PANCONTINENTAL OIL & GA
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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
Corporate Information
Directors
Directors
Henry David Kennedy
Henry David Kennedy
Roy Barry Rushworth
John Douglas Begg
Ernest Anthony Myers
Ernest Anthony Myers
Anthony Robert Frederick Maslin
Roy Barry Rushworth
Marie Michele Malaxos
Company Secretary
Vesna Petrovic
Company Secretary
Vesna Petrovic
Registered Office
Level One, 10 Ord Street
Registered Office
West Perth WA 6005
Level One, 10 Ord Street
Telephone: +61 8 6363 7090
West Perth WA 6005
+61 8 6363 7099
Fax:
Telephone: +61 8 6363 7090
Fax:
+61 8 6363 7099
Share Register
Advanced Share Registry Services
PO Box 1156
Nedlands WA 6909
Telephone: +61 8 9389 8033
Share Registry
Advanced Share Registry Services
PO Box 1156
Nedlands WA 6909
Telephone: +61 8 9389 8033
Auditors
Rothsay Chartered Accountants
Auditors
Level 1, Lincoln House
Rothsay Chartered Accountants
4 Ventnor Avenue
Level 1, Lincoln House
West Perth WA 6005
4 Ventnor Avenue
West Perth WA 6005
Internet Address & Contact
www.pancon.com.au
info@pancon.com.au
Internet Address & Contact
www.pancon.com.au
info@pancon.com.au
ASX Code
PCL
ASX Code
PCL
(Non-Executive Chairman)
Non-Executive Chairman
(Executive Director & Chief Executive Officer)
Executive Director & Chief Executive Officer
(Executive Finance Director)
Non-Executive Director
(Non-Executive Director)
Non-Executive Director
Non-Executive Director
Who we are
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.
Pancontinental Oil & Gas NL is an Australian based oil and
gas exploration company with interests in Africa and newly
acquired interests in the United States of America and
Australia.
Australia.
The Company’s headquarters are in West Perth, Western
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.
Contents
Chairman’s Review
Chairman’s Review
Contents
Directors' Report
Chairman’s Review
3
4
Directors' Report
Directors' Report
Corporate Governance Statement
Corporate Governance Statement
Permit Schedule
Corporate Governance Statement
Review of Operations
Review of Operations
Review of Operations
Statement of Comprehensive Income
Directors’ Report
Statement of Financial Position
Auditor’s Independence Declaration
Statement of Changes in Equity
Statement of Comprehensive Income
Statement of Comprehensive Income
Corporate Governance Statement
Statement of Cash Flows
Statement of Financial Position
Statement of Financial Position
Statement of Comprehensive Income 47
Notes to the Financial Statements
Statement of Changes in Equity
Statement of Financial Position
Statement of Changes in Equity
Directors' Declaration
Statement of Changes in Equity
Statement of Cash Flows
Statement of Cash Flows
48
20
33
34
49
7
Notes to the Financial Statements
Notes to the Financial Statements
Statement of Cash Flows
Independent Audit Report
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
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51
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69
72
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1
3
14
25
39
40
41
42
43
60
61
63
Corporate Information
Corporate Information
Non-Executive Chairman
Executive Director & Chief Executive Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Who we are
Pancontinental Oil & Gas NL is an Australian based oil and
gas exploration company with interests in Africa and newly
acquired interests in the United States of America and
Australia.
The Company’s headquarters are in West Perth, Western
Australia.
The Company is listed on the Australian Securities Exchange
under code PCL.
Pancontinental is managed by a team of experienced
financial
from corporate,
technical and
individuals
backgrounds.
Corporate Information
ABN 95 003 029 543
Directors
Henry David Kennedy
John Douglas Begg
Ernest Anthony Myers
Roy Barry Rushworth
Marie Michele Malaxos
Company Secretary
Vesna Petrovic
Registered Office
Level One, 10 Ord Street
West Perth WA 6005
Telephone: +61 8 6363 7090
Fax:
+61 8 6363 7099
Share Registry
Advanced Share Registry Services
PO Box 1156
Nedlands WA 6909
Telephone: +61 8 9389 8033
Auditors
Rothsay Chartered Accountants
Level 1, Lincoln House
4 Ventnor Avenue
West Perth WA 6005
Internet Address & Contact
www.pancon.com.au
info@pancon.com.au
ASX Code
PCL
Contents
Directors' Report
Corporate Governance Statement
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Independent Audit Report
1
Corporate Information
Corporate Information
Strategy & Business
Model
Identify oil & gas
basins with
overlooked potential
& seek funding for
PCL's original ideas
Create value for
Shareholders
Secure acreage at
low entry cost and
complete initial work
programmes
Attract highly
reputable companies
to partner in projects
2
Corporate Information
Chairman’s Review
Chairman’s Review
Strategy & Business
Model
Identify oil & gas
basins with
overlooked potential
& seek funding for
PCL's original ideas
Attract highly
reputable companies
to partner in projects
Create value for
Shareholders
Secure acreage at
low entry cost and
complete initial work
programmes
Pancontinental is now positioned with the potential
to deliver early value from assets acquired through
the recent Bombora transaction, while ensuring
shareholders continue to benefit from exposure to
our significant African position.
Dear Shareholder,
The Board of Directors of Pancontinental Oil & Gas NL is pleased to present to you the Company’s
2017 Annual Report.
During the financial year, uncertainty continued across global markets with companies basing their
exploration budgets and forward operational planning on a low oil price environment and reduced
industry activity. Notwithstanding the challenges faced in the oil and gas industry, Pancontinental
persisted and has now entered the new financial year well-funded and with a diverse asset portfolio.
The Company’s Namibian asset is now partially owned by Africa Energy Corp. a well-respected
company with a focus on the acquisition and exploration of African oil and gas assets. The transaction,
which closed in September 2017 has given the Company a very healthy immediate capital injection of
US $2.2 million, with more to follow once drilling commences. Additionally, Africa Energy will provide
valuable technical expertise to complement our in-house experts. During the year, PEL 37 joint venture
Operator Tullow Kudu Limited farmed out to India’s ONGC Videsh Limited. The farmout is a welcome
development and we expect this to be a positive step toward testing the large oil potential of PEL 37
next year.
In July 2017, Pancontinental joined forces with Bombora Natural Energy Pty Ltd, which has reinforced
the Company’s oil and gas asset portfolio with a number of exciting new, near-term projects, including
appraisal drilling of existing gas discoveries. Bombora adds considerable shorter-term activity with
interests in gassy opportunities in the Sacramento Gas Basin and the onshore Perth Basin, as well as
the potential for a series of additional new projects.
The reformed management team now lead by John Begg is well suited to efficiently manage the
exciting new USA and Australian assets and to continue to run the existing high-potential African
projects.
Pancontinental raised AU $1.8 million during the financial year which demonstrates market support in
the Company, its assets, management and strategy. We thank all participants in placements as well
as the Share Purchase Plan. Subsequent to year end a further AU $2.0 million was raised as part of
the Bombora transaction.
I acknowledge with appreciation, the hard work and dedication of the entire Pancontinental team
during the financial year. To you, our loyal Shareholders, as always I extend a particular thanks for
your patience and support. Rest assured that my fellow directors and I remain totally focused on
delivering value to you.
We look to a new, very positive future for Pancontinental, with an expanded portfolio that we believe
to be very attractive to new and existing shareholders.
HD Kennedy
Chairman
3
Permit Schedule
Permit Schedule
Pancontinental is a junior oil and gas exploration company with
a portfolio of high quality exploration and appraisal assets in
prospective hydrocarbon provinces
AFRICA
AUSTRALIA
Namibia PEL 37
Kenya L6
Australia Perth Basin
Walyering Gas Field
LOCATION:
LOCATION:
LOCATION:
Walvis Basin, Offshore Namibia
Lamu Basin, Onshore /Offshore
Kenya
Northern Perth Basin on trend from
the analogue producing, Gingin/Red
Gully gas & condensate field.
PROJECT SIZE:
PROJECT SIZE:
PROJECT SIZE:
17,295 square kilometres
5,010 square kilometres
120 square kilometres (Area to be
excised from a larger exploration
licence, just focused on the Walyering
Gas Field)
JOINT VENTURE PARTNERS:
JOINT VENTURE PARTNERS:
JOINT VENTURE PARTNERS:
Tullow Kudu Limited (Operator)
65.00%*
Pancontinental Oil & Gas Group
30.00%**
Paragon Oil & Gas (Pty) Ltd
5.00%
*Post year-end ONGC Videsh
Limited farmed in for a 30%
interest.
**Post year-end Africa Energy
Corp. invested in Pancontinental
Namibia Pty Ltd and acquired a
deemed
interest with
Pancontinental retaining 20%.
10%
Offshore
FAR Limited (Operator)
60.00%
Pancontinental Oil & Gas Group
40.00%
Onshore
Milio International Group
(Operator)
60.00%* after earn in.
Pancontinental Oil & Gas Group
16.00%
FAR Limited
24.00%
UIL Energy (Operator)
30.00%
Pancontinental Oil & Gas
70.00%**
**Assumes option exercised to
earn the interest by funding a 3D
seismic survey in 2018, covering
the Walyering Gas Field.
GEOLOGY:
GEOLOGY:
GEOLOGY:
An "Oil Mature Fairway" has been
interpreted which extends through
PEL 37. Pancontinental believes
that PEL 37 is one of the prime
areas in Namibia covering an oil
generating "sweet spot" where oil
prone source rocks are sufficiently
buried to generate oil.
A number of ponded turbidite,
slope turbidite, basin floor turbidite
fans and channels forming major
very
closely
associated with, and within the
Inner Graben of PEL 37 have been
identified and mapped.
"leads"
large
A deep central graben in this area
is considered to be an oil and gas
“source kitchen” and potential
hydrocarbon
trapping prospects
have been identified adjacent to
the area.
The Kifaru Prospect and Kifaru
West Prospect are interpreted to be
large stacked Miocene reefs, with
interpreted good lateral and top
seals and close proximity to mature
Eocene source rocks.
The Tembo Prospect is a large tilted
fault block trap, with interpreted
sandstone reservoirs at a number
of levels.
4
put
briefly
The Walyering Gas Field was
discovered in 1971 and a small
compartment
on
production, producing about 0.25
Bcf gas. It is still crossed by the
Parmelia gas trunk line that has
available capacity. The field is
located in a large, faulted anticline
on the west side of the Dandaragan
Trough which hosts the source
kitchens
for most of the gas
discovered in the Basin.
provided
reservoir system
A thick interbedded fluvio-deltaic
is
sandstone
present with top and lateral seals
mostly
intra-
formational shales and siltstones.
