f
ABN 25 009 069 005
ANNUAL REPORT
30 June 2015
TABLE OF CONTENTS
TABLE OF CONTENTS
Corporate Directory .......................................................................................................................................... 1
Directors’ Report ............................................................................................................................................... 2
Auditors’ Independence Declaration ............................................................................................................... 20
Corporate Governance Statement .................................................................................................................. 21
Consolidated Statement of Comprehensive Income ...................................................................................... 29
Consolidated Balance Sheet .......................................................................................................................... 30
Consolidated Statement of Cash Flows ......................................................................................................... 31
Consolidated Statement of Changes in Equity ............................................................................................... 32
Notes to the Consolidated Financial Statements ........................................................................................... 33
Directors’ Declaration ..................................................................................................................................... 77
Independent Auditor’s Report ......................................................................................................................... 78
Shareholder information .................................................................................................................................. 80
Samson Oil & Gas Limited
Annual Report – 30 June 2015
CORPORATE DIRECTORY
Directors
V. Rudenno (Chairman)
T.M. Barr (Managing Director)
D. Craig
K. Skipper
Secretary
D.I. Rakich
Registered Office and Business Address
Level 16, AMP Building
140 St Georges Terrace
Perth, Western Australia 6000
(08) 9220 9830
Telephone:
(08) 9220 9820
Facsimile:
Email
contact@samsonoilandgas.com.au
Web Site
www.samsonoilandgas.com.au
Share Registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross, Western Australia 6953
Telephone:
Facsimile:
(08) 9315 2333
(08) 9315 2233
Bankers
National Australia Bank
Utility Bay 13.03
100 St Georges Terrace
Perth, Western Australia 6000
Bank of the West
633 17th Street
Denver, Colorado, 80202
Solicitors
Squire Sanders
152 St Georges Terrace
Perth, Western Australia 6000
Davis Graham & Stubbs LLP
1550 Seventeenth Street, Suite 500
Denver, Colorado, 80202
Clanahan, Bean & Beck, PC
1873 South Bellaire Street, Suite 1401
Denver, Colorado, 80222
Auditors
RSM Bird Cameron Partners
8 St Georges Terrace
Perth, Western Australia 6000
Samson Oil & Gas Limited
CORPORATE DIRECTORY
Stock Exchange
Australian Securities Exchange Limited
Code: SSN
NYSE Amex
Code: SSN
Australian Company Number
009 069 005
Australian Business Number
25 009 069 005
Presentation Currency
The financial statements are presented in
US Dollars (2014: US Dollars)
Annual Report – 30 June 2015
Page 1 of 81
DIRECTORS’ REPORT
30 June 2015
DIRECTORS’ REPORT
In accordance with a resolution of Directors, the Directors submit their report with respect to the results of the
operations of Samson Oil & Gas Limited (“the Company”) and its controlled entities (“the Consolidated Entity” or
“Group”) for the year ended 30 June 2015 and the state of its affairs at that time.
DIRECTORS
The names and details of the Directors of the Company in office during the whole financial year and until the
date of this report, unless noted otherwise, are:
Dr. Victor Rudenno
Chairman
Dr. Rudenno was appointed as a Director of the Company in April 2007. In 1984, Dr. Rudenno transitioned to
the investment industry as a rated mining and energy analyst working for firms such as James Capel, DBSM and
Prudential Bache. In 1995, he moved to the corporate side of investment banking and worked for a number of
leading firms including Macintosh Corporate, Deutsche Bank, Hartley Poynton and CIBC. In 2002, Dr. Rudenno
co-founded Equity Capital Markets Ltd, an investment bank specialising in corporate advice and capital raising
which merged with Interfinancial in 2005 and subsequently was acquired by Tolhurst, an ASX listed broker in
2007. He is currently an Executive Director of Revaluate Pty Limited. He is a Senior Fellow of the Financial
Services Institute of Australasia and a Fellow of the Australasian Institute of Mining and Metallurgy. Dr. Rudenno
holds a Bachelor of Mining Engineering degree, a Master of Commerce degree and a Doctor of Philosophy for
his thesis on Mining Economics. During his earlier academic career, Dr. Rudenno lectured both at the University
of New South Wales and part time at University of Sydney, predominantly on mining economics, geostatistics,
operations research and thermodynamics. He is the author of the textbook “Mining Valuation Handbook”.
Dr Rudenno is a member of the Audit Committee. On 1 July 2015 Dr Rudenno was appointed Chair of the Audit
Committee.
Dr Rudenno is a member of the Compensation Committee.
On 25 August 2010, Dr Rudenno was appointed a non-executive Director of Pilbara Minerals Limited (a publicly
listed company) and resigned from this position on 30 May 2013.
Dr Rudenno has not held any directorships, other than those disclosed above in the past three years.
Mr Terence Maxwell Barr
Managing Director
Mr Barr is a petroleum geologist with over 30 years’ experience, including 11 years with Santos Limited. He is
credited with the discovery of significant oil and gas reserves during his career. In recent years, Mr Barr has
specialised in tight gas exploration, drilling and completion and is considered an expert in this field. This
experience and expertise is invaluable given the exposure the Company has to tight gas opportunities in
Wyoming and other parts of United States of America. Mr Barr was appointed managing director of the Company
on 25 January 2005.
Mr Barr has not held any other directorships in the past three years.
