38
Statement of Comprehensive Income
YEAR ENDED 30 JUNE 2016
Notes
CONSOLIDATED
2016
$
2015
$
OPERATING ACTIVITIES
Depreciation 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
TOTAL OPERATING ACTIVITIES
FINANCING ACTIVITIES
Financing income
Financing expense
TOTAL FINANCING ACTIVITIES
PROFIT/(LOSS) BEFORE INCOME TAX
Income tax expense
PROFIT/(LOSS) FOR THE PERIOD
OTHER COMPREHENSIVE INCOME/(LOSS)
Other comprehensive income
TOTAL OTHER COMPREHENSIVE
INCOME/(LOSS)
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
(23,565)
(888,438)
(43,924)
(8,354)
(1,021,183)
(81,337)
(4,044,840) (40,492,415)
(7,454)
(36,144)
(3,108)
(31,502)
(10,023)
(31,873)
(194,908)
(61,579)
(226,261)
(5,486,105) (42,206,141)
(13,249)
(30,231)
(3,304)
(46,589)
(15,812)
(23,750)
(143,286)
(25,718)
(183,399)
16,893
(3,169)
13,724
328,058
(555)
327,503
(5,472,381) (41,878,638)
-
-
(5,472,381) (41,878,638)
-
-
-
-
(5,472,381) (41,878,638)
(0.40)
(0.40)
(3.64)
(3.64)
The Statement of Comprehensive Income is to be read in conjunction with the Notes to the Financial Statements.
39
Statement of Financial Position
AT 30 JUNE 2016
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
NON-CURRENT LIABILITIES
Provision for employee entitlements
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
2016
2015
$
$
1,157,927
63,113
1,221,040
1,345,837
51,839
1,397,676
62,292
9,293,818
9,356,110
83,257
13,399,620
13,482,877
10,577,150
14,880,553
274,658
274,658
1,248,123
1,248,123
16,901
16,901
8,427
8,427
291,559
1,256,550
10,285,591
13,624,003
101,545,967
154,000
99,411,998
154,000
(91,414,376) (85,941,995)
13,624,003
10,285,591
10,285,591
13,624,003
The Statement of Financial Position is to be read in conjunction with the Notes to the Financial Statements.
40
Statement of Changes in Equity
AT 30 JUNE 2016
Consolidated
Share
Capital
Retained
Earnings
$
$
Option
Reserve
$
Total
Equity
$
Balance at 1 July 2015
99,411,998 (85,941,995)
154,000
13,624,003
Profit or loss
Other comprehensive
income/(loss)
-
-
Shares issued (net of costs)
2,133,969
Share options
-
(5,472,381)
-
-
-
-
-
-
-
(5,472,381)
-
2,133,969
-
Balance at 30 June 2016
101,545,967 (91,414,376)
154,000
10,285,591
Balance at 1 July 2014
99,411,998
(44,254,537)
345,179
55,502,640
Profit or loss
Other comprehensive
income/(loss)
Shares issued (net of costs)
Share options
-
-
-
-
(41,878,638)
-
-
-
-
-
191,180
(191,179)
(41,878,638)
-
-
1
Balance at 30 June 2015
99,411,998
(85,941,995)
154,000
13,624,003
The above Statement of Changes in Equity is to be read in conjunction with the Notes to the Financial Statements.
41
Statement of Cashflows
YEAR ENDED 30 JUNE 2016
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Recharges & refunds 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
Interest received
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(b)
CONSOLIDATED
2016
2015
$
$
(1,457,727)
-
(885,452)
(1,735,302)
948,392
(7,964,324)
11(a)
(2,343,179)
(8,751,234)
(2,600)
(90,509)
(2,600)
(90,509)
17,093
2,224,000
(82,289)
249,959
-
-
2,158,804
249,959
(186,975)
1,345,837
(935)
1,157,927
(8,591,784)
9,665,484
272,137
1,345,837
The above Statement of Cash Flows is to be read in conjunction with the Notes to the Financial Statements.
42
Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This financial report was authorised for issue by the Directors on 30 September 2016.
Statement of Compliance
The financial report is a general purpose financial report which has been prepared in accordance with
Australian Accounting Standards (“AASBs”), including Australian interpretations adopted by the Australian
Accounting Standards Board (‘AASB’) and the Corporations Act 2001. The consolidated financial report of
the consolidated entity and company also 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
43
Notes to the Financial Statements
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.