The target reservoirs are between
3,000m and 4,000m but when
drilled correctly have good natural
gas flow potential.
by
Permit Schedule
Permit Schedule
NORTH AMERICA
USA California
Sacramento Gas Basin
Dempsey Gas Project
USA California
Sacramento Gas Basin
Tulainyo Gas Discovery
USA California
Sacramento Gas Basin
Alvares Gas Discovery
LOCATION:
LOCATION:
LOCATION:
Central-Northern, Sacramento
Gas Basin, California
West flank of Northern
Sacramento Gas Basin
Northern Perth Basin on trend
from the analogue producing,
Gingin/Red Gully gas and
condensate field.
PROJECT SIZE:
PROJECT SIZE:
PROJECT SIZE:
Over 4,500 net acres
(18 square kilometres)
Over 40,000 net acres
(152 square kilometres)
Approx 6,000 acres
(24 square kilometres)
JOINT VENTURE PARTNERS:
JOINT VENTURE PARTNERS:
JOINT VENTURE PARTNERS:
Sacgasco Limited (Operator)
50.00%
Empyrean Energy PLC
30.00%
Xstate Resources Limited
10.00%
Pancontinental Oil and Gas NL
10.00%*
� Via 100% subsidiary Bombora
Natural Gas LLC
California Resources Production
Corporation (Operator)
41.67%
Cirque Resources LP
25.00%
Gas Fields LLC
33.33%
� Equity interests are assumed
post full earning via a staged
farmin requiring funding of three
wells.
� Gas Fields is managed by and
owned 40% by Pancontinental.
Sacgasco Limited (Operator)
39.00%
Empyrean Energy PLC
25.00%
Xstate Resources Limited
21.00%
Pancontinental Oil & Gas NL
15.00%
� Via subsidiary Bombora
Natural Gas LLC
GEOLOGY:
GEOLOGY:
GEOLOGY:
The Dempsey structure is a large
3-way dip, fault- bound structure
continuing from shallow levels
to economic basement
down
rocks and defined by 3D seismic.
is
located
It
in the central
Northern Sacramento Gas Basin
gas
within
producing area.
a multi-field,
an
seismic
It has lesser volume reservoir
targets within
existing
producing field area, mapped on
3D
overlying
multiple, much larger, stacked
targets
within
interpreted
sandstones of Early Cretaceous
age.
and
The Early Cretaceous reservoirs
have not often been drilled in the
Basin
(just 16 partial well
penetrations) and most of these
were very old wells that were not
drilled on structure.
trapped
There is strong evidence that the
the shallow,
in
gas
traditional producing zones such
Forbes
as
the Kione and
A large anticline structure with up
to 100km² of closure located in
the frontal folds of the Coastal
the western
Ranges
boundary of the Sacramento Gas
Basin.
forming
by
Early Cretaceous rocks normally
at greater depths beneath the
traditional gas producing layers
of the Basin, are brought near to
compressional
surface
structuring that
is continuing
present day. This structuring,
similar to that seen in the fold
belt of PNG, creates high stress in
the rocks and high formation
pressures.
early
2014
The Tulainyo-1 drilling program in
late
2015
–
encountered high pressure gas in
a number of reservoirs but could
not be tested due to mechanical
difficulties. Good quality E-log
data was however matched to
extensive adjacent outcrop within
the Coastal Ranges indicating
that
section
thickens and will continue at
reservoir
the
A large (over 16km²) faulted
anticline structure in a frontal fold
setting on the west flank of the
Sacramento Gas Basin. On
geological trend and north of the
Tulainyo Gas Discovery. As at
Tulainyo, the highly tectonised
geological environment makes
effective drilling
challenging,
often requiring very high mud
weights to maintain the borehole
when drilling and to hold back gas
under apparent, high pressure.
silt
The Alvares-1 drilled in 1982 had
extensive high gas shows in the
Early Cretaceous Stoney Creek
Formation. A thick sequence of
sandstones,
and
conglomerates were penetrated
in the well below 8,300 feet
(2,530 metres) with gas shows
extending over some 1,500m
that were either not tested or
improperly tested in the original
discovery well.
are
gas
The
interpreted
from E-log, core,
cuttings and test data to have fair
reservoirs
5
Permit Schedule
Permit Schedule
Formations, has been generated
the
rocks within
by source
underlying
Early Cretaceous
section.
Primary reservoir targets are in
the Ladoga and Boxer Formation
sandstones.
A circa 3,000m well would be
required to test all target levels in
the structure.
depth within the structure. There
is potential for all the reservoirs
within some 10,000` (+3,000
metres) of vertical mapped
closure to be gas filled, creating a
gas
potentially
resource.
giant-scale
in
reservoirs
Over 11 TCF of dry gas has
historically been produced from
Late Cretaceous and younger
the
sandstone
Sacramento Gas Basin. In the
Northern part of
the Basin,
Pancontinental believes the gas is
older
sourced
Cretaceous section
that
beneath the Tulainyo structure.
The region is characterised by
extensive
production
gas
infrastructure.
from
like
the
to moderate reservoir quality and
the Early
than
older
are
Cretaceous
reservoirs
encountered in the Tulainyo-1
well program. Despite at least 3
gas columns being present in the
original
mechanical
conditions prevented valid flow
testing although a partially
successful test did flow good
quality dry gas at 0.4 MMcfd to
surface.
well,
A more
reservoir
recent
engineering review of the well
results indicates that natural flow
of between 4.0 and 10.0MMcfd
could be achievable from these
and
reservoirs
completed
using
modern technology.
if
optimally,
drilled
Namibia
USA California
6
Review of Operations
Review of Operations
Namibia
The PEL 37 joint venture is focused on the
interpretation of seismic data acquired in
recent years, with a number of prospects
under review. The post year-end entry of
India’s ONGC Videsh into the joint venture
signals a positive step toward testing the large
oil potential of this offshore acreage.
Namibia became an independent nation in March 1990. Since then, the country has achieved political
stability with a democratically elected government and an improved economy which has attracted
foreign investment. Namibia now ranks alongside Australia, the United States of America, China, the
United Kingdom and Canada in its travel security grading. These factors have contributed to
Pancontinental successfully conducting business activities in country over the past decade.
Located on the west coast of Africa, Namibia has an offshore area of 240,000 sq km. A vast area.
Bordering Namibia immediately to the North, is Angola, the second largest oil producer in Africa and
a member of OPEC. The hydrocarbon potential of Namibia is virtually unexplored but the exploration
findings to date indicate there is great potential.
Pancontinental’s investment in Namibia is based on
the theory that the offshore area is favourable for
hydrocarbon generation due to the deposit and
build-up of nutrients and sediments. The Koigab Fan
(shown in the image to the right) is a depositional
feature onshore Namibia. Within the feature is the
Koigab River which transports bed loads and
sediments into the Atlantic Ocean, where, over time
the sediments have been deposited in features such
as turbidites, which, together with further deposition
of source rocks have been buried deeply enough to
generate and trap hydrocarbons.
The Company holds licence PEL 37 which covers
three blocks in the Walvis Basin, offshore Namibia.
In recent years, the Wingat-1 well drilled by HRT
Participações em Petróleo S.A. (now PetroRio) in the
block immediately to the south of PEL 37 verified for
the first time that an active oil system was present
in the Basin. The well struck oil and found two well-
developed oil source rocks as well as several
turbidite reservoirs saturated with oil.
The recent entry of major companies ONGC Videsh
Limited and Total into offshore Namibia reinforces
the view that Namibia is emerging as one of the few
remaining countries in the world where truly giant
fields could be found.
7
PEL 37
Koigab River and Fan onshore Namibia
Review of Operations
Review of Operations
Namibia Offshore PEL 37
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%
* Post year end, Tullow signed an agreement with ONGC Videsh Limited for the farmout of 30% of its
interest subject to customary conditions precedent.
** Also post year end, Pancontinental entered into an agreement with Africa Energy Corp. (“AEC”)
whereby the AEC was issued new shares in Pancontinental Namibia Pty Ltd, giving it a 33.33% interest
in the subsidiary in return for a payment to Pancontinental of US $7.7 million.
Pancontinental has been a leader in industry efforts to open up the exploration potential in Namibia.
In 2011, under the Namibia’s Open Bidding System, the Company along with its local partner Paragon
Oil & Gas (Pty) Ltd (“Paragon”) negotiated the terms for Petroleum Exploration Licence 37 (“PEL 37”)
over three blocks; 2012B, 2112A and 2113B in the Walvis Basin.
100 km
Pancontinental’s licence PEL 37 offshore Namibia
Map of Africa showing Namibia’s location
The blocks are situated in what is believed to be a prime area.
PetroRio’s Wingat-1 well was drilled in the licence directly to the
south and it is here that it was proven for the first time that an active
oil system was present in Namibia. In fact, PetroRio published the
image to the right after conducting Oil Seep Density Analysis over
regional offshore Namibia, with Pancontinental’s PEL 37 holding the
oily “Bullseye”.
The key elements of a petroleum system include source, seal, trap
and reservoir. Regional exploration has confirmed that all of these
elements are present in the geological structures offshore Namibia.
Pancontinental’s exploration team is confident that such a petroleum
system exists within PEL 37 and this may well be proven by the
planned drilling of the licence in 2018.
8
PetroRio’s Oil
Seep Density
Analysis
Review of Operations
Review of Operations
Licence Timeline
Initial Exploration Period of 4 years - March 2011 to March 2015
Work Programme Commitment to the Ministry of Mines and Energy:
Purchase seismic data; and acquire 3,000km2 3D seismic;
Actual Work Programme completed by the PEL 37 Joint Venture:
The PEL 37 joint venture completed the above work programme within the required timeframe by
purchasing seismic data and acquiring 3,000km2 of 3D seismic;
During the Initial Exploration Period:
In 2011, with the initial award of the licence, Pancontinental held an 85% interest in the project, with
Paragon holding the remaining 15%. The Company quickly recognised the potential of PEL 37 and as
such sought an additional 10% from its local partner.
In 2013, Pancontinental then farmed out a 65% interest to Tullow Kudu Limited, a subsidiary of Tullow
Oil for an exploration work programme originally estimated to be in excess of US $100 million.
Subsequent to that transaction Pancontinental has been carried through the cost of all activity other
than eligible administration costs, for the project.
3D seismic analysis defined four Main Oil Prospects with significant Prospective Resources.
First Renewal Period of 2+1 years - March 2015 to March 2018
Work Programme Commitment to the Ministry of Mines and Energy:
Drill one well to 3,500m or acquire 1,000km of 2D seismic;
Actual Work Programme completed by the PEL 37 Joint Venture:
The PEL 37 joint venture has completed the above work programme within the required timeframe by
acquiring 1,000km of 2D seismic;
During the First Renewal Period:
The farmout agreement with Tullow stated that Tullow would be required to notify the Joint Venture
of their intention to either withdraw or continue into the drilling phase of the farmout agreement.