Mr Keith Skipper
Non Executive Director
Mr. Skipper was appointed as director of the Company on 15 September 2008. Mr. Skipper holds a B.Sc (Hons)
degree in Geology from Reading University (United Kingdom) and a Master of Science from McMaster University
(Canada). He commenced his career with Amoco Canada Petroleum Limited in 1970. Mr. Skipper’s experience
includes ten years with Bridge Oil Ltd and several years with Pan Canadian Petroleum Limited (now part of
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 2 of 81
DIRECTORS’ REPORT
30 June 2015
Encana Corporation) and Antrim Energy Inc. in management and senior executive positions. He is a resident of
Australia.
Mr Skipper is a member of the Audit Committee.
Mr Skipper was the Chair of the Compensation Committee until 1 July 2015, when he resigned as Chair of the
committee. He remains a member of the Compensation Committee
During the last three years, Mr. Skipper was a Director of the following publicly listed companies:
Rawson Resources Limited
UIL Energy Limited
Dr DeAnn Craig
Non Executive Director
Dr Craig was appointed as a Director of the Company on 11 July 2011. Dr Craig holds an Interdisciplinary PhD
with emphasis in Petroleum Engineering and Operations Research from the Colorado School of Mines
(USA). She has also earned several degrees from Colorado School of Mines including Masters of International
Political Economy of Resources, Masters of Science Mineral Economics and Business and a Bachelor of
Science Chemical and Petroleum Refining Engineering. In addition Dr Craig holds an MBA from Regis
University in Denver, Colorado. During her career Dr. Craig has been a drilling engineer, a reservoir engineer
responsible for reserves determination and property valuation, and progressed to senior management in several
companies, including Phillips Petroleum, now ConocoPhillips, and CNX Gas. She is a registered professional
engineer in the state of Colorado.
In the previous five years she has served as Senior Vice President, Asset Assessment CNX Gas Corporation,
served as an Adjunct Professor in the Petroleum Engineering Department at the Colorado School of Mines and
was appointed by the Governor of Colorado to serve on the Colorado Oil and Gas Conservation
Commission. Currently she is consulting to the oil and gas industry.
Dr Craig was the Chair of the Audit Committee throughout the year. She resigned as Chair of the Audit
Committee on 1 July 2015, she remains a member of the committee.
Dr Craig is a member of the Compensation Committee.
Dr Craig was appointed a Non-Executive of Atlas Resources Partners, L.P. (a publicly listed company) in March
2012 and continues to serve in that position to the date of this report. Dr Craig has not held any other
directorships in the past three years.
Mr Eugene McColley (resigned effective 5 August 2015)
Non Executive Director
Mr McColley is a co-founder and managing general partner of Roaring Fork Capital Management, LLC formed in
2002. He has provided both capital and value-added services to orphaned microcap companies (public
companies with market capitalisations of $140 million or less that have been neglected by the financial
community) for the past 20 years. His relevant expertise stems from experience as both a microcap investment
banker and a director investor in orphaned microcap companies. As an investment banker, Mr McColley raised
$280 million for over 50 microcap public companies. As a private equity fund manager and direct angel investor,
Mr McColley has invested in 81 orphaned microcap companies.
Prior to his resignation, Mr McColley was a member of the Audit and Compensation Committees.
Mr McColley has not held any other directorships in the past three years.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 3 of 81
DIRECTORS’ REPORT
30 June 2015
COMPANY SECRETARY
Mr Denis Rakich F.C.P.A
Mr Rakich is an accountant and Company Secretary with extensive corporate experience within the petroleum
services, petroleum and mineral production and exploration industries. Mr Rakich is responsible for the
corporate management of Samson Oil & Gas Limited and the maintenance of the Company’s ASX listing. He is
a member of CPA Australia and is currently Company Secretary for another public Company in the resources
sector.
DIRECTORS’ SHAREHOLDINGS
At the date of this report, the interests of the Directors in shares and share options in the Company are:
T.M. Barr
V. Rudenno
K. Skipper
D. Craig
E. McColley
PRINCIPAL ACTIVITIES
Number of Ordinary
Shares
Number of Options
over Ordinary
Shares
14,546,446
5,892,105
936,502
280,000
2,002,500
802,938
542,241
80,000
4,000,000
4,801,001
The principal activities during the year of entities within the Consolidated Entity were oil and gas exploration,
development and production in the United States of America. There have been no significant changes in the
nature of these activities during the year.
The Company’s focus in the future will continue to be on oil and gas exploration, development and production in
the USA. The Company will aim to develop existing acreage, whilst continuing to identify potential project
acquisitions.
OPERATING AND FINANCIAL REVIEW
Financial Results
Excluding certain non-cash charges of impairment, depletion and amortisation and exploration expenditure
written off the Company made a profit of $4.4 million (2014:$3.0 million).
The result for the financial year ended 30 June 2015 from continuing operations, after provision for income tax
was a loss attributable to members of the parent of $35.0 million (2014: loss $3.3 million). Included in the
current year result is exploration expenditure expensed of $12.7 million (2014: $0.4 million). Exploration
expenditure also includes $12.4 million of previously capitalized exploration expense written off in relation to the
Company’s South Prairie, Roosevelt and Hawk Springs project. The exploration expenditure in the prior year
primarily relates to the Matson well in our South Prairie project. This well was expensed in line with the
Consolidated Entity’s accounting policy to expense all exploration when the conclusion is reached that the
Consolidated Entity is unlikely to recover the expenditure by future exploitation or sale.