(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 diminishing value basis on all property, plant and equipment.
Major depreciation rates are:
Plant and equipment:
2016
30%
2015
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
44
Notes to the Financial Statements
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.
(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.
45
Notes to the Financial Statements
Notes to the Financial Statements
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;
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
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted
for any bonus element.
(b) Future Income Tax Benefit not taken into account
(s) Comparatives
Where necessary, comparatives have been reclassified and repositioned for consistency with current year
disclosures.
(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. A number
of new standards, amendments to standards and interpretations are effective for the current annual report
period; however, none have been applied in preparing these consolidated financial statements. The
standards are not expected to have a material impact on the accounting policies or consolidated financial
statements of the group.
The potential future income tax benefit calculated at 30% in respect of:
Adjustments to carry forward tax losses
Tax Losses not brought to account
Total
This future income tax benefit will only be obtained if:
(a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be
realised;
(b) the conditions for deductibility imposed by tax legislation continue to be complied with; and
(c) no changes in tax legislation adversely affect the consolidated entity in realising the benefit.
The recognition and utilisation of losses is subject to the loss recoupment rules being satisfied.
4. RECEIVABLES (CURRENT)
Sundry receivables
Total
(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.
46
CONSOLIDATED
2016
2015
$
$
23,565
8,354
4,044,840
40,492,415
CONSOLIDATED
2016
$
2015
$
(1,559,629) (12,563,591)
1,559,629
12,563,591
-
-
-
-
-
-
6,920,304
6,706,042
6,920,304
6,706,042
CONSOLIDATED
2016
2015
$
63,113
63,113
$
51,839
51,839
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
facie
tax, using
The prima
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
2015
2016
$
$
23,565
8,354
4,044,840
40,492,415
CONSOLIDATED
2016
$
2015
$
(1,559,629) (12,563,591)
-
-
1,559,629
12,563,591
-
-
Adjustments to carry forward tax losses
Tax Losses not brought to account
Total
This future income tax benefit will only be obtained if:
(a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be
6,920,304
6,920,304
6,706,042
6,706,042
-
-
realised;
(b) the conditions for deductibility imposed by tax legislation continue to be complied with; and
(c) no changes in tax legislation adversely affect the consolidated entity in realising the benefit.
The recognition and utilisation of losses is subject to the loss recoupment rules being satisfied.
4. RECEIVABLES (CURRENT)
Sundry receivables
Total
(a) Terms and conditions
CONSOLIDATED
2016
$
63,113
63,113
2015
$
51,839
51,839
(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.
47
Notes to the Financial Statements
5. INTERESTS IN SUBSIDIARIES
Name
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
Pancontinental Namibia Pty Ltd**
Provision for diminution in value of
investment
Loan to Pancontinental Namibia Pty Ltd
Provision for loss on loan to
Pancontinental Namibia P/L
Afrex Ltd *
Provision for diminution in value of
investment
Loan to Afrex Ltd
Provision for loss on loan to Afrex Ltd
Starstrike Resources Ltd *
Provision for diminution in value of
investment
Loan to Starstrike Resources Ltd
Provision for loss on loan to Starstrike
Resources Ltd
Total
Country of
incorporation
Percentage of
equity interest
held by the
consolidated
entity
Investment
2016
%
2015
%
2016
$
2015
$
Australia
100
100
2
2
Australia
100
100
(2)
(150,184)
(2)
(155,180)
-
1
-
1
(1)
4,786,523
(1)
4,511,137
(65,161)
(47,150)
Saint Lucia
100
100
10,584,107
10,584,107
British Virgin
Islands
(10,584,107) (10,584,107)
6,681,913
(2,955,144)
6,741,096
(4,861,512)
100
100
380,000
380,000
(380,000)
81,580
(380,000)
73,995
-
6,532,342
-
8,109,571
*Indicates companies not audited by Rothsay Chartered Accountants.