Tullow chose to enter the drilling phase of the agreement, which required the drilling of one exploration
well by March 2017 provided that a suitably matured drillable prospect was identified.
As operator, Tullow is conducting further work with a focus on determining if there are mitigating
factors to the current view of risk and confirming a drillable prospect in the licence.
Post year end - Tullow farmout to ONGC Videsh Limited
In July 2017, Pancontinental was advised by PEL 37 operator that it had negotiated and signed an
agreement with India’s state-owned oil producer ONGC Videsh Limited (“ONGC”) for a 30% interest
in the offshore licence. While ONGC will hold a considerable stake, operatorship will remain with
Tullow.
Pancontinental is optimistic that this latest development with ONGC will see the joint venture enter
into a firm drilling programme in 2018. The news was received extremely well within the industry due
to the strong credentials of ONGC and the impact their partnership will provide to the drilling of the
highly prospective Namibia acreage.
9
Review of Operations
Review of Operations
Post year end – Africa Energy Corp. becomes a shareholder of Pancontinental’s Namibian
subsidiary in exchange for a staged payment of US$7.7 million
In September 2017, Pancontinental finalised a transaction with Africa Energy Corp. (“Africa Energy”),
whereby Africa Energy subscribed for new shares in Pancontinental Namibia Pty Ltd. The first payment
of US$2.2 million was received by Pancontinental at closing and a second payment of US$5.5 million
will be due at spud of the planned well to be drilled in PEL 37. Pancontinental now own 66.67% of the
subsidiary and Africa Energy 33.33%, resulting in deemed interests of 20% and 10% in the PEL 37
project for Pancontinental and Africa Energy respectively. Africa Energy is backed by one of the most
successful and respected players in oil exploration – the Lundin Group, and Pancontinental welcomes
their entry into the subsidiary.
The deal with Africa Energy provides further, third party validation of Pancontinental’s long held
theories and African asset selection. Large international companies are continuing to secure positions
offshore Namibia, per the recent ONGC Videsh farmin to PEL 37 and news that oil major Total has also
recently farmed into a deeper water block in Namibia.
Prospects
The PEL 37 Joint Venture has completed the agreed components of the work commitments to date
including 3D and 2D seismic, processing, interpretation and mapping. The exploration programme
going forward will look at determining which prospects will be high graded for the planned drilling
campaign.
50 km
PEL 37 - seismic outline with location of
Prospects and Leads
PEL 37 - showing the location of 3D and 2D
seismic acquisitions.
The key Prospects within PEL 37 include Cormorant, Albatross, Seagull and Gannet North and South.
The Prospects are positioned in the northern blocks of the licence and are on trend to the first oil
discovery offshore Namibia. The four main Prospects have been mapped on 3D seismic, with potential
for combined Prospective Resources of 915 Million Barrels of oil (recoverable). This potential does not
include additional potential which may be present in the three leads which have also been mapped
and extensive areas not yet covered by 3D seismic (see Cautionary Statement below).
10
Review of Operations
Review of Operations
Cormorant
is a Cretaceous base-of-slope
Cormorant
turbidite fan prospect, located in water depths
of about 400m. The prospect is located within
the central part of a “fairway” which was
predicted by Pancontinental during
the
formation of its exploration theories on Namibia.
Albatross is a Cretaceous slope and base-of-
slope turbidite fan prospect also located in a
water depth of 400m and covering the largest
area of all the potential traps mapped to date.
Mature Aptian Oil
Source Interval
5 km
Cormorant Prospect
Cormorant is positioned on the northern
flank of the fairway and is interpreted to
have access to some of the thickest and
most mature area of the Aptian oil source
rock fairway.
Albatross
has
estimated
Pancontinental
the
Prospective Resource potential of the
Prospects mapped to date using factors
including estimates of the area of the
Prospects, 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)
Mature Aptian Oil
Source Interval
Albatross Prospect
PROSPECT / LEAD
Albatross
Seagull & Gannet S
Seagull & Gannet N
Cormorant
Upper Fan 2
Lower Fan 3
Lower Fan 4
STATUS
AREA
(Sq Km)
PROSPECTIVE
RESOURCE 100%
(MmBbls)*
NET TO
NET
JOINT VENTURE
(MmBbls)
PANCONTINENTAL
SHARE (MmBbls)
Prospect
Prospect
Prospect
Prospect
Lead
Lead
Lead
293
273
90
120
85
352
170
349
338
104
124
331.6
321.1
98.8
117.8
66.3
64.2
19.8
23.6
TOTAL (Prospects Only)
915*
869.3
173.9
Cautionary Statement - 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
11
Review of Operations
Review of Operations
Kenya
Pancontinental has been present in Kenya for
over a decade, during this time the Company
has shared in two of Kenya’s historic offshore
discoveries. The Company is now reviewing its
interest in Block L6 which covers both an
offshore and onshore area.
As with Namibia, Pancontinental’s exploration division has led industry thinking on the exploration
potential of offshore Kenya. The company developed theories with regard to oil generation and based
on these theories, internationally recognised companies farmed into the projects and tested the
concepts. This method of generating activity shelters the Company and its shareholders from the high
cost that can be incurred in offshore exploration. For example, in 2012 with Kenya L8 (operated by
Apache Corporation) and in 2014 with Kenya L10A (operated by BG Group), the company shared the
success of Kenya’s first oil and gas discoveries with its joint venture partners. The discovery in Block
L10A was particularly significant as it reversed a previously long held industry misconception that East
Africa only had potential for gas. Pancontinental was a partner in both joint ventures since the award
of the blocks and the discoveries were validation of Pancontinental’s views.
The Company now holds an onshore and offshore stake in Block L6.
Pancontinental’s past and current blocks
Pancontinental has developed a model of how it
believes the Lamu Basin came to be so
prospective. The model is centred on a concept
that the Tana River carried nutrients and
sediments into the Indian Ocean. The nutrients
and sediments then flowed along two offshore
troughs; Tembo and Maridadi. Both troughs flow
south through L6 and it is along this path that
the Company believes is the prime location for
oil generation.
The Tana River Delta, offshore Kenya
12
Review of Operations
Review of Operations
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%
The L6 permit was initially awarded in 2002, with Pancontinental as the original licence applicant.
Currently, ASX listed FAR Limited are operators of the offshore portion of the block and Dubai-based
Milio International who are experienced Kenyan operators are in control of the work programme for
the onshore portion of the block.
Due to uncertainties over the security of field operations in this area, activity has been suspended.
13
Review of Operations
Review of Operations
Post Year End Acquisition of Bombora
Natural Energy Pty Ltd
Pancontinental’s acquisition of Bombora has
its asset portfolio by
complemented
providing near term drilling activity
in
California and opportunities in Australia.
On 7 June 2017, Pancontinental executed a binding Heads of Agreement to acquire Bombora Natural
Energy Pty Ltd (“Bombora”). The acquisition, which was approved and completed on 12 July 2017,
will see Pancontinental obtain rights to interests in gas projects located in the Sacramento Gas Basin,
California, USA and the Perth Basin, Western Australia.
Bombora is mainly focussed on drilling for gas with most of the projects being existing gas discoveries
requiring appraisal drilling to prove commerciality. Its interests in the USA are close to strong gas
markets and existing infrastructure. The Company will participate in two high-potential wells during
2017; Dempsey-1 which has already spudded and reached TD (Total Depth), and Tulainyo-2 in
November. If successful, the two wells have the potential for rapid development and early production.
The acquisition of Bombora will provide Pancontinental shareholders with the opportunity to participate
in near term, high impact drilling activity while preparations are ongoing for the drilling of the highly
anticipated Namibia PEL 37 well.
Pancontinental has strengthened its Board with the addition of key Bombora directors. John Begg is
now the CEO and Executive Director, and Marie Malaxos a Non-Executive Director. Both incoming
directors have considerable experience in the petroleum industry, a history of securing valuable
opportunities and converting these to commercially productive projects.
Sacramento Basin
Projects Location Map
Sacramento Gas Basin, California
Bombora has concentrated on exploring overlooked
petroleum systems that have the potential for near-term
commercial gas production in prime locations that are
easily accessible to existing infrastructure.
The Company’s Sacramento Gas Basin projects include:
The Dempsey Gas Project: This project is operated by
ASX listed Sacgasco Limited (ASX:SGC). Under the
farmin agreement, the Company has earned a 10%
interest by funding 20% of the Dempsey-1 well. The well
which reached TD in September 2017 will now be flow
tested after encountering gas in each of the target zones
drilled. Dempsey-1 is the first well to target the Early
Cretaceous sand section on structures defined by 3D
seismic and has proven Bombora’s theory that gas in the
northern Sacramento Gas Basin originates from the
older Cretaceous section.
14
Review of Operations
Review of Operations
The Tulainyo Gas Discovery:
Resources
California
is
Production Corporation
this
of
the Operator
project with
discovery
company Cirque
private
Resources LP a partner in
venture.
the
Bombora’s 40%
owned
subsidiary Gas Fields LLC
(“Gas Fields”) is earning up
to a 33.33% interest in the
project by funding up to
three wells over an 18
month period.
joint
Schematic Cross Section of Sacramento Gas Basin Plays
(image courtesy of Xstate Resources Limited)
Alvares and
Tulainyo Trend
Gas recovered on test
with >1,500m gas
shows
Dempsey and New
Prospects Trend
High relief anticlines
and sub-thrust plays
in
first well
The
the
programme, Tulainyo 2-7, is
due to spud in November 2017 with the objective of appraising a potentially giant-scale, over
pressured gas discovery in similar age rocks to those about to be tested in the Dempsey-1 well. In
2015, the area was drilled with the Tulainyo-1 well which recovered good quality gas although testing
could not proceed due to mechanical difficulties. Historic drilling, including the most recent well,
indicates that the entire anticline could be gas charged.
A variety of lightly explored
structural and stratigraphic plays
beneath existing production
Financing of the Tulainyo 2-7 well has been secured with Bombora’s funding partner Magnum Gas &
Power Limited having already contributed all the necessary funds for the drilling of the well to the
Operator.
Tulainyo Recoverable Gas Resource Potential Net to PCL
Assumes a net beneficial position at completion of farmin earning wells and unrisked resources per
press release 23 June 2017.
Cautionary statement: The Company confirms that it is not aware of any new information or data that
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 Alvares Gas Discovery: Under a farmin with Sacgasco Limited (ASX: SGC) and Xstate
Resources, Bombora has the right to earn a 15% working interest by funding on a promoted basis
appraisal drilling on the 1982 Alvares discovery. Although there is currently no commitment to drill at
Alvares, the discovery is on trend to the Tulainyo Gas Discovery and may be revalued pending results
of the Tulainyo 2-7 well operations.