Also included in the net loss are impairment charges of $19.9 million. This charge mainly relates to our North
Stockyard and Rainbow project and is a direct result of the significant decrease in the global oil price.
Development Activities
Bakken Field, Williams County, North Dakota
North Stockyard Project
Various working interests
Together with the fellow working interest owners, the Consolidated Entity has drilled seventeen wells in this field,
fourteen in the Bakken formation, two in the Three Forks formation and one in the Mission Canyon formation.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 4 of 81
Below is a summary of the wells in our North Stockyard and their performance during the year ended 30 June
2015. Production information is shown on a gross basis.
DIRECTORS’ REPORT
30 June 2015
Rainbow Project
23% - 55% working interest
The Consolidated Entity’s first well in its Rainbow project spud on 28 June 2014. This well was drilled by
Continental Energy Corporation and produced 15,207 barrels of oil, net to the Company during the year ended
30 June 2015.
Currently, the Consolidated Entity’s had a permit in place to drill a Middle Bakken well in the western drilling unit.
The location for this well has been built and conductor pipe has been set, therefore drilling to complete the well
could be commenced in the near future, if desired. However, if drilling operations do not commence by 4
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 5 of 81
Net Revenue InterestObjectiveReserve Classification at June 30, 2015YTD Production June 30, 2015 BOE*Cumulative well production to June 30, 2015 BOE*Harstad #1-1526.39%Mission CanyonPlugged and Abandoned- 105,234 Leonard #1-23H7.65%BakkenPDP 15,960 153,645 Gene #1-22H23.41%BakkenPDP 26,973 206,133 Gary #1-24H28.31%BakkenPDP 22,517 238,314 Rodney #1-14H20.66%BakkenPDP 39,578 195,203 Earl #1-13H24.48%BakkenPDP 53,359 314,600 Everett #1-15H19.89%BakkenPDP 114,640 254,118 - - Billabong22.01%BakkenPDNP41,057 41,057 Sail & Anchor 4-13-1419.15%BakkenPDP45,136 95,813 Blackdog 3-13-1419.02%BakkenPDP99,520 189,417 Tooheys 4-15-1421.60%BakkenPDP78,248 130,999 Coopers 2-15-1421.60%BakkenPDP60,262 99,789 Little Creature21.24%BakkenPDP23,681 85,909 Matilda Bay 1-1525.23%BakkenPDP31,892 32,901 Matilda Bay 2-1525.23%BakkenPDP33,118 47,796 Bootleg 4- 14-1521.72%Three ForksPDP94,172 94,172 Bootleg 5- 14-1521.72%Three ForksPDP82,379 82,379 Bootleg 8-14-1521.72%Three Forks 2PDP14,816 14,816 Ironbank 5-14-1320.46%Three ForksPDP68,029 68,029 Ironbank 4-14-1320.46%Three ForksPDP36,835 36,835 Ironbank 7-14-1320.46%Three ForksPDP35,236 35,236 Bootleg 6-14-1521.72%Three ForksPDP13,125 13,125 Bootleg 7-14-1321.72%Three ForksPDP16,472 16,472 Ironbank 6-14-1320.46%Three ForksPDP16,629 16,629 1,063,634 2,568,619 Initial Development ProgramInfill Development Program*BOE calculations only includes gas sold and excludes gas flared.
DIRECTORS’ REPORT
30 June 2015
February 2016, the lease could expire as it is passed its primary term and is being held by a continuous drilling
clause. The Consolidated Entity is considering extending the lease to delay the drilling of the well in the current
oil price environment; however the terms and conditions of this are not yet known.
Exploration Activities
Hawk Springs Project, Goshen County, Wyoming
Defender US 33 #2-29H
37.5% working interest
This well commenced production in February 2012. Numerous operational and pumping issues have been
associated with this well. This well was cleaned out in July 2012 and resumed pumping. In June 2015, the well
was struck by lightning, which affected the electronic controllers associated with the well. These controllers have
yet to be repaired due to the well’s low productivity rate. At June 30, 2015, the Defender well had no proved
reserves.
Bluff 1-11
25% working interest
The Bluff Prospect was drilled in June 2014 to test multiple targets in the Permian and Pennsylvanian sections in
a 4-way structural trapping configuration. The Bluff #1-11 well reached a total depth of 8,900 feet after
intersecting the pre-Cambrian basement.
Various oil shows were observed in the Cretaceous, Jurassic, Permian, and Pennsylvanian intervals while
drilling. After running drill-pipe conveyed logging tools in the deeper portion of the well below the intermediate
casing, the Pennsylvanian zones, were deemed to be too thin and uneconomic to produce. The Permian target
zone (from 7738’to 7756’) displayed excellent porosity. As a result, the calculated water saturation was high, and
was initially deemed to be water saturated, so the bottom portion of the hole below the intermediate casing was
plugged. Further analysis of the Permian target zone by an outside expert petrophysicist has determined the
9500 foot level sand contains gas, and the properties associated with this interval the gas was most likely
nitrogen and this was proven through analysis of the gas sampled from the flow test. . The presence of any type
of gas in the Permian target zone validates the trap in the Bluff prospect and thus the potential to host an oil leg
below the gas cap. In April 2015, the cement plug above the Permian target zone was drilled out and the
presence of nitrogen was confirmed and we began a flow test of this well in July 2015, The flow test was
completed in September after 1.2 BCF of gas was produced, the test was curtailed at this point because
pressure transient analysis and reservoir modeling suggested that whilst the fluid contact was seen to be moving
it was doubtful as to whether this fluid boundary would be seen at the Bluff 1-11 well bore. Accordingly the flow
test was not definitive either proving or disproving the presence of an oil leg to this gas accumulation.