**Australian entity audited by Rothsay, branch operation by Ernst & Young Namibia.
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
Write offs
Depreciation expense
Total written down amount
48
CONSOLIDATED
2015
2016
$
$
93,964
(31,672)
62,292
91,364
(8,107)
83,257
83,257
2,600
-
(23,565)
62,292
1,388
90,980
(757)
(8,354)
83,257
Notes to the Financial Statements
7. DEFERRED EXPLORATION, EVALUATION AND
DEVELOPMENT COSTS
Exploration, evaluation and development costs carried
forward
Pre-production:
exploration and evaluation phases:
Carrying amount at 1 July
Expenditure & acquisitions during the year
Exploration expenditure written off
Exploration expenditure written off – direct to P&L
Disposal of Australian assets
Recovery and refunds of exploration expenditure *
Carrying amount at 30 June
CONSOLIDATED
2016
$
2015
$
13,399,620
327,704
45,950,928
8,661,655
(4,044,840) (40,492,415)
177,868
50,000
(948,416)
13,399,620
588,847
-
(977,513)
9,293,818
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.
* For the year ended 30 June 2016, the $977,513 relates to cash call credits, for the year ended 30 June
2015 the credit relates to refunds of joint venture contributions and reimbursement of past costs.
8. TRADE and OTHER PAYABLES (CURRENT)
Trade creditors, accruals and provisions
Total
9. CONTRIBUTED EQUITY
(a) Issued and paid up capital
Ordinary shares fully paid
Total
(b) Movements in shares on issue
CONSOLIDATED
2015
2016
$
$
274,658 1,248,123
274,658 1,248,123
CONSOLIDATED
2016
$
2015
$
101,545,967
101,545,967
99,411,998
99,411,998
Beginning of the financial year
Issued during the year:
Placements & SPP (net of costs)
Exercise of Options (net of costs)
End of the financial year
2016
2015
Number of
shares
$
1,150,994,096
99,411,998
Number of
shares
1,150,994,096
$
99,411,998
2,133,969
566,500,000
-
-
1,717,494,096 101,545,967
-
-
1,150,994,096
-
-
99,411,998
49
Notes to the Financial Statements
10. RESERVES AND ACCUMULATED LOSSES
Reserves
Beginning of the financial year
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
CONSOLIDATED
2016
$
2015
$
154,000
-
154,000
345,179
(191,179)
154,000
(85,941,995)
(44,254,537)
(5,472,381)
-
(91,414,376)
(91,414,376)
(41,878,638)
191,180
(85,941,995)
(85,941,995)
CONSOLIDATED
2016
$
2015
$
(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
Financing expense
Financing income
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
Net cash flow from operating activities
(b) Reconciliation of cash
Cash balance comprises:
cash assets
Closing cash balance
(5,472,381) (41,878,638)
23,565
3,169
(16,893)
8,354
555
(328,058)
(11,274)
20,965
(6,784)
(81,869)
4,105,802
-
(964,991)
-
(31,141)
(2,343,179)
32,551,308
-
1,087,908
-
(104,010)
(8,751,234)
1,157,927
1,157,927
1,345,837
1,345,837
50
Notes to the Financial Statements
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
13. EMPLOYEE BENEFITS
CONSOLIDATED
2016
$
2015
$
-
-
-
-
-
-
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
2016
2015
Number of
options
2,750,000
-
2,750,000
Weighted
average
exercise
price
0.12
-
0.12
Number of
options
5,000,000
(2,250,000)
2,750,000
Weighted
average
exercise
price
0.12
0.13
0.12
Options held at the end of the reporting period
The following table summarises information about options held as at 30 June 2016. All options outstanding
were issued to Directors.
Number of options
2,750,000
Grant date
30 Nov 12
Expiry date
29 Nov 16
Weighted average
exercise price
0.1230
14. SUBSEQUENT EVENTS
There were no significant events after balance date.
15. EARNINGS PER SHARE
CONSOLIDATED
2016
$
2015
$
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
(5,472,381)
(5,472,381)
(41,878,638)
(41,878,638)
51
Notes to the Financial Statements
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
1,372,776,288
1,150,994,096
-
-
1,372,776,288
1,150,994,096
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
Amounts received or due and receivable by Ernst
and Young Namibia for:
an audit or review of the financial report of
Pancontinental Namibia Pty Ltd
other services in relation to the entity
1 $19,000 of the audit fee relates to the 2014 financial year.
2 $15,198 of the audit fee relates to previous financial years.