Bombora’s Sacramento Gas Basin projects have previously encountered gas, but the discoveries have
not yet been proved commercial. Bombora believes it has the expertise required to plan for and re-
drill these gas discoveries with the aim of rapidly commercialising the gas.
15
Review of Operations
Review of Operations
Walyering Project Location
Perth Basin, Australia
Walyering Gas Field: Under a farmin with UIL Energy Ltd
(ASX: UIL), the Company can earn a 70% operated interest
in the southern part of onshore exploration licence EP 447.
The Company must carry out permitting for the project
(remaining cost c. A$150,000) thereby earning the right to
a 70% operated interest by acquiring a 3D seismic survey
before August 2018 at a cost of approximately A$1.8
million.
Bombora believes that 3D data will show the Walyering Gas
Field to be substantial in size. Its position relative to
important infrastructure means it is well placed for potential
fast track development following appraisal drilling success.
16
Review of Operations
Review of Operations
Corporate
Pancontinental’s corporate activities for the
financial year included; changes to the Board,
and
Fundraising,
Conferences
General Meetings
Board Changes
As stated above in the ‘Post Year End Acquisition of Bombora
Natural Energy Pty Ltd’ section, two of Bombora’s directors
have joined the Pancontinental Board; John Begg as CEO and
Executive Director and Marie Malaxos as Non-Executive
Director.
Pancontinental director (and
former Chairman) Dave
Kennedy has taken over the role of Chairman from John
Leach, who has stepped down from the Board. The Board
thanks John for his valuable contribution and leadership of
the Company.
Barry Rushworth and Ernie Myers will continue on the Board
as Non-Executive Directors.
For a detailed timeline of Board changes throughout the year
please see ‘Board Changes throughout the Financial Year’ on
the first page of the Directors’ Report.
New Directors Marie Malaxos & John Begg
Fundraising
Pancontinental raised AU $1.8m during the financial year with a breakdown as follows:
Placement to sophisticated and professional investors
Placement to directors approved at general meeting
Share Purchase Plan
Total funds raised
AU $1,170,000
AU $ 230,000
AU $ 398,500
AU $1,798,500
In addition, post year end, the company announced that it had raised AU $2.0 million by way of placement
to professional and sophisticated investors as well as US $2.2 million from Africa Energy’ Corp.’s investment
in Pancontinental Namibia Pty Ltd.
17
Review of Operations
Review of Operations
General Meeting
On 15 March, the company held a general meeting of shareholders to vote on resolutions with regard
to a share placement ratification and issue of shares to directors. All resolutions put to the meeting
were passed via a poll.
Conferences
During the financial year, Director Ernie Myers had the pleasure of being invited to present at the
Africa Oil, Gas and Energy Conference, an event connecting professionals from the Australian oil and
gas sector with African local knowledge experts, government officials, potential projects and
investment opportunities.
Director Ernie Myers presenting to the Africa Oil, Gas and Energy Conference
18
Review of Operations
Prospective Resource Estimates Cautionary Statement
DISCLAIMERS & NOTES
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 for California date from 23 June 2017. 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 for
the Namibian project using deterministic methods and for California using probabilistic 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 Pancontinental’s percentage
entitlement under Joint Venture contracts and adjusted for applicable royalties.
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.
Prospects and Leads
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 compiled by Mr John Begg the Chief
Executive Officer and Executive Director of Pancontinental Oil & Gas NL. Mr Begg has more than 30 years’
experience in practising petroleum geology and exploration management.
Mr Begg 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
Prospective Resource Estimates Cautionary Statement
DISCLAIMERS & NOTES
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 for California date from 23 June 2017. 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 for
the Namibian project using deterministic methods and for California using probabilistic 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 Pancontinental’s percentage
entitlement under Joint Venture contracts and adjusted for applicable royalties.
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.
Prospects and Leads
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 compiled by Mr John Begg the Chief
Executive Officer and Executive Director of Pancontinental Oil & Gas NL. Mr Begg has more than 30 years’
experience in practising petroleum geology and exploration management.
Mr Begg 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.
19
Directors’ Report
Your Directors submit their report for the year ended 30 June 2017.
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.
BOARD CHANGES THROUGHOUT THE FINANCIAL YEAR
Henry David Kennedy
1 July 2016
30 November 2016
10 July 2017
John Douglas Begg
10 July 2017
Non-Executive Chairman as at 29 September 2017
Mr Kennedy held the position of Non-Executive Chairman.
Mr Kennedy retired as Non-Executive Chairman to become a Non-Executive
Director.
Post financial year end, but prior to the release of this report, Mr Kennedy was
again appointed Non-Executive Chairman.
Chief Executive Officer and Executive Director as at 29 September 2017
Mr Begg joined the Board as Executive Director and Chief Executive Officer in
July 2017. Mr Begg did not hold office at any time during the 2017 financial
year.
Ernest Anthony Myers
1 July 2016
10 July 2017
Non-Executive Director as at 29 September 2017
Mr Myers held the position of Executive Finance Director.
Post financial year end, but prior to the release of this report, Mr Myers was
appointed as a Non-Executive Director.
Roy Barry Rushworth
1 July 2016
10 July 2017
Non-Executive Director as at 29 September 2017
Mr Rushworth held the positions of Chief Executive Officer and Executive Director.
Post financial year end, but prior to the release of this report, Mr Rushworth was
appointed as a Non-Executive Director.
Marie Michele Malaxos
10 July 2017
Non-Executive Director as at 29 September 2017
Mrs Malaxos joined the Board as Non-Executive Director in July 2017. Mrs Malaxos
did not hold office at any time during the 2017 financial year.
Vesna Petrovic
1 July 2016
9 December 2016
10 July 2017
31 July 2017
Company Secretary and Alternate Director as at 29 September 2017
Mrs Petrovic held the position of Company Secretary.
Mrs Petrovic was appointed Executive Director.
Post financial year end, but prior to the release of this report, Mrs Petrovic stepped
down as Executive Director but remained Company Secretary.
Mr Kennedy appointed Mrs Petrovic as his Alternate Director.
John Edward Leach
1 July 2016
30 November 2016
10 July 2017
No longer a Board Member
Mr Leach held the position of Independent Non-Executive Director.
Mr Leach is appointed Independent Non-Executive Chairman.
Post financial year end, but prior to the release of this report, Mr Leach stepped
down as Independent Non-Executive Chairman.
20
Directors’ Report
Directors’ Report
Names, qualifications, experience and special responsibilities
Henry David Kennedy MA (Geology), SEG (Non-Executive Chairman)
Mr Kennedy is a Geologist with a long history in Australian and New Zealand oil and gas
companies. During his time as a technical director he was instrumental in the formation
and development of a number of successful listed companies. These companies were
involved in numerous discoveries in Western Australia and New Zealand. At
Pancontinental, Mr Kennedy has used his wide knowledge base to assist with the
strategic direction of the company. Mr Kennedy has been a director of Pancontinental
since August 1999.
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.
John Douglas Begg BSc (Geology) (Chief Executive Officer and Executive Director)
Mr Begg is an expert upstream oil and gas project generator and deal closer. Experienced
in equity capital raisings, mergers and acquisitions, and negotiations with industry joint
ventures, regulators and governments. An industry-leading geoscientist who has lived
and worked with consistently high business impact in Australia, Developing South East
Asian countries, the UK, Middle East and the USA. Mr Begg has been instrumental in the
discovery and development of commercial oil and gas fields on three continents so far.
Mr Begg joined the Board as Executive Director and Chief Executive Officer in July 2017.
Ernest Anthony Myers CPA (Non-Executive Director)
Mr Myers, an Accountant by profession, has held senior management and executive roles
within a number of ASX listed companies. During his career he has been instrumental in
the capital raisings and financial management of these companies. He has played a key
role in managing the Group’s African portfolio. Mr Myers joined Pancontinental in March
2004 and has served in a number of executive and non-executive roles.
Mr Myers was an alternate Director of East Africa Resources Limited from June 2010
until April 2015.
Roy Barry Rushworth, BSc (Non-Executive Director)
Mr Rushworth is a Geologist who brings extensive experience in petroleum exploration
to the Company. Commencing with positions in exploration operations, his career then
extended to the role of Chief Geologist and Exploration Manager for an Australian listed
company. A number of oil and gas discoveries were made by the company during that
time. More recently, Mr Rushworth has been responsible for identifying, negotiating and
acquiring international new venture opportunities in Malta, Kenya, Morocco and Namibia.
In addition, he has a track record of working closely with international government
bodies and attracting blue chip joint venture partners to Pancontinental’s projects.
Mr Rushworth has been a director of Pancontinental since August 2005.
21
Directors’ Report
Directors’ Report
Marie Michele Malaxos BE, Dip Bus, GAICD (Non-Executive Director)
Mrs Malaxos has been a professional executive in the resources sector for over 25 years,
with involvement in all aspects of the development and operation of oil and gas fields
including commercial and budget control, technical management and approval,
stakeholder liaison, environmental management, health and safety management and
assessment of assets for sale and purchase.
In July 2017, Mrs Malaxos was appointed to the Board of Pancontinental Oil & Gas NL as
a Non-Executive Director.
FORMER DIRECTOR
John Edward Leach BArts (Economics) CA, MBA (Independent Non-Executive Chairman)
Mr Leach was a Director of Pancontinental since February 2016, having held both the positions of Independent
Non-Executive Director and more recently Independent Non-Executive Chairman. Post financial year end on 10
July 2017, after shareholder approval of the Bombora Natural Energy Pty Ltd acquisition Mr Leach stepped down
from the Board.
The Board would like to express their sincere thanks to Mr Leach for his contribution to the company during his
tenure.
COMPANY SECRETARY & ALTERNATE DIRECTOR
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.
Roles in accounting and finance of numerous publicly listed entities, particularly those
involved in Africa have provided Mrs Petrovic a base from which to contribute to the
accounting and governance functions at Pancontinental.
Mrs Petrovic was appointed Company Secretary in April 2010 and Alternate Director in
July 2017.
IMPORTANT NOTE
THE DISCLOSURES IN THE DIRECTORS’ REPORT AND FINANCIAL STATEMENTS WHICH FOLLOW
RELATE TO THE DIRECTORS WHO WERE IN OFFICE DURING THE FINANCIAL YEAR ENDED 30 JUNE
2017.
POST FINANCIAL YEAR END, PANCONTINENTAL ACQUIRED BOMBORA NATURAL ENERGY PTY LTD
(“BOMBORA”) AND AS SUCH TWO EXISTING PANCONTINENTAL BOARD MEMBERS RESIGNED FROM
THEIR POSITIONS TO MAKE WAY FOR TWO DIRECTORS FROM BOMBORA.
FOR FURTHER DETAILS, PLEASE SEE THE “BOARD CHANGES THROUGHOUT THE FINANCIAL YEAR”
SECTION AT THE BEGINNING OF THE DIRECTORS’ REPORT.