Roosevelt Project, Roosevelt County, Montana
Australia II
100% working interest
In December 2011, the Consolidated Entity drilled the Australia II well in the Roosevelt Project, the first appraisal
(exploratory) well in this project area. This well was drilled to a total measured depth of 14,972 feet with the
horizontal lateral remaining within the target zone for the entire lateral length. Oil and gas shows were returned
during the drilling of this well and approximately 3,425 barrels of oil were produced. The well encountered
numerous operational issues and was deemed uneconomic and all costs associated with the well were
expensed during the year ended 30 June 2012.
In July 2014, the Consolidated Entity replaced the pump on the Australia II well and production from this well has
recommenced production. During July 2014, the well averaged 100 barrels of oil per day. The well failed to
produce consistently following this and the high cost of lease operating expenses rendered the well uneconomic,
it is currently shut in, pending higher oil prices.
Gretel II
100% working interest
The Consolidated Entity drilled the second appraisal (exploratory) well in the Roosevelt Project, Gretel II, in
January 2012 and fracture stimulated in March 2012. Based on the results, it appears that this well was drilled
on the north side of the Brockton Fault zone, which is believed to be the western edge of the continuous Bakken
oil. The Gretel II well is currently shut in, as it was mainly producing water, with just a 5% oil cut. The
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 6 of 81
DIRECTORS’ REPORT
30 June 2015
Consolidated Entity does not believe that it will recover its costs associated with drilling it. The Consolidated
Entity expensed $11.6 million of previously capitalised exploration expenditure which represents 100% of the
costs incurred during the year ended 30 June 2012. No further work has been performed on this well bore during
the year ended 30 June 2014. During the year ended 30 June 2015, the reclamation process was started for this
lease.
In total, $24.7 million of previously capitalized exploration expenditure has been expensed in relation to the
drilling costs associated with these two wells during the year ended 30 June 2012.
During the year ended 30 June 2014, the Consolidated Entity entered into a seismic and drilling agreement with
Momentus Energy Corp, a Canadian exploration and development company based in Calgary to further explore
this project. Momentus acquired 20 squares miles of 3-D seismic data at no cost to the Consolidated Entity.
This data has been processed and interpreted.
Momentus failed to drill their earn in well by the date required in the farm out agreement and therefore the
agreement has been voided. Given the deterioration in the oil price, and the exploratory nature of the project, all
previously capitalised costs, $7.9 million, in relation to the Roosevelt project were written off during the year
ended 30 June 2015.
Other
South Prairie Project, North Dakota
25% working interest
The Consolidated Entity has a 25% working interest in 25,590 net acres, which is located on the eastern flank of
the Williston Basin in North Dakota. The target reservoir for the project is the Mississippian Mission Canyon
Formation. Seventy-six square miles of 3-D seismic data have been shot and processed. The data has been
interpreted and the first prospect – the Matson #3-1 well, was drilled during the year ended 30 June 2014. The
well was drilled to a depth of 4,825 feet. The joint operation elected to plug and abandon this well based on the
logging and show results and $186,854 in dry hole costs was recognised in the Income Statement. The data
indicates that oil migrated through the Mission Canyon reservoir, evidenced by black asphaltic dead oil stain, but
was not trapped in the targeted 420 acre 4-way structural closure.
The joint operation then focused on developing three structural closure prospects (Pubco, Deering, and Birch)
along the Prairie Salt edge in the South Prairie 3-D project. The York #3-9 well, from the Pubco Prospect was
drilled in September 2014. This well failed to intersect hydrocarbons and was immediately plugged. Given the
lack of success in this project, the Consolidated Entity expensed $2.5 million in previously capitalised Exploration
Expenditure to the Income Statement during the year ended 30 June 2015.
The leases remain current in the project and a third well, Badger #1 is expected to be drilled in October 2015.
This well is expected to test the Wayne Zone of the Mississippian Canyon formation.
Cane Creek Project, Grand & San Juan Counties, Utah
Pennsylvanian Paradox Formation, Paradox Basin
100% working interest
On November 5, 2014, the Consolidated Entity entered into an Other Business Arrangement (“OBA”) with the
Utah School and Institutional Trust Lands Administration (“SITLA”) covering approximately 8,080 gross/net acres
located in Grand and San Juan Counties, Utah, all of which are administered by SITLA. The Consolidated Entity
was granted an option period for two years in order to enter into a Multiple Mineral Development Agreement
(“MMDA”) with another company who hold leases to extract potash in an an acreage position situated without
project area. Upon entering into the MMDA, SITLA is obligated to deliver oil and gas leases covering our project
area at cost of $75 per acre to the Consolidated Entity
This acreage is located in the heart of the Cane Creek Clastic Play of the Paradox Formation along the Cane
Creek anticline. The primary drilling objective is the overpressured and oil saturated Cane Creek Clastic interval.