CONSOLIDATED
2016
2015
$
$
35,000
55,5001
-
-
8,924
-
43,924
25,8372
-
81,337
52
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
Ernest Anthony Myers
John Edward Leach
Anthony Robert Frederick
Maslin
(ii) Specified Executives
Vesna Petrovic
Non-Executive Chairman
Executive Director, Chief Executive Officer
Executive Finance Director
Non-Executive Director (from 26/2/16)
Non-Executive Director (to 15/1/16)
Company Secretary
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 Employee Option Schemes 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
Super-
annuation
Retirement
benefits
Equity Other
Options Bonus
Total
Specified
Directors/Officers
Henry David Kennedy
2016
2015
Roy Barry Rushworth
2016
2015
Ernest Anthony Myers
2016
2015
John Edward Leach
50,000
50,000
343,750
643,750
200,000
245,000
2016
2015
16,000
-
Anthony Robert Frederick Maslin
26,000
48,000
2016
2015
Vesna Petrovic
2016
2015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- -
- -
- -
50,000
50,000
50,000
78,000
343,750
643,750
-
-
-
-
200,000
245,000
-
-
-
-
16,000
-
-
-
-
-
26,000
48,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
-
150,000
-
-
-
-
-
-
-
150,000
150,000
Total Remuneration: Specified Directors /Officers
785,750
1,136,750
-
-
2016
2015
-
-
-
-
-
-
-
-
-
-
-
-
-
785,750
- 1,136,750
(c) Remuneration options: Granted and vested during the year
There were no grants of remuneration options during the year.
53
Notes to the Financial Statements
Notes to the Financial Statements
(d) Option holdings of specified Directors and specified Executives
2016
(d) Option holdings of specified Directors and specified Executives
2016
Balance at
beginning of
Balance at
period
beginning of
1 July 2015
period
1 July 2015
500,000
1,000,000
500,000
750,000
1,000,000
750,000
-
Options
Exercised/
Options
(Expired)
Exercised/
(Expired)
-
-
-
-
-
-
-
Granted as
Remuneration
Granted as
Remuneration
-
-
-
-
-
-
-
Specified Directors
Henry David Kennedy
Specified Directors
Roy Barry Rushworth
Henry David Kennedy
Ernest Anthony Myers
Roy Barry Rushworth
John Edward Leach
Ernest Anthony Myers
(from 26/2/16)
John Edward Leach
Anthony Robert Frederick
(from 26/2/16)
Maslin (to 15/1/16)
Anthony Robert Frederick
Total
Maslin (to 15/1/16)
Total
2015
2015
Specified Directors
Henry David Kennedy
Specified Directors
Roy Barry Rushworth
Henry David Kennedy
Ernest Anthony Myers
Roy Barry Rushworth
Anthony Robert Frederick
Ernest Anthony Myers
Maslin
Anthony Robert Frederick
Total
Maslin
Total
-
500,000
2,750,000
500,000
2,750,000
Balance at
beginning of
Balance at
period
beginning of
1 July 2014
period
1 July 2014
1,250,000
2,500,000
1,250,000
750,000
2,500,000
750,000
500,000
5,000,000
500,000
5,000,000
Net Change
Other
Net Change
Other
Balance at
end of period
Balance at
end of period
30 June 2016
-
-
-
-
-
-
-
-
-
-
-
-
30 June 2016
500,000
1,000,000
500,000
750,000
1,000,000
750,000
-
-
500,000
2,750,000
500,000
2,750,000
-
-
-
-
-
-
-
-
-
-
Granted as
Remuneration
Granted as
Remuneration
-
-
-
-
-
-
-
-
-
-
Options
Exercised/
Options
(Expired)
Exercised/
(Expired)
(750,000)
(1,500,000)
(750,000)
-
(1,500,000)
-
-
(2,250,000)
-
(2,250,000)
Net Change
Other
Net Change
Other
Balance at
end of period
Balance at
end of period
30 June 2015
-
-
-
-
-
-
-
-
-
-
30 June 2015
500,000
1,000,000
500,000
750,000
1,000,000
750,000
500,000
2,750,000
500,000
2,750,000
(e) Shareholdings of Specified Directors and Specified Executives
(e) Shareholdings of Specified Directors and Specified Executives
2016
Ordinary Shares held in
2016
Pancontinental Oil & Gas NL
Ordinary Shares held in
Specified Directors
Pancontinental Oil & Gas NL
Henry David Kennedy
Specified Directors
Roy Barry Rushworth
Henry David Kennedy
Ernest Anthony Myers
Roy Barry Rushworth
John Edward Leach (from 26/2/16)
Ernest Anthony Myers
Anthony Robert Frederick Maslin
John Edward Leach (from 26/2/16)
(to 15/1/16)
Anthony Robert Frederick Maslin
Total
(to 15/1/16)
Balance
1 July 2015
Balance
1 July 2015
141,351,602
36,835,610
141,351,602
400,715
36,835,610
-
400,715
-
14,583
178,602,510
14,583
Acquisitions
(Disposals)
Acquisitions
(Disposals)
128,750,000