22
Directors’ Report
Directors’ Report
DIRECTORS' INTERESTS
The relevant interest of each Director in the shares and options of the Company as at 30 June 2017 is as follows:
John Edward Leach
Henry David Kennedy
Roy Barry Rushworth
Ernest Anthony Myers
Vesna Petrovic
DIRECTORS' MEETINGS
Ordinary Shares
Options over
Ordinary Shares
-
336,768,269
46,835,610
2,900,715
-
-
-
-
-
-
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:
John Edward Leach
Henry David Kennedy
Roy Barry Rushworth
Ernest Anthony Myers
Vesna Petrovic
Directors'
Meetings
7
6
7
6
7
7
Notes
The Directors discussed and agreed various matters throughout the financial year which were resolved by circular
resolution; 11 matters were dealt with in such a manner during the year.
23
Directors’ Report
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;
Extraction of value from the Company’s asset base;
Seek new ventures suitable for inclusion in the group’s asset structure;
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 to the group;
Review appropriate fundraising proposals.
Focus on cost cutting in all non-essential areas; and
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.
(0.26)
(0.26)
Employees
The consolidated entity had four (4) employees as at 30 June 2017, (2016: four (4)). The consolidated entity
employs the services of specialised consultants where and when needed.
Cents
OPERATING AND FINANCIAL REVIEW
Review of Operations
Namibia PEL 37 [30% at 30 June 2017, 20% interest at 29 September 2017]
Pancontinental holds an interest in acreage over an offshore area in the Walvis Basin, Namibia, which it acquired
as one of the original bidders in 2011. After the completion of initial exploration studies Pancontinental and its
local partner sought to bring in a strong joint venture partner to take the lead. In 2013, the Company farmed out
to Tullow Namibia Limited, a subsidiary of Tullow Oil plc (“Tullow”), a multinational oil and gas company. In
exchange for a 65% operated interest, Tullow would free carry Pancontinental in an exploration programme worth
in excess of US $100 million.
To date, the joint venture has acquired 3D and 2D seismic data which it has processed, mapped and interpreted.
The total spend to date is circa US $34 million, with all of the exploration costs free carried for Pancontinental.
Post the end of the financial year, in July 2017, operator Tullow entered into a farmout agreement with ONGC
Videsh Limited of India for a 30% participating interest. Tullow is to remain as operator of the PEL 37 joint
venture. Pancontinental believes this transaction to be a positive step toward testing the oil potential of PEL 37.
Also post year end, Africa Energy Corp, a Canadian oil and gas exploration company listed on the TSX Venture
Exchange (Ticker Symbol AFE) invested in Pancontinental’s subsidiary Pancontinental Namibia Pty Ltd. Africa
Energy subscribed for new shares in the subsidiary, acquiring a 33.33% shareholding in exchange for US $7.7
million; US $2.2 million payable immediately and the balance payable upon spud of the PEL 37 well in Namibia.
Africa Energy has a highly regarded team focused on large African oil plays that will add technical capability
24
Directors’ Report
Directors’ Report
towards furthering the growth potential of this asset.
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 and has completed various work programmes in joint venture over the area.
Due to uncertainties over the security of field operations in this area, activity has been suspended.
In conjunction with joint venture partner and operator of the offshore area, FAR Limited, future activities for Block
L6 are in review.
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 continues to look for new opportunities, in Africa and elsewhere compatible with its strengths.
Whilst the company is committed to further developing existing projects, emerging opportunities are reviewed
on a timely basis.
Performance Indicators
The Board closely monitors and discusses the group’s operating plans, financial budget and overall performance
as well as the company’s share price.
The underlying drivers which contribute to the company’s performance and can be managed internally include a
disciplined approach to reducing the group’s non-essential costs and allocating funds to those areas which will
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; however through effective communication between the
company and all of its Stakeholders the company can provide assurance of regular reviews to determine actions
to mitigate risk and increase performance.
Operating Results for the Year
Summarised operating results are as follows:
2017
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.
(4,981,475)
(4,981,475)
3,207
3,207
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
2017
2016
2015
2014
2013
(4,981,475) (5,472,381) (41,878,638) (19,068,997)
(662,822)
(0.26)
(0.40)
(3.64)
(1.66)
(0.06)
$0.002
$0.003
$0.006
$0.023
$0.050
25
Directors’ Report
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 Board is responsible for ensuring that risks and opportunities are identified on a timely basis and that the
group's objectives and activities are aligned with the risks and opportunities identified by the Board.
The group believes that it is crucial for all Board members to be a part of this process and as such the Board
has not established a separate risk management committee. The Board has a number of mechanisms in place
to ensure that its objectives and activities are aligned with the risks identified. These include the following:
Implementation of operating plans and cash flow budgets by Management and Board monitoring of progress
against these budgets.
Ongoing analysis of business risks specific to the upstream oil and gas 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. Such standards ensure shareholder
value is delivered and maintained. Standards cover legal compliance, conflict resolution, privileged
information and fair dealing.
The Board provides Shareholders with information using a comprehensive Continuous Disclosure Policy
which includes identifying matters which have a material effect on the underlying security price. ASX
announcements, the web page of the company and other media resources are used to convey such
information. The Board encourages full participation by Shareholders at the AGM and Shareholders are
requested to vote on Board and Executive remuneration aggregates as well as Employee Incentive
Schemes.
The Company’s prevents the occurrence of risks by undertaking regular reviews of the Group’s business
practices to identify potential risks. Techniques used for identifying risks include:
Evaluating each function of the business and identifying anything that could have a negative impact on
the Group’s operations;
Reviewing records to identify previous issues that could have a current impact;
Considering any external risks that could affect the Group; and
Brainstorming with employees to identify risks and in turn implementing risk prevention measures.
Once potential risks have been identified, managing risks involves developing cost effective options on how to
best to deal with the risks. Risks can be:
Avoided – by changing business processes or equipment to achieve a similar outcome with less risk;
Reduced - if a risk can’t be avoided the Group can reduce its likelihood and consequence. This could
include staff training, documenting procedures and policies, complying with legislation, maintaining
equipment, practicing emergency procedures, keeping records safely secured and contingency planning.
Transferred - transfer some or all of the risk to another party through contracting, insurance,
partnerships or joint ventures.
Accepted – this may be the only option.
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.
26
Directors’ Report
Directors’ Report
Review of Financial Condition
Capital Structure
During the year, the Company added to its cash reserves through placements and a share purchase plan.
Share Capital
Beginning of the financial year
Issued during the year:
Shares awaiting shareholder approval
End of the financial year
Option movements during the financial year were as follows:
Option Reserve
Balance at beginning of year
expired
issued
Balance at end of year
Number of shares
$
1,717,494,096 101,545,967
1,673,197
732,583,346
150,000
-
2,450,077,442 103,369,164
Number
of
options
2,750,000
(2,750,000)
100,000,000
Weighted
average
exercise price
0.12
0.12
0.005
100,000,000
0.005
Since the end of the financial year and up until the date of this report 394,634,149 options were
issued.
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
During the current financial year, the company raised funds by way of placements and a share purchase plan.
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
As at 30 June 2017 there were 100,000,000 ordinary shares under options. Refer to the notes for further details
on the options outstanding.
During the year 2,750,000 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
4 July 2017
Namibia PEL 37 operator Tullow entered into a farmout agreement with ONGC Videsh Limited of India for a 30%
participating interest. Tullow is to remain as operator of the PEL 37 joint venture. Pancontinental believes this
transaction to be a positive step toward testing the oil potential of PEL 37.
10 July 2017
General Meeting of shareholders held to seek approval for the acquisition of private company Bombora Natural
Energy Pty Ltd and related resolutions. Bombora is a gas-focused company with interests onshore in the
27
Directors’ Report
Directors’ Report
Sacramento Gas Basin, USA and onshore Perth Basin. All resolutions put to the meeting were passed on a poll.
17 July 2017
Placement funds received for Pancontinental’s $2 million fundraising.
3 August 2017
Dempsey-1 onshore well in the Sacramento Gas Basin, California commences drilling.
14 August 2017
Magnum Gas and Power Limited (“Magnum”) contributed funds in accordance with a Letter of Intent announced
on 5 June 2017 to provide the remaining funding on its and Pancontinental’s behalf required for the drilling of
Tulainyo-2 in the Sacramento Gas Basin, USA to the operator of the Tulainyo project. Following transfer of the
funds, Gas Fields LLC, a subsidiary of Pancontinental holding the Tulainyo asset, will be owned 40%
Pancontinental and 60% Magnum Gas and Power Limited. The drilling of the Tulainyo-2 well is scheduled to
commence late October 2017.
11 September 2017
Africa Energy Corp, a Canadian oil and gas exploration company listed on the TSX Venture Exchange (Ticker
Symbol AFE) invested in Pancontinental’s subsidiary Pancontinental Namibia Pty Ltd. Africa Energy subscribed
for new shares in the subsidiary, acquiring a 33.33% shareholding in exchange for US $7.7 million; US $2.2
million payable immediately and the balance payable upon spud of the PEL 37 well in Namibia. Africa Energy
has a highly regarded team focused on large African oil plays that will add technical capability towards
furthering the growth potential of this asset
There were no other 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 currently there
are no likely developments in the entity's operations.
Post year end the Company acquired a subsidiary Bombora Natural Energy Pty Ltd which holds interests in the
United States of America as well as Western Australia. Exploration and appraisal drilling activity on the newly
acquired projects may lead to expansion in the entity’s operations, however this is not known as at the date of
this report.
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:
JL Leach, HD Kennedy, RB Rushworth, EA Myers and V Petrovic.
28
Directors’ Report
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. If they perform additional duties they are remunerated at market rates. The Chief
Executive Officer receives a fixed fee for his respective executive services. 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 2017 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
$375,000 (actual payments reduced to $237,500)
Chief Executive Officer
23 December 2014
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 further reduced during the financial year by $128,125, this is in
addition to the $345,000 reduction in the last 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.