Keys to the play to date include positioning along the axis of the Cane Creek anticline and exposure to open
natural fractures. The 3-D seismic is currently being designed to image these natural fractures. This project
displays very robust economics in a low priced oil environment using the evidence obtained from a nearby
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 7 of 81
DIRECTORS’ REPORT
30 June 2015
competitor well that has produced 802,967 BO in just over two years and has an EUR of 1.2 million barrels of oil.
Initial production rates are around 1,500 BOPD and decline rates are very modest.
Financing Activities
In January 2014, the Consolidated Entity entered into a $25 million credit facility with Mutual of Omaha, which
was increased to $50 million in November 2014, subject to borrowing base restrictions.
The current borrowing base is $19.0 million, which is drawn to $18.7 million as at Balance Date and the date of
this report.
Production Activities
During the year the Consolidated Entity produced approximately 233,646 (2014: 105,243) barrels of oil and
226,707 (2014: 182,659) Mcf of gas.
Reserves
PDP
PDNP
PUD
TOTAL PROVED
NET OIL
MBBLS
1,217
68
-
1,285
As at 30 June 2015
NET GAS
MMCF
1,117
66
-
1,177
NET BOE
MBBLS
1,403
79
-
1,482
NPV 10
$ MILLION
$32.336
$1.917
-
$34.253
Notes to Reserves Estimates
BOE MBBBLS is thousand barrels of oil equivalent
BOE is calculated using a heating value of gas and converted as 1 BOE equals 6 MCF
PDP is Proved Developed Producing
PDNP is Proved Developed Non Producing
PUD is Proved Un-Developed
NPV 10 is Net Present Value at 10% discount rate
The SEC pricing model that has been used is as follows:
Oil
Gas
Benchmark
$71.68/BBL
$3.39/MMBTU
Proved realized
$59.64/BBL
$4.30/MCF
The PDP and PDNP reserve estimates and forecasts of future production rates are based on historical
performance and analogy data. If no production decline trend has been established, future production rates and
decline curves are based on analogous wells. If a decline curve is established, this trend is used as the basis for
estimating future production rates.
The reserve estimates utilize historical operating costs of the wells and leases, subject to the report, and are
held constant for the life of a well. Development costs are based on authorizations for expenditure for the
proposed work or actual costs for similar projects. Abandonment costs are assumed to be offset by the salvage
value as all of these projects are located onshore.
The estimated reserves quoted are based on, and fairly represent, information and supporting documentation
prepared by Stephen E Gardner an employee Ryder Scott Company, L.P., an independent petroleum
engineering consulting firm based on the definitions and disclosures guidelines of the United State Securities
and Exchange Commission (SEC). The reserves included in this release were estimated using deterministic
methods and presented as incremental quantities.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 8 of 81
DIRECTORS’ REPORT
30 June 2015
Mr. Gardner is a qualified petroleum reserves and resources evaluator within the meaning of the ASX Listing
Rules, and is a member of the Society of Petroleum Engineers and the Society of Petroleum Evaluation
Engineers
Mr. Gardner and Ryder Scott Company, L.P. have each consented to the form and context in which the
estimated reserves and supporting documentation are presented.
The reference point used in the reserve estimates is the sales point, and the reserves and their value are wholly
attributable to the Consolidated Entity’s economic interest, net of royalties, operating and development costs,
and production and ad valorem taxes.
The PDP reserve estimate is comprised of 33 individual wells which fall into two groups and have the following
net revenue interest, reserve volumes and value.
5
PDP
Well count
Avg. NRI
North Stockyard
Other
Total
22
22
33
21%
17%
Net Oil
MBBLS
1,089
131
1,220
Net Gas
MMCF
869
255
1,124
Net BOE
MBBLS
1,234
174
1,408
NPV 10
$ MILLION
$29.471
$2.861
$32.332
North Stockyard is operated by Zavanna LLC and Slawson Exploration Company Inc.
All PDP reserves are held by production.
The PNDP reserve estimate is comprised of 1 well in the North Stockyard group that has the following net
revenue interest, reserve volumes and value.
PNDP
Well count
Avg. NRI
North Stockyard
1
25%
Net Oil
MBBLS
68
Net Gas
MMCF
67
Net BOE
MBBLS
80
NPV 10
$ MILLION
$1.917
All PNDP reserves are held by production.
DIVIDENDS
No dividend was paid or recommended for payment during the year (2014: $Nil).
SHARE OPTIONS
As at the date of this report, there were 324,667,765 (2014: 389,192,854) unissued ordinary shares under
option. All option exercise prices are denominated in Australian Dollars unless noted otherwise.
In November 2010, 29,000,000 options were issued to the Directors. These options have an exercise price of 8
cents per share and an expiry date of 31 October 2014. These options vested immediately and expired
unexercised during the year.
In December 2010, 32,000,000 options were issued to employees of the Company. These options have an
exercise price of 8 cents and an expiry date of 31 December 2014. One third of the options vested on 31
January 2011, one third vested on 31 January 2012 and the remaining third vested on 31 January 2013.
500,000 of these options were exercised during the year ended 30 June 2011. The remaining option expired
unexercised on 31 December 2014.
In July 2011, 4,000,000 options were issued to an employee of the Company. These options have an exercise
price of 16.4 cents and an expiry date of 31 December 2014. One third of the options vested on 31 July 2011,
one third vested on 31 July 2012 and the remaining third vested on 31 July 2013. These options expired
unexercised.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 9 of 81
DIRECTORS’ REPORT
30 June 2015
In November 2011, 4,000,000 options were issued to a Non-executive Director of the Company. These options
have an exercise price of 15.5 cents and an expiry date of 31 October 2015. These options vested immediately.