-
128,750,000
1,250,000
-
-
1,250,000
-
-
130,000,000
-
Balance
30 June 2016
Balance
30 June 2016
270,101,602
36,835,610
270,101,602
1,650,715
36,835,610
-
1,650,715
-
14,583
308,602,510
14,583
Total
2015
Ordinary Shares held in
2015
Pancontinental Oil & Gas NL
Ordinary Shares held in
Specified Directors
Pancontinental Oil & Gas NL
Henry David Kennedy
Specified Directors
Roy Barry Rushworth
Henry David Kennedy
Ernest Anthony Myers
Roy Barry Rushworth
Anthony Robert Frederick Maslin
Ernest Anthony Myers
Total
Anthony Robert Frederick Maslin
Total
178,602,510
130,000,000
308,602,510
Acquisitions
(Disposals)
Acquisitions
(Disposals)
-
-
-
-
-
-
-
-
-
Balance
30 June 2015
Balance
30 June 2015
141,351,602
36,835,610
141,351,602
400,715
36,835,610
14,583
400,715
178,602,510
14,583
-
178,602,510
Balance
1 July 2014
Balance
1 July 2014
141,351,602
36,835,610
141,351,602
400,715
36,835,610
14,583
400,715
178,602,510
14,583
178,602,510
54
Notes to the Financial Statements
18. SEGMENT INFORMATION
Segment accounting policies
The group has adopted AASB 8 Operating Segments which requires operating segments to be identified on the
basis of internal reports about components of the group that are reviewed by the chief operating decision-
maker in order to allocate resources to the segment and to assess its performance.
The Board of Pancontinental reviews internal reports prepared as consolidated financial statements and
strategic decisions of the group are determined upon analysis of these internal reports. During the period the
group operated predominately in one business segment, being the oil and gas sector. Accordingly, under the
management approach outlined only one operating sector has been identified and no further disclosures are
required in the notes to the consolidated financial statements.
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. In this industry, it arises principally from the receivables of joint
venture re-charges and recuperations of cost. For the group in this financial year, it arises primarily from
receivables due from subsidiaries, GST and VAT refunds, prepayments and bonds.
(i) Trade and other receivables:
The group operates predominantly in the oil and gas exploration sector; it does not ordinarily have material
trade receivables and is therefore not ordinarily 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.
(ii) Loans to subsidiaries:
The company has provided funding to its subsidiaries by way of loans. Based on Management’s review of
the subsidiaries net tangible asset position and cash flow projections, the current carrying value of the loans
have been assessed to be fully recoverable. Repayment of these loans will occur through future business
activities of each respective entity.
Exposure to credit risk
55
Notes to the Financial Statements
18. SEGMENT INFORMATION
Segment accounting policies
The group has adopted AASB 8 Operating Segments which requires operating segments to be identified on the
basis of internal reports about components of the group that are reviewed by the chief operating decision-
maker in order to allocate resources to the segment and to assess its performance.
The Board of Pancontinental reviews internal reports prepared as consolidated financial statements and
strategic decisions of the group are determined upon analysis of these internal reports. During the period the
group operated predominately in one business segment, being the oil and gas sector. Accordingly, under the
management approach outlined only one operating sector has been identified and no further disclosures are
required in the notes to the consolidated financial statements.
The company and group have exposure to the following risks from their use of financial instruments:
19. FINANCIAL INSTRUMENTS
Financial risk management
Overview:
(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. In this industry, it arises principally from the receivables of joint
venture re-charges and recuperations of cost. For the group in this financial year, it arises primarily from
receivables due from subsidiaries, GST and VAT refunds, prepayments and bonds.