29
Directors’ Report
Directors’ Report
Table 1: Director remuneration for the year ended 30 June 2017
Primary benefits
Post
Employment
Equity
Total
Salary &
Fees
Cash STI
Super-
annuation
Options
(Issued)
Value of
options as
proportion
of Revenue
John Edward Leach
(Non-Executive Chairman)
2017
2016
Henry David Kennedy
(Non-Executive Director)
2017
2016
48,000
16,000
50,000
50,000
Roy Barry Rushworth
(Executive Director, Chief Executive Officer)
2017
2016
Ernest Anthony Myers
(Executive Finance Director)
2017
2016
Vesna Petrovic
(Executive Director)
2017
2016
237,500
343,750
187,500
200,000
140,625
150,000
Anthony Robert Frederick Maslin
(Non-Executive Director_to Jan 16)
2017
2016
Total Current Year
Remuneration
-
26,000
663,625
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
48,000
16,000
0.0%
0.0%
50,000
50,000
0.0%
0.0%
237,500
343,750
0.0%
0.0%
187,500
200,000
0.0%
0.0%
140,625
150,000
0.0%
0.0%
-
26,000
0.0%
0.0%
663,625
-
Table 2: Options granted as part of remuneration for the year ended 30 June 2017
(as approved by Shareholders)
There were no options granted as part of remuneration for the year ended 30 June 2017 (30 June 2016: 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
2017
2016
2015
2014
2013
120%
1.79%
3 years
-
-
-
-
-
-
-
-
-
110%
2.74%
4 years
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Directors’ Report
Directors’ Report
Total number of options:
Number of options
Grant date
Vesting date
Weighted average fair
value
100,000,000
21 Apr 17
21 Apr 20
0.001
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 %
2017
$0.002
8,756,452
(4,981,475)
(56.89)%
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)%
END OF REMUNERATION REPORT
31
Directors’ Report
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 2016/191. 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 2017.
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 29 September 2017
32
Directors’ Report
33
Directors’ Report Corporate Governance Statement
Corporate Governance Statement
The Company’s 2017 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 June 2017.
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 2017 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.
and
Selection
As part of its Corporate Governance Manual the Company has also adopted a Policy and Procedure
at
for
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.
of Directors which
(Re)Appointment
found
can
be
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.
34
Corporate Governance Statement
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
2017
20%
100%
43%
2016
20%
100%
43%
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 12.6% of women.
35
Corporate Governance Statement
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, in recent years market
conditions have 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
$345,000 per annum in the 2016 financial year to adapt to market circumstances. In addition, this
2017 financial year Executive Director salaries were further reduced by $128,125. 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.
36
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.
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 Leach, Mr Myers and Mrs Petrovic are qualified accountants and therefore meets the tests of
financial expertise.
37
Corporate Governance Statement
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
JE Leach
Independent Non-Executive
Chairman
1 year
Yes
RB Rushworth Executive Director, Chief Executive
12 years
No - Executive Director
Officer
HD Kennedy
Non-Executive Director
18 years
No - Substantial
Shareholder
EA Myers
Executive Finance Director
8 years
No - Executive Director
V Petrovic
Company Secretary and Executive
Director
< 1 year No - Executive Director
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.
Adopted – As recommended, the Chairman is an independent director. Also as recommended, the
Chairman and the CEO are not the same person.
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.
38
Corporate Governance Statement
Corporate Governance Statement
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.
39
Corporate Governance Statement
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
External Auditor
Procedure
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;
40
Corporate Governance Statement
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.
41
Corporate Governance Statement
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.
42
Corporate Governance Statement
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 Company’s Risk
Management Policy (a summary of which can be found at http://pancon.com.au/about-
us/corporate-governance/) is applied when reviewing and discussing risk management matters.
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.
43
Corporate Governance Statement
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.
44
Corporate Governance Statement
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.
45
Corporate Governance Statement
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.
46
Statement of Comprehensive Income
Statement of Comprehensive Income
YEAR ENDED 30 JUNE 2017
Notes
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
Office expenses
Travel
Other 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
CONSOLIDATED
2017
$
2016
$
(16,869)
(781,136)
(35,975)
(3,473,130)
(8,531)
(23,941)
(3,717)
(43,513)
(112,842)
(23,750)
(101,706)
(52,361)
(44,336)
(162,147)
(4,883,954)
(23,565)
(888,438)
(43,924)
(4,044,840)
(13,249)
(30,231)
(3,304)
(46,589)
(15,812)
(23,750)
(101,082)
(42,204)
(25,718)
(183,399)
(5,486,105)
3,207
(100,728)
(97,521)
16,893
(3,169)
13,724
(4,981,475)
-
(4,981,475)
(5,472,381)
-
(5,472,381)
-
-
-
-
(4,981,475)
(5,472,381)
(0.26)
(0.26)
(0.40)
(0.40)
The Statement of Comprehensive Income is to be read in conjunction with the Notes to the Financial Statements.
47
Statement of Financial Position
Statement of Financial Position
AT 30 JUNE 2017
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
4
6
7
8
9a
10
10
CONSOLIDATED
2017
2016
$
$
740,160
77,571
817,731
1,157,927
63,113
1,221,040
45,423
6,874,976
6,920,399
62,292
9,293,818
9,356,110
7,738,130
10,577,150
499,946
499,946
274,658
274,658
10,871
10,871
16,901
16,901
510,817
291,559
7,227,313
10,285,591
100,000
103,369,164 101,545,967
154,000
(96,241,851) (91,414,376)
10,285,591
7,227,313
TOTAL EQUITY
7,227,313
10,285,591
The Statement of Financial Position is to be read in conjunction with the Notes to the Financial Statements.
48
Statement of Changes in Equity
Statement of Changes in Equity
AT 30 JUNE 2017
Consolidated
Share
Capital
Retained
Earnings
$
$
Option
Reserve
$
Total
Equity
$
Balance at 1 July 2016
101,545,967
(91,414,376)
154,000
10,285,591
Profit or loss
-
(4,881,475)
Other comprehensive income/(loss)
Shares issued (net of costs)
Shares awaiting shareholder approval
-
1,673,197
150,000
-
-
-
-
-
-
-
(4,881,475)
-
1,673,197
150,000
Share options
-
54,000
(54,000)
-
Balance at 30 June 2017
103,369,164
(96,241,851)
100,000
7,227,313
Balance at 1 July 2015
Profit or loss
Other comprehensive income/(loss)
Shares issued (net of costs)
2,133,969
Shares awaiting shareholder approval
Share options
-
-
99,411,998
(85,941,995)
154,000
13,624,003
-
-
(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
The above Statement of Changes in Equity is to be read in conjunction with the Notes to the Financial Statements.
49
Statement of Cashflows
Statement of Cashflows
Notes to the Financial Statements
CONSOLIDATED
2017
2016
$
$
(1,315,144)
-
(933,171)
(1,457,727)
-
(885,452)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This financial report was authorised for issue by the Directors on 29 September 2017.
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
11(a)
(2,248,315)
(2,343,179)
Standards Board.
YEAR ENDED 30 JUNE 2017
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)
-
-
(2,600)
(2,600)
3,207
1,948,500
(118,272)
17,093
2,224,000
(82,289)
1,833,435
2,158,804
(414,880)
1,157,927
(2,887)
740,160
(186,975)
1,345,837
(935)
1,157,927
The above Statement of Cash Flows is to be read in conjunction with the Notes to the Financial Statements.
50
Basis of preparation
applied, unless otherwise stated.
(a) Income Tax
it is recognised in equity.
in respect of prior years.
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
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
Current tax is the expected tax payable on the taxable income for the year, and any adjustment to tax payable
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 and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest.
These costs are only carried forward to the extent that the costs are expected to be recouped through the
successful development of the area or where activities in the area have not yet reached a stage which permits
reasonable assessment of the economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against operating results in the year
in which the decision to abandon the area is made. When production commences the accumulated costs for
the relevant area of interest are classified as development costs and amortised over the life of the project area
according to the rate of depletion of the economically recoverable reserves.
Where independent valuations of areas of interest have been obtained, the valuations are brought to account.
Subsequent expenditure on re-valued areas of interest is accounted for in accordance with the above
principles. A regular review is undertaken of each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to that area of interest.
At 30 June 2017 the Directors considered that the carrying value of the oil and gas exploration interests of the
consolidated entity was as shown in the Statement of Financial Position and no further impairments arises
other than that already recognised.
(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.
have been eliminated in full.
All intercompany balances and transactions, including unrealised profits arising from intra-group transactions,
Notes to the Financial Statements
Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This financial report was authorised for issue by the Directors on 29 September 2017.
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 and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest.
These costs are only carried forward to the extent that the costs are expected to be recouped through the
successful development of the area or where activities in the area have not yet reached a stage which permits
reasonable assessment of the economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against operating results in the year
in which the decision to abandon the area is made. When production commences the accumulated costs for
the relevant area of interest are classified as development costs and amortised over the life of the project area
according to the rate of depletion of the economically recoverable reserves.
Where independent valuations of areas of interest have been obtained, the valuations are brought to account.
Subsequent expenditure on re-valued areas of interest is accounted for in accordance with the above
principles. A regular review is undertaken of each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to that area of interest.
At 30 June 2017 the Directors considered that the carrying value of the oil and gas exploration interests of the
consolidated entity was as shown in the Statement of Financial Position and no further impairments arises
other than that already recognised.
(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.
51
Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements
(d) Foreign currencies
Translation of foreign currency transactions
Transactions in foreign currencies of entities within the consolidated entity are converted to local currency at
the rate of exchange ruling at the date of the transaction.
Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising
under foreign currency contracts where the exchange rate for that monetary item is fixed in the contract) are
translated using the spot rate at the end of the financial year.
A monetary item arising under a foreign currency contract outstanding at the reporting date where the
exchange rate for the monetary item is fixed in the contract is translated at the exchange rate fixed in the
contract.
All resulting exchange differences arising on settlement or re-statement are recognised as revenues and
expenses for the financial year. Any gains or costs on entering a hedge are deferred and amortised over the
life of the contract.
(e) Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market
investments readily convertible to cash within two working days, net of outstanding bank overdrafts.
Interest expense is charged as an expense as it accrues.
(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:
2017
30%
2016
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
52
entity’s exploration assets. This basis has been determined after consideration of the following factors:
The ability to issue additional share capital under the Corporations Act 2001, if required, by a share
purchase plan, share placement or rights issue;
The option of farming out all or part of the consolidated entity’s exploration projects; and
The ability, if required to dispose of interests in exploration and development assets.
Accordingly, the Directors believe that the consolidated entity will obtain sufficient cash inflows to enable it to
continue as a going concern and that it is appropriate to adopt that basis of accounting in the preparation of
the financial statements.
(l) Payables
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration
to be paid in the future for goods and services received, whether or not billed to the consolidated entity.
Payables to related parties are carried at the principal amount.
Deferred cash settlements are recognised at the present value of the outstanding consideration payable on
the acquisition of an asset discounted at prevailing commercial borrowing rates.
(m) Provisions
Provisions are recognised when the economic entity has a legal, equitable or constructive obligation to make
a future sacrifice of economic benefits to other entities as a result of past transactions or other past events, it
is probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of
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
the amount of the obligation.
(n) Contributed equity
of the share proceeds received.
(o) Revenue recognition
revenue is recognised:
Rendering of Services
have been incurred.
Interest Revenue
(p) Taxes
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
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
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.