During the year ended June 30, 2013, we issued 97,307,526 options in conjunction with two placements and a
rights offering. The options have an exercise price of 3.8 cents and an expiry date of 31 March 2017. During the
current year 25,089 (2014: 28,784) were exercised.
In August and September 2013, 132,352,082 options were issued in conjunction with two placements and a
rights offering. The options have an exercise price of 3.8 cents and an expiry date of 31 March 2017.
In November 2013, 4,000,000 options were issued to a Non-Executive Director of the Company. These options
have an exercise price of 3.9 cents and an expiry date of 30 November 2017. These options vested
immediately.
In April 2014, 87,033,246 were issued in conjunction with a placement completed at the same time. The options
have an exercise price of 3.3 cents and an expiry date of 30 April 2018.
Shares issued as a result of the exercise of options
During the year 25,089, (2014: 28,784) ordinary shares were issued upon the exercise of 25,089 3.8 cent
options (2014: 28,784) (2014: 3.8 cent options).
Remuneration Report
The remuneration report is set out under the following headings:
A
B
C
D
E
F
G
Key management personnel disclosed in this report
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Equity instruments held by key management personnel
Loans to key management personnel
Company performance
The information provided in this remuneration report has been audited as required by section 308 (3C) of the
Corporations Act 2001.
Key management personnel disclosed in this report
A
For the purposes of this report, Key Management Personnel (KMP) of the Consolidated Entity are defined as
those persons having authority and responsibility for planning, directing and controlling the major activities of the
Company and the Consolidated Entity, directly or indirectly, including any director (whether executive or
otherwise) of the Parent Company.
For the purposes of this report, the term “executive” encompasses the Chief Executive Officer, Company
Secretary, Chief Financial Officer, Vice President – Exploration and Vice President - Engineering. There are no
further employees employed by either the Company or its subsidiaries who meet the definition of executive,
therefore only the five executives detailed above are included in this report. During the year and as at the date of
this report, unless stated otherwise, the key management personnel were:
Terry Barr
Victor Rudenno
Keith Skipper
DeAnn Craig
Eugene McColley
Managing Director
Non-executive Director, Chairman
Non-executive Director
Non-executive Director
Non-executive Director (resigned effective 5 August 2015)
Denis Rakich
Robyn Lamont
David Ninke
Company Secretary
Chief Financial Officer
Vice President – Exploration
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 10 of 81
DIRECTORS’ REPORT
30 June 2015
Principles used to determine the nature and amount of remuneration
B
The objective of the Consolidated Entity’s executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The performance of the Company depends upon the
quality of its Directors and executives. To be successful and maximise shareholder wealth, the Company must
attract, motivate and retain highly skilled Directors and executives.
Remuneration packages applicable to the executive Directors, senior executives and non-executive Directors
are established with due regard to:
Performance against set goals
Ability to attract and retain qualified and experienced Directors and senior executives.
The Company has formed a Compensation Committee. Dr DeAnn Craig, Dr Victor Rudenno, Mr Eugene
McColley (prior to his resignation) and Mr Keith Skipper are the current members of the Compensation
Committee. The Compensation Committee is responsible for determining and reviewing compensation
arrangements for Directors and executives. The Committee assesses the appropriateness of the nature and
amount of remuneration of Directors and executives on a periodic basis by reference to relevant employment
market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high
quality Board and executive team.
Executive Remuneration
The Company aims to reward executives with a level and mix of remuneration commensurate with their position
and responsibilities within the Company and so as to:
Align the interests of executives with those of shareholders;
Link reward with strategic goals and performance of the Company; and
Ensure total remuneration is competitive by market standards.
Base pay for executives is reviewed on the contract renewal date to ensure the base pay is set to reflect the
market for a comparable role. There are no guaranteed base pay increases included in any executives’
contracts.
Remuneration consists of fixed remuneration and remuneration incentives in the form of options issued in the
Company.
The level of fixed remuneration is reviewed annually by the Board having due regard to performance against
goals set for the year and relevant comparative information. The Board has access to external advice
independent of management if required. During the year ended 30 June 2014 the Board sought advice from
Denver Compensation and Benefits LLC in regards to the remuneration, including cash compensation and short
and long term incentives for employees of the Consolidated Entity. No external advice was sought during the
year ended 30 June 2015.
Non-executive Director Remuneration
Fees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities
of, the Directors. Non-executive Directors’ fees and payments are reviewed annually by the board. The Chair’s
fees are determined independently of the other non-executive Directors. The Chair is not present at any
discussions relating to determination of his own remuneration.
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 Directors as agreed. The latest determination was at the Annual General Meeting held on 18
November 2010 when shareholders approved an aggregate remuneration of A$500,000 per annum. The
amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is
apportioned amongst Directors is reviewed annually.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 11 of 81
DIRECTORS’ REPORT
30 June 2015
Non-executive Directors are encouraged by the Board to hold shares in the Company (purchased by Directors
on market). It is considered good governance for Directors to have a stake in the Company on whose Board
they sit.
Remuneration Incentives
The Company does not have a policy in place limiting the Directors exposure to risk in relation to the Company’s
options.