(i) Trade and other receivables:
The group operates predominantly in the oil and gas exploration sector; it does not ordinarily have material
trade receivables and is therefore not ordinarily 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.
(ii) Loans to subsidiaries:
Notes to the Financial Statements
Notes to the Financial Statements
The company has provided funding to its subsidiaries by way of loans. Based on Management’s review of
the subsidiaries net tangible asset position and cash flow projections, the current carrying value of the loans
have been assessed to be fully recoverable. Repayment of these loans will occur through future business
activities of each respective entity.
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:
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
Consolidated
Trade and other receivables
Cash and cash equivalents
Trade and other receivables
Total
Cash and cash equivalents
Total
Impairment losses:
Note
Note
4
4
Carrying amount
Carrying amount
2016
$
2016
63,113
$
1,157,927
63,113
1,221,040
1,157,927
2015
$
2015
51,839
$
1,345,837
51,839
1,397,676
1,345,837
1,221,040
1,397,676
Impairment losses:
None of the company’s or group’s receivables are past due at 30 June 2016, (2015: nil).
None of the company’s or group’s receivables are past due at 30 June 2016, (2015: 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
An impairment write down in respect of inter-group loans and shares was recognised during the current year
recognised through impairment of loans to subsidiaries and shares held in subsidiaries during the current
from an analysis of the subsidiaries respective financial positions. The total impairment write down
period was $1,924,379 (2015: $62,367).
recognised through impairment of loans to subsidiaries and shares held in subsidiaries during the current
period was $1,924,379 (2015: $62,367).
Whilst the loans were not payable at 30 June 2016 a provision for impairment based on the subsidiaries
financial position was carried forward from previous periods. The balance of this provision may vary due to
Whilst the loans were not payable at 30 June 2016 a provision for impairment based on the subsidiaries
performance of a subsidiary in a given year.
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
(b) Liquidity risk:
group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
unacceptable losses or risking damage to the group’s reputation.
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.
The group manages liquidity risk by maintaining adequate cash reserves through continuously monitoring
forecast and actual cash flows.
Consolidated
Consolidated
Trade and other payables - Current
Trade and other payables - Non Current
Trade and other payables - Current
Total
Trade and other payables - Non Current
Total
< 1 year
Contractual cashflows
1-5 years
Contractual cashflows
$
1-5 years
< 1 year
(274,658)
$
-
(274,658)
(274,658)
-
(274,658)
$
-
$
-
-
-
-
-
> 5 years
$
> 5 years
-
$
(16,901)
-
(16,901)
(16,901)
(16,901)
(c) Market risk:
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
(c) Market risk:
equity prices will affect the group’s income or the value of its holdings of financial instruments. The objective
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
of market risk management is to manage and control market risk exposures within acceptable parameters,
equity prices will affect the group’s income or the value of its holdings of financial instruments. The objective
while optimising the return.
of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return.
(i) Currency risk:
(i) Currency risk:
The group is from time to time 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
The group is from time to time exposed to currency risk on investments, and foreign currency denominated
Australian dollar (AUD). The other material currency that these transactions are denominated in is the
purchases in a currency other than the respective functional currencies of group entities, primarily the
(USD).
Australian dollar (AUD). The other material currency that these transactions are denominated in is the
The group has not entered into any derivative financial instruments to hedge such transactions and
(USD).
anticipated future receipts or payments that are denominated in a foreign currency.
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.
56
Notes to the Financial Statements
Exposure to currency risk:
The group’s exposure to foreign currency risk at balance date was as follows, based on notional amounts:
30 June 2016
USD
AUD
Total
AUD
USD
Total
30 June 2015
750,247 407,680 1,157,927
1,052,933
292,904
1,345,837
63,113
-
63,113
51,839
-
51,839
(291,559)
-
(291,559)
(1,256,550)
-
(1,256,550)
521,801 407,680
929,481
(151,778)
292,904
141,126
AUD
Cash & cash
equivalents
Trade & other
receivables
Trade and other
payables
Net balance
sheet
exposure
The following significant exchange rates applied during the year:
AUD : USD
Average rate
Reporting date spot rate
2016
0.728
2015
0.837
2016
0.744
2015
0.765
Sensitivity analysis:
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
2015.