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
Notes to the Financial Statements
Notes to the Financial Statements
entity’s exploration assets. This basis has been determined after consideration of the following factors:
The ability to issue additional share capital under the Corporations Act 2001, if required, by a share
purchase plan, share placement or rights issue;
The option of farming out all or part of the consolidated entity’s exploration projects; and
The ability, if required to dispose of interests in exploration and development assets.
Accordingly, the Directors believe that the consolidated entity will obtain sufficient cash inflows to enable it to
continue as a going concern and that it is appropriate to adopt that basis of accounting in the preparation of
the financial statements.
(l) Payables
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration
to be paid in the future for goods and services received, whether or not billed to the consolidated entity.
Payables to related parties are carried at the principal amount.
Deferred cash settlements are recognised at the present value of the outstanding consideration payable on
the acquisition of an asset discounted at prevailing commercial borrowing rates.
(m) Provisions
Provisions are recognised when the economic entity has a legal, equitable or constructive obligation to make
a future sacrifice of economic benefits to other entities as a result of past transactions or other past events, it
is probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of
the amount of the obligation.
(n) Contributed equity
Issued and paid up capital is recognised at the fair value of the consideration received by the company.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction
of the share proceeds received.
(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
53
Notes to the Financial Statements
Notes to the Financial Statements
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on
a gross basis and the GST component of cash flows arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
(q) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the
reporting date. These benefits include wages and salaries, annual leave, sick leave and long service leave.
Liabilities arising in respect of wages and salaries, annual leave, sick leave and any other employee benefits
expected to be settled within twelve months of the reporting date are measured at their nominal amounts
based on remuneration rates which are expected to be paid when the liability is settled.
Employee benefit expenses and revenues arising in respect of the following categories:
wages and salaries, non-monetary benefits, annual leave, long service leave, sick leave and other leave
benefits; and
other types of employee benefits
are charged against profits on a net basis in their respective categories.
(r) Earnings per share
Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity
(other than dividends) and preference share dividends, divided by the weighted average number of ordinary
shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit attributable to members, adjusted for:
costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have
been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted
for any bonus element.
(s) Comparatives
Where necessary, comparatives have been reclassified and repositioned for consistency with current year
disclosures.
(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.
54
Notes to the Financial Statements
Notes to the Financial Statements
2. DEPRECIATION AND WRITE OFF
Notes
Expenses
Depreciation of non-current assets:
Office furniture and equipment
Generative exploration and write off:
Exploration, evaluation and development
costs
3. INCOME TAX
(a) Income Tax (Benefit)/Expense
The prima facie tax, using tax rates applicable
in the country of operation, on profit and
extraordinary items differs from the income
tax provided in the financial statements as
follows:
Prima facie tax on profit from ordinary
activities
Tax effect of permanent differences:
Other items (net)
Amount not brought to account as a carried
forward future income tax benefit
Income tax expense attributable to ordinary
activities
(b) Future Income Tax Benefit not taken into account
The potential future income tax benefit calculated at 27.5% in respect of:
CONSOLIDATED
2016
2017
$
$
16,869
23,565
3,473,130
4,044,840
CONSOLIDATED
2017
$
2016
$
(1,369,906)
(1,559,629)
-
-
1,369,906
1,559,629
-
-
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
6,750,443
* 6,750,443
6,920,304
6,920,304
-
-
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.
*The potential future income tax benefit was calculated by multiplying the current tax rate of 27.5% by the
Group’s carry forward losses at 30 June 2017 of $24,547,065.
4. RECEIVABLES (CURRENT)
Sundry receivables
Total
CONSOLIDATED
2017
$
77,571
77,571
2016
$
63,113
63,113
55
Notes to the Financial Statements
Notes to the Financial Statements
(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.
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
2017
%
2016
%
2017
$
2016
$
Australia
100
100
2
2
Australia
100
100
(2)
(149,935)
(2)
(150,184)
-
1
-
1
(1)
5,677,968
(1)
4,786,523
(83,271)
(65,161)
Saint Lucia
100
100
10,584,107
10,584,107
British Virgin
Islands
(10,584,107) (10,584,107)
6,741,096
(4,861,512)
6,770,414
(6,299,703)
100
100
380,000
380,000
(380,000)
89,147
(380,000)
81,580
-
6,004,620
-
6,532,342
*Indicates companies not audited by Rothsay Chartered Accountants.
**Australian entity audited by Rothsay, branch operation by Ernst & Young Namibia.
Note, the Group is in the process of evaluating its subsidiary companies to assess how the Group’s operations
can be streamlined.
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
CONSOLIDATED
2016
2017
$
$
93,964
(48,541)
45,423
93,964
(31,672)
62,292
56
Notes to the Financial Statements
Notes to the Financial Statements
Carrying amount opening balance
Additions
Write offs
Depreciation expense
Total written down amount
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
Recovery and refunds of exploration expenditure *
Carrying amount at 30 June
62,292
-
-
(16,869)
45,423
83,257
2,600
-
(23,565)
62,292
CONSOLIDATED
2017
$
2016
$
9,293,818
918,135
(3,473,130)
136,153
-
6,874,976
13,399,620
327,704
(4,044,840)
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 petroleum areas.
* For the year ended 30 June 2016, the $977,513 relates to cash call credits.
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
CONSOLIDATED
2016
2017
$
$
274,658
499,946
274,658
499,946
CONSOLIDATED
2017
$
2016
$
103,369,164 101,545,967
103,369,164 101,545,967
(b) Movements in shares on issue
2017
2016
Beginning of the financial year
Issued during the year:
Placements & SPP (net of costs)
Exercise of Options (net of costs)
Shares awaiting shareholder approval
End of the financial year
Number of
shares
$
1,717,494,096 101,545,967
1,673,197
732,583,346
-
-
150,000
-
2,450,077,442 103,369,164
Number of
shares
1,150,994,096
$
99,411,998
2,133,969
566,500,000
-
-
-
-
1,717,494,096 101,545,967
57
Notes to the Financial Statements
Notes to the Financial Statements
10. RESERVES AND ACCUMULATED LOSSES
Reserves
Beginning of the financial year
Options expired
Options issued
End of the financial year
CONSOLIDATED
2017
$
2016
$
154,000
(154,000)
100,000
100,000
154,000
-
-
154,000
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
(91,414,376)
(4,981,475)
154,000
(96,241,851)
(96,241,851)
(85,941,995)
(5,472,381)
-
(91,414,376)
(91,414,376)
11. STATEMENT OF CASH FLOWS
CONSOLIDATED
2017
$
(a) Reconciliation of the net loss after tax to the net cash flows from operations
2016
$
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
Other non-cash
Net cash flow from operating activities
(b) Reconciliation of cash
Cash balance comprises:
cash assets
Closing cash balance
(4,981,475)
(5,472,381)
16,869
100,728
(3,207)
23,565
3,169
(16,893)
(14,458)
16,869
2,418,842
-
219,258
(21,741)
(2,248,315)
(11,274)
20,965
4,105,802
-
(964,991)
(31,141)
(2,343,179)
740,160
740,160
1,157,927
1,157,927
58
Notes to the Financial Statements
Notes to the Financial Statements
12. EXPENDITURE COMMITMENTS
CONSOLIDATED
2017
$
2016
$
Capital expenditure commitments
Estimated capital expenditure contracted for at reporting date, but not provided for, payable:
not later than one year
later than one year and not later than five years
later than five years
Total
-
-
-
-
-
-
-
-
13. EMPLOYEE BENEFITS
Employee Share Scheme
Information with respect to the number of options under the employee share incentive scheme is as follows:
Balance at beginning of year
expired
Balance at end of year
2017
2016
Number of
options
2,750,000
(2,750,000)
-
Weighted
average
exercise
price
0.12
0.12
-
Number of
options
2,750,000
-
2,750,000
Weighted
average
exercise
price
0.12
-
0.12
Options held at the end of the reporting period
There were 100,000,000 options held by the Company as at 30 June 2017, these options were not issued under
the Employee Share Scheme
14. SUBSEQUENT EVENTS
4 July 2017
Namibia PEL 37 operator Tullow entered into a farmout agreement with ONGC Videsh Limited of India for a
30% participating interest. Tullow is to remain as operator of the PEL 37 joint venture. Pancontinental believes
this transaction to be a positive step toward testing the oil potential of PEL 37.
10 July 2017
General Meeting of shareholders held to seek shareholder approval for the acquisition of private company
Bombora Natural Energy Pty Ltd and related resolutions. Bombora is a gas-focused company with interests
onshore in the Sacramento Gas Basin, USA and onshore Perth Basin. All resolutions put to the meeting were
passed on a poll.
17 July 2017
Placement funds received for Pancontinental’s $2 million fundraising.
3 August 2017
Dempsey-1 onshore well in the Sacramento Gas Basin, California commences drilling.
14 August 2017
Magnum Gas and Power Limited (“Magnum”) contributed funds in accordance with a Letter of Intent
announced on 5 June 2017 to provide the remaining funding on its and Pancontinental’s behalf required for
the drilling of Tulainyo-2 in the Sacramento Gas Basin, USA to the operator of the Tulainyo project. Following
transfer of the funds, Gas Fields LLC, a subsidiary of Pancontinental holding the Tulainyo asset, will be owned
40% Pancontinental and 60% Magnum Gas and Power Limited. The drilling of the Tulainyo-2 well is scheduled
to commence late October 2017.
11 September 2017
Africa Energy Corp, a Canadian oil and gas exploration company listed on the TSX Venture Exchange (Ticker
Symbol AFE) invested in Pancontinental’s subsidiary Pancontinental Namibia Pty Ltd. Africa Energy subscribed
59
Notes to the Financial Statements
Notes to the Financial Statements
for new shares in the subsidiary, acquiring a 33.33% shareholding in exchange for US $7.7 million; US $2.2
million payable immediately and the balance payable upon spud of the PEL 37 well in Namibia. Africa Energy
has a highly regarded team focused on large African oil plays that will add technical capability towards
furthering the growth potential of this asset.