The remuneration of non-executive Directors for the year ended 30 June 2015 and 2014 is detailed in Table 1
and Table 2 of this report.
Remuneration Incentives
Directors’ remuneration is not linked to either long term or short term incentives. The Board feels that the expiry
date and exercise price of the options issued to the Directors in the current and prior years are sufficient to align
the goals of the Directors and executives with those of the shareholders to maximise shareholder wealth. There
are no performance criteria or service conditions attached to options issued to Directors.
Vesting conditions are attached to options that are issued to executives and employees.
Bonus plan for calendar year ended 31 December 2013
For the calendar year ended 31 December 2013, the payment of a bonus will be at the discretion of the Board of
Directors. Payment of a bonus will only be payable if the Consolidated Entity’s operations are cash flow positive
for the December quarter 2013. Cash flow has been defined by the Compensation Committee as all revenue
including interest less all costs including interest. Costs will also exclude all exploration and development
expenditure for the period after deduction of all administrative costs associated with these expenditures.
While the size of the bonus plan will be at the discretion of the Board, it may not be larger than 20% of the net
cash balance after debt servicing as at 31 December 2013 and no greater than $1.2m. No bonus expense was
accrued as at 30 June 2013 and no bonus was paid under this plan.
Bonus plan for calendar year ended 31 December 2014
For the calendar year ended 31 December 2014, the following goals have been established for the payment of a
bonus:
Metric
Production
Reserves
Discretionary
Weight
30%
30%
40%
Threshold
132,000
1367 MBOE
Target
158,000
1640 MBOE
Stretch
178,000
1845 MBOE
For the period ended 30 June 2014, $132,324 has been accrued in relation to this bonus. During the year ended
30 June 2015, a further $178,421 was expensed in relation to this bonus as both stretch targets were meet. No
discretionary piece was paid.
Bonus plan for calendar year ended 31 December 2015
The Compensation Committee agreed not to put a bonus plan in place for the calendar year ended 31
December 2015.
Details of Remuneration
C
Amounts of remuneration
Details of remuneration of the Directors and executives of the Company and Consolidated Entity in accordance
with the requirements of the Corporations Act 2001 and its Regulations are set out in the following tables.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 12 of 81
DIRECTORS’ REPORT
30 June 2015
Table 1: Key Management Personnel compensation for the year ended 30 June 2015
Short Term
Post
Employment
Share-based Payments
Total
Total
Performance
Related
Salary &
Fees
$
Bonus
Paid
$
Non-monetary
Benefits
$
Accrued
Bonus
$
Super -
annuation
$
Options
$
Ordinary
Shares
$
$
%
Directors
T.Barr
D. Craig
K. Skipper
V. Rudenno
E. McColley
Executives
D. Rakich
R. Lamont
D. Ninke
400,000
62,260
3,670
80,000
67,056
88,011
80,000
-
-
-
-
98,561
9,276
242,000
32,959
276,716
1,332,344
37,688
142,183
-
-
-
-
-
4,875
1,761
10,306
-
-
-
-
-
-
-
-
-
17,750
-
-
-
-
15,088
17,750
17,750
68,338
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
483,680
80,000
67,056
88,011
80,000
122,925
297,584
333,915
1,553,171
12.9%
0.0%
0.0%
0.0%
0.0%
7.5%
11.1%
11.3%
The bonus paid represents the amount of the bonus expensed for the year ended 30 June 2015, with respect to the bonus applicable for the
calendar year ended 31 December 2014. A portion of the bonus was accrued and expensed during the year ended 30 June 2014, however was
only paid during the year ended 30 June 2015, along with the portion expensed for the year ended 30 June 2015. All key management personnel
earned 60% of the maximum bonus payable and forfeited the remaining 40%.
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 13 of 81
DIRECTORS’ REPORT
30 June 2015
Table 2: Key Management Personnel compensation for the years ended 30 June 2014
Short Term
Post
Employment
Share-based Payments
Total
Total
Performance
Related
Salary &
Fees
$
Bonus
Paid
$
Non-monetary
Benefits
$
Accrued
Bonus
$
Super -
annuation
$
Options
$
Ordinary
Shares
$
$
%
Directors
T.Barr
D.Craig
K. Skipper
V. Rudenno
E. McColley*
Executives
D. Rakich1
R. Lamont1
D. Ninke1
D. Gralla*
400,000
74,837
73,480
96,443
56,508
163,350
242,000
276,716
240,502
1,623,836
-
-
-
-
-
-
-
-
-
-
3,470
33,740
8,750
-
-
-
-
-
5,850
2,878
1,590
13,788
-
-
-
-
-
-
-
-
5,812
17,861
20,423
-
77,836
12,208
15,000
15,000
13,541
64,499
-
-
-
-
80,989
-
-
-
-
80,989
-
-
-
-
-
-
-
-
-
-
445,960
74,837
73,480
96,443
137,497
181,370
280,711
315,017
255,633
1,860,948
7.6%
0.0%
0.0%
0.0%
58.9%
3.2%
6.4%
6.5%
0.0%
The accrued bonus represents the amount of bonus that was expensed during the year ended 30 June 2014 for the bonus for the calendar year
ended 31 December 2014.
* Mr McColley was appointed 3 October 2014.
* Mr Gralla resigned effective 31 May 2014.