Effect in AUD
30 June 2016
10% strengthening
30 June 2015
10% strengthening
Consolidated
Equity
Profit or
loss
45,298
45,298
32,545
32,545
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.
The sensitivity analysis only had an effect on the equity or profit and loss of the company in relation to
the USD bank account.
57
Notes to the Financial Statements
Interest rate risk:
At balance date the group had exposure to interest rate risk, through its cash and equivalents held
within a financial institution.
Variable rate
instruments
Cash and cash equivalents
Consolidated Carrying
Amount
30 June
2016
30 June
2015
1,157,927
1,345,837
Fair value sensitivity analysis for fixed rate instruments:
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.
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 2016
30 June 2015
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Carrying
amount
63,113
1,157,927
(291,559)
Fair value
63,113
1,157,927
(291,559)
Carrying
amount
51,839
1,345,837
(1,256,550)
Fair value
51,839
1,345,837
(1,256,550)
929,481
929,481
141,126
141,126
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 %
2016
2015
-
10,285,591
10,577,150
97.24%
11,954,797
(5,472,381)
(45.78)%
-
13,624,003
14,880,553
91.56%
34,563,322
(41,878,638)
(121.16)%
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.
58
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 (2015:
$50,000). Refer note 17.
(b) 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 2016
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
2016
$
2015
$
(3,533,398)
(41,865,729)
(3,533,398)
(41,865,729)
2016
$
2015
$
1,221,040
10,577,150
1,389,518
14,784,486
274,658
291,559
1,232,154
1,240,581
101,545,967
154,000
(91,414,376)
10,285,591
99,411,998
154,000
(86,022,093)
13,543,905
59
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 2016 and of their performance for the year ended on that date; and
(ii) complying with Accounting Standards including International Financial Reporting 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 2016.
On behalf of the Board
Ernest Anthony Myers
Director
Perth 30 September 2016
60
61
62
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 2016.
(a) Distribution of equity securities
The number of shareholders, by size of holding, in each class of share are:
1
- 1,000
1,001
- 5,000
5,001
- 10,000
10,001 - 100,000
100,001
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:
Ordinary shares
Number of holders Number of shares
426
295
374
1,526
1,104
3,725
2,702
91,690
1,012,471
3,167,884
65,282,491
1,647,939,560
1,717,494,096
79,351,619
1
2
3
4
5
6
7
8
9
SUNDOWNER INTERNATIONAL LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CRESCENT NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PASIBAS NOMINEES PTY LTD PEEL HUNT LLP DRP
J P MORGAN NOMINEES AUSTRALIA LIMITED
LJ SKYE TRUSTEES LIMITED
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
FLOTECK CONSULTANTS LIMITED
10 MR DOUGLAS JOHN WHELAN
11 MR MICHAEL JOHN NORRISS
12
FARJOY PTY LTD
13 MRS JULIE ANNE HOUSTON
14 MR MALCOLM CLARK ANDERSON
15
16
17
TATTERSFIELD SECURITIES LIMITED
JUSTIN NUFF PTY LTD
RACT SUPER PTY LTD
18 MR ROBERT ALBERT BOAS
19
20
BNP PARIBAS NOMS PTY LTD
ROY BARRY RUSHWORTH
Listed ordinary shares
Number of
shares
Percentage of
ordinary
shares
261,006,827
177,822,787
15.2
10.35
77,500,000
67,668,247
62,545,000
33,450,397
26,277,940
25,344,794
22,500,000
16,750,000
14,200,000
12,500,000
11,000,000
10,546,000
10,268,388
10,000,000
10,000,000
9,425,000
9,366,218
9,057,670
4.51
3.94
3.64
1.95
1.53
1.48
1.31
0.98
0.83
0.73
0.64
0.61
0.6
0.58
0.58
0.55
0.55
0.53
877,229,268
51.08
63
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 are set out below:
Sundowner International Limited
(e) Permit Schedule
Number of
Shares
261,006,827
Permits
Interests
and
Licence
Permit reference
Interest
Petroleum prospects
Kenya
Namibia
L6
EL 0037
40% offshore, 16% onshore
30%
64
(Non-Executive Chairman)
(Non-Executive Chairman)
(Executive Director & Chief Executive Officer)
(Non-Executive Chairman)
(Executive Director & Chief Executive Officer)
(Executive Finance Director)
(Executive Director & Chief Executive Officer)
(Executive Finance Director)
(Non-Executive Director)
(Executive Finance Director)
(Non-Executive Director)
(Non-Executive Director)
PANCONTINENTAL LOGO
The Pancontinental logo is in keeping
with the Pancontinental name and
technical ethic. The logo represents a
mapped view of the globe seen from
above the polar region. The green
sectors represent the continents and the
blue sectors represent the oceans.