15. EARNINGS PER SHARE
CONSOLIDATED
2017
$
2016
$
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
(4,981,475)
(4,981,475)
(5,472,381)
(5,472,381)
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
Number of shares
Number of shares
1,942,921,042
1,372,776,288
-
-
1,942,921,042
1,372,776,288
16. AUDITORS' REMUNERATION
Amounts received or due and receivable by Rothsay for:
an audit or review of the financial report of the entity
and any other entity in the consolidated entity
other services in relation to the entity and any other
entity in the consolidated entity
Amounts received or due and receivable by Ernst and
Young Namibia for:
an audit or review of the
Pancontinental Namibia Pty Ltd
other services in relation to the entity
financial report of
CONSOLIDATED
2017
2016
$
$
26,000
35,000
-
-
9,975
-
35,975
8,924
-
43,924
60
Notes to the Financial Statements
Notes to the Financial Statements
17. DIRECTOR AND EXECUTIVE DISCLOSURES
(a) Details of Specified Directors and Specified Executives
(i) Specified Directors for the current financial year
John Edward Leach
Henry David Kennedy
Roy Barry Rushworth
Ernest Anthony Myers
Vesna Petrovic
(ii) Specified Executives for the current financial year
N/A
Non-Executive Chairman
Non-Executive Director
Executive Director, Chief Executive Officer
Executive Finance Director
Executive Director & 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
John Edward Leach
2017
2016
Henry David Kennedy
2017
2016
Roy Barry Rushworth
2017
2016
Ernest Anthony Myers
48,000
16,000
50,000
50,000
237,500
343,750
187,500
200,000
2016
2016
Vesna Petrovic
2017
2016
140,625
150,000
Anthony Robert Frederick Maslin
-
26,000
2017
2016
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total Remuneration: Specified Directors /Officers
663,625
785,750
-
-
2017
2016
-
-
-
-
-
-
-
-
- -
- -
- -
48,000
16,000
-
-
- -
-
-
- -
50,000
50,000
-
-
- -
- -
- -
237,500
343,750
-
-
- -
- -
- -
187,500
200,000
-
-
- -
- -
-
-
140,625
150,000
-
-
- -
- -
-
-
-
26,000
-
-
- -
- -
- -
663,625
785,750
(c) Remuneration options: Granted and vested during the year
There were no grants of remuneration options during the year.
61
Notes to the Financial Statements
Notes to the Financial Statements
(d) Option holdings of specified Directors and specified Executives
2017
Specified Directors
John Edward Leach
Henry David Kennedy
Roy Barry Rushworth
Ernest Anthony Myers
Vesna Petrovic
Total
2016
Specified Directors
John Edward Leach
Henry David Kennedy
Roy Barry Rushworth
Ernest Anthony Myers
Anthony Robert Frederick
Maslin (to 15/1/16)
Total
Balance at
beginning of
period
1 July 2016
-
500,000
1,000,000
750,000
-
2,250,000
Balance at
beginning of
period
1 July 2015
-
500,000
1,000,000
750,000
500,000
2,750,000
Granted as
Remuneration
Options
Exercised/
(Expired)
Net Change
Other
Balance at
end of period
30 June 2017
-
-
-
-
-
-
-
(500,000)
(1,000,000)
(750,000)
-
(2,250,000)
-
-
-
-
-
-
-
-
-
-
-
-
Granted as
Remuneration
Options
Exercised/
(Expired)
Net Change
Other
Balance at
end of period
-
-
-
-
-
-
-
-
-
-
-
-
30 June 2016
-
-
-
-
-
-
-
500,000
1,000,000
750,000
500,000
2,750,000
(e) Shareholdings of Specified Directors and Specified Executives
2017
Ordinary Shares held in
Pancontinental Oil & Gas NL
Specified Directors
John Edward Leach
Henry David Kennedy
Roy Barry Rushworth
Ernest Anthony Myers
Vesna Petrovic
Total
2016
Ordinary Shares held in
Pancontinental Oil & Gas NL
Specified Directors
John Edward Leach
Henry David Kennedy
Roy Barry Rushworth
Ernest Anthony Myers
Anthony Robert Frederick Maslin (to 15/1/16)
Balance
1 July 2016
Acquisitions
(Disposals)
Balance
30 June 2017
-
270,101,602
36,835,610
1,650,715
-
-
66,666,667
10,000,000
1,250,000
-
-
336,768,269
46,835,610
2,900,715
-
308,587,927
77,916,667
386,504,594
Balance
1 July 2015
Acquisitions
(Disposals)
Balance
30 June 2016
-
141,351,602
36,835,610
400,715
14,583
-
128,750,000
-
1,250,000
-
-
270,101,602
36,835,610
1,650,715
14,583
Total
178,602,510
130,000,000
308,602,510
62
Notes to the Financial Statements
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. Repayment of these loans will occur
through future business activities of each respective entity.
63
Notes to the Financial Statements
Notes to the Financial Statements
Exposure to credit risk
The carrying amount of the Company’s and Group’s financial assets represents the maximum credit exposure.
The maximum exposure to credit risk at the reporting date was:
Consolidated
Trade and other receivables
Cash and cash equivalents
Total
Impairment losses:
Note
4
Carrying amount
2017
$
77,571
740,160
2016
$
63,113
1,157,927
817,731
1,221,040
None of the Company’s or Group’s receivables are past due at 30 June 2017, (2016: nil).
An impairment write down in respect of inter-Group loans and shares was recognised during the current year
from an analysis of the subsidiaries respective financial positions. The total impairment write down recognised
through impairment of loans to subsidiaries and shares held in subsidiaries during the current period was
$1,456,301 (2016: $1,924,379).
Whilst the loans were not payable at 30 June 2017 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
performance of a subsidiary in a given year.
(b) Liquidity risk:
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The
group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the group’s reputation.
The group manages liquidity risk by maintaining adequate cash reserves through continuously monitoring
forecast and actual cash flows.
Consolidated
Trade and other payables - Current
Trade and other payables - Non Current
< 1 year
$
(499,946)
-
Total
(499,946)
(c) Market risk:
Contractual cashflows
1-5 years
> 5 years
$
-
(10,871)
(10,871)
$
-
-
-
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the group’s income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return.
(i) Currency risk:
The Group is 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
Australian dollar (AUD). The other material currency that these transactions are denominated in is the (USD).
64
Notes to the Financial Statements
Notes to the Financial Statements
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.
Exposure to currency risk:
The group’s exposure to foreign currency risk at balance date was as follows, based on notional amounts:
30 June 2017
30 June 2016
AUD
USD
Total
AUD
USD
Total
185,119 555,041
740,160
750,247
407,680
1,157,927
77,571
(510,817)
-
-
77,571
63,113
(510,817)
(291,559)
-
-
63,113
(291,559)
(248,127) 555,041
306,914
521,801
407,680
929,481
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
2017
0.754
2016
0.728
2017
0.769
2016
0.744
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
2016.
Effect in AUD
30 June 2017
10% strengthening
30 June 2016
10% strengthening
Consolidated
Equity
Profit or
loss
61,671
61,671
45,298
45,298
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.
Interest rate risk:
At balance date the Group had exposure to interest rate risk, through its cash and equivalents held within
financial institution.
Variable rate
instruments
Cash and cash equivalents
Consolidated Carrying
Amount
30 June
2017
30 June
2016
740,160
1,157,927
65
Notes to the Financial Statements
Notes to the Financial Statements
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 2017
30 June 2016
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Carrying
amount
77,571
740,160
(510,817)
Fair value
77,571
740,160
(510,817)
Carrying
amount
63,113
1,157,927
(291,559)
Fair value
63,113
1,157,927
(291,559)
306,914
306,914
929,481
929,481
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 %
2017
2016
-
7,227,313
7,738,130
93.40%
8,756,452
(4,981,475)
(56.89)%
-
10,285,591
10,577,150
97.24%
11,954,797
(5,472,381)
(45.78)%
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.
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 was $50,000 (2016:
$50,000). Refer note 17.
(b) The Company has effected Directors and Officers Liability Insurance.
66
Notes to the Financial Statements
Notes to the Financial Statements
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 2017
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
2017
$
2016
$
(4,964,349)
(3,533,398)
(4,964,349)
(3,533,398)
2017
$
2016
$
814,409
7,637,155
1,221,040
10,577,150
447,340
458,211
274,658
291,559
103,369,164
100,000
(96,290,220)
7,178,944
101,545,967
154,000
(91,414,376)
10,285,591
67
Directors’ Declaration
Directors’ Declaration
In accordance with a resolution of the Directors of Pancontinental Oil & Gas NL, I state that:
(1) In the opinion of the Directors:
(a) the financial statements and notes of the company and of the consolidated entity are in accordance with
the Corporations Act 2001, including:
(i) giving a true and fair view of the company's and consolidated entity's financial position as at 30
June 2017 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 2017.
On behalf of the Board
Ernest Anthony Myers
Director
Perth 29 September 2017
68
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 2017 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 2017.
On behalf of the Board
Ernest Anthony Myers
Director
Perth 29 September 2017
69
Directors’ Report
70
Directors’ Report 71
Directors’ Report ASX Additional Information
ASX Additional Information
Additional information required by the ASX Ltd and not shown elsewhere in this report is as follows.
The information is current as at 30 September 2017.
(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
428
287
358
1,397
1,303
3,773
2,319
94,353
977,376
3,029,671
59,621,075
5,198,066,193
5,261,788,668
48,622,475
Listed ordinary shares
Number of
shares
Percentage of
ordinary
shares
1
2
3
4
5
6
7
8
9
10
11
12
13
SUNDOWNER INTERNATIONAL LTD
PERTH SELECT SEAFOODS PTY LTD
BT PORTFOLIO SERVICES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ROCK DOC PTY LTD
JEMAYA PTY LTD
CRESCENT NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
CEN PTY LTD
BNP PASIBAS NOMINEES PTY LTD
ZENIX NOMINEES PTY LTD
ROY BARRY RUSHWORTH
BNP PARIBAS NOMINEES PTY LTD
14 MR GEOFFREY DONALD COULTAS
15
16
17
18
J P MORGAN NOMINEES AUSTRALIA LIMITED
INVESCO NOMINEE PTY LTD
TARNEY HOLDINGS PTY LTD
NEJA PTY LTD
19 MILVERTON PTY LTD
20
OIL & GAS SOLUTIONS PTY LTD
402,673,494
319,000,000
224,000,000
200,089,233
187,200,026
163,000,000
160,835,000
133,179,185
104,000,000
91,711,670
88,400,000
87,500,000
86,009,798
67,589,500
66,526,828
63,878,175
63,000,000
60,000,000
55,000,000
52,000,000
7.65
6.06
4.26
3.80
3.56
3.10
3.06
2.53
1.98
1.74
1.68
1.66
1.63
1.28
1.26
1.21
1.20
1.14
1.05
0.99
2,675,592,909
50.84
72
ASX Additional Information
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 26 July 2017
Tattersfield Group
(e) Permit Schedule
Number of
Shares
411,768,268
92,157,865
Permits
Interests
and
Licence
Permit reference
Interest
Petroleum prospects
Namibia
Kenya
USA California
USA California
USA California
Australia
PEL 37
L6
Dempsey
Tulainyo
Alvares
Walyering
20%
40% offshore, 16% onshore
10%
earning 13.33%
15%
earning 70%
73
PANCONTINENTAL OIL & GA
S N
L –
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
7
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
7
Level One, 10 Ord Street
West Perth WA 6005
Telephone: +61 8 6363 7090
Facsimile: +61 8 6363 7099