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 14 of 81
DIRECTORS’ REPORT
for the year ended 30 June 2015
Table 3 Compensation options: Granted and vested during the year (Consolidated) – in Australian
Dollars
No compensation options were granted during the year.
Service Agreements
D
It is the Board’s policy that employment contracts are only entered into with the managing director and senior
executives. As such contracts have been entered into for Mr. Barr, Mr. Gralla, Mr. Ninke and Ms Lamont.
Details of these contracts are included below.
Mr. Barr – Chief Executive Officer
Effective 1 January 2011, Mr Barr has been retained by the Company to act as the Company’s President,
Managing Director and Chief Executive officer for a period of three years with an option to extend the
contract for an additional three years at the mutual agreement of both the Company and the employee. In
January 2014, his contract was extended for an additional 2 years. As of 1 January 2014, the contract allows
for total compensation of $454,700 (cash and non cash benefits).
Mr. Ninke – Vice President Exploration
Effective 1 January 2011, Mr Ninke has been retained by the Company to act as Vice President - Exploration
for a period of three years with an option to extend the contract for an additional three years. In January
2014, Mr Ninke’s contract was extended for three years at the mutual agreement of both the Company and
the employee. As of 1 January 2014, the contract allows for total compensation of $301,417 (cash and non
cash benefits). Mr Ninke also retains the right to receive a 1% revenue royalty from production from
prospects identified and recommended prior to 31 March 2011, being the Diamondback prospect. This
prospect has yet to be drilled.
Ms Lamont – Chief Financial Officer
Effective 1 January 2011, Ms Lamont has been retained by the Company to act as the Vice President –
Finance and Chief Financial Officer for a period of three years with an option to extend the contract for an
additional three years at the mutual agreement of both the Company and the employee. In January 2014, Ms
Lamont’s contract was extended for an additional three years. As of 1 January 2014, the contract allows for
total compensation of $266,700 (cash and non cash benefits).
E
Equity instruments held by key management personnel
(i) Option holdings of key management personnel
(ii) Shares issued on exercise of options
(iii) Shareholding of key management personnel
(i)
Option holdings of key management personnel
30 June 2015
Balance at
beginning of
period
Exercised
during the
year
Expired
during the
year
Granted as
compensation
Other
Balance at
end of
period
Options
vested at 30
June 2015
Directors
D.Craig
T. Barr
1 July 2014
4,000,000
10,802,938
V. Rudenno
6,542,241
K. Skipper
E. McColley
Executives
D. Rakich
R. Lamont
D. Ninke
Total
6,080,000
4,801,001
5,000,000
7,000,000
7,000,000
51,226,180
Samson Oil & Gas Limited
-
-
- (10,000,000)
- (6,000,000)
- (6,000,000)
-
-
- (5,000,000)
- (7,000,000)
- (7,000,000)
- (41,000,000)
-
-
-
-
-
-
-
-
-
30 June
2015
-
-
-
-
-
-
-
4,000,000
4,000,000
802,938
802,938
542,241
542,241
80,000
80,000
4,801,001
4,801,001
-
-
-
-
-
-
- 10,226,180
-
10,226,180
Financial Statements – 30 June 2015
Page 15 of 81
DIRECTORS’ REPORT
for the year ended 30 June 2015
(ii)
Shares issued on exercise of options
No directors or executive options were exercised during the year ended 30 June 2015 (2014: nil)
(iii)
Shareholdings of key management personnel
30 June 2015
Balance at beginning
of period
Granted as
compensation
On exercise of
options
Net change
other
Balance at end
of period
Directors
D. Craig
T. Barr
V. Rudenno
K. Skipper
E. McColley
Executives
D. Rakich
R. Lamont
D. Ninke
1 July 2014
280,000
14,546,446
5,892,105
936,502
8,402,500
-
2,472,038
2,112,624
34,642,215
30 June 2015
-
-
-
-
280,000
14,546,446
5,892,105
936,502
(6,400,000)
2,002,500
-
-
(224)
(6,400,224)
-
2,472,038
2,112,400
28,241,991
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
All equity transactions with key management personnel other than those arising from the exercise of
compensation options have been entered into under terms and conditions no more favourable than those the
Consolidated Entity would have adopted if dealing at arm’s length.
In the tables above “Net Change Other” for E. McColley represents sales of shares by a company associated
with Mr McColly through a blind trust that Mr McColly has no control over. D.Ninke holds his ordinary shares
in the form of an American Depositary Receipt (“ADR’s”) in the United States. The ratio of ordinary shares to
ADR’s changed during the year from 20:1 to 200:1 and as a result Mr Ninke’s shareholding decreased
slightly.
F
Loans to key management personnel
No loans have been granted to key management personnel during the current or prior year.
G
Other transactions and balances with key management personnel
There were no transactions with key management personnel or their related parties during the current or
prior year other than those mentioned above.
Company Performance – Graph needs to be updated
H
The Company’s performance is reflected in the movement in the Company’s earnings/(loss) per share (EPS)
over time. The graph below shows Samson Oil & Gas Limited’s basic EPS history for the past five years,
including the current period as well as the average share price quoted from the ASX.
EPS for the years ended 30 June 2015, 2014, 2013, 2012 and 2011 has been measured based on the net
(loss)/profit as calculated by the application of Australian Accounting Standards.
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 16 of 81
DIRECTORS’ REPORT
for the year ended 30 June 2015
CORPORATE STRUCTURE
Samson Oil & Gas