Corporate Information
Corporate Information
Corporate Information
ABN 95 003 029 543
ABN 95 003 029 543
ABN 95 003 029 543
Directors
Directors
Henry David Kennedy
Directors
Henry David Kennedy
Roy Barry Rushworth
Henry David Kennedy
Roy Barry Rushworth
Ernest Anthony Myers
Roy Barry Rushworth
Ernest Anthony Myers
Anthony Robert Frederick Maslin
Ernest Anthony Myers
John Edward Leach
John Edward Leach
Company Secretary
Company Secretary
Vesna Petrovic
Company Secretary
Vesna Petrovic
Vesna Petrovic
Registered Office
Registered Office
Level One, 10 Ord Street
Registered Office
Level One, 10 Ord Street
West Perth WA 6005
Level One, 10 Ord Street
West Perth WA 6005
Telephone: +61 8 6363 7090
West Perth WA 6005
Telephone: +61 8 6363 7090
+61 8 6363 7099
Telephone: +61 8 6363 7090
+61 8 6363 7099
Fax:
Fax:
Fax:
Share Register
Share Register
+61 8 6363 7099
Advanced Share Registry Services
Share Register
Advanced Share Registry Services
Advanced Share Registry Services
PO Box 1156
PO Box 1156
Nedlands WA 6909
PO Box 1156
Nedlands WA 6909
Telephone: +61 8 9389 8033
Nedlands WA 6909
Telephone: +61 8 9389 8033
Telephone: +61 8 9389 8033
Auditors
Auditors
Auditors
Rothsay Chartered Accountants
Rothsay Chartered Accountants
Level 1, Lincoln House
Rothsay Chartered Accountants
Level 1, Lincoln House
4 Ventnor Avenue
Level 1, Lincoln House
4 Ventnor Avenue
West Perth WA 6005
4 Ventnor Avenue
West Perth WA 6005
West Perth WA 6005
Internet Address & Contact
Internet Address & Contact
www.pancon.com.au
Internet Address & Contact
www.pancon.com.au
info@pancon.com.au
www.pancon.com.au
info@pancon.com.au
info@pancon.com.au
ASX Code
ASX Code
PCL
ASX Code
PCL
PCL
Contents
Contents
Chairman’s Review
Contents
Chairman’s Review
Permit Schedule
Permit Schedule
Chairman’s Review
Review of Operations
Review of Operations
Review of Operations
Directors' Report
Directors' Report
Directors' Report
Corporate Governance Statement
Corporate Governance Statement
Corporate Governance Statement
Statement of Comprehensive Income
Statement of Comprehensive Income
Statement of Comprehensive Income
Statement of Financial Position
Statement of Financial Position
Statement of Financial Position
Statement of Changes in Equity
Statement of Changes in Equity
Statement of Changes in Equity
Statement of Cash Flows
Statement of Cash Flows
Statement of Cash Flows
Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements
Directors' Declaration
Directors' Declaration
Directors' Declaration
Independent Audit Report
Independent Audit Report
Independent Audit Report
ASX Additional Information
ASX Additional Information
2
2
3
XX
3
4
XX
4
15
15
XX
27
25
XX
42
39
XX
43
40
XX
44
41
XX
45
42
XX
46
43
XX
63
60
XX
64
61
XX
66
63
PANCONTINENTAL OIL & GA
S N
L –
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
6
P
A
N
C
O
N
T
I
N
E
N
T
A
L
O
I
L
&
G
A
S
N
L
-
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
6
Level One, 10 Ord Street
West Perth WA 6005
Telephone: +61 8 6363 7090
Facsimile: +61 8 6363 7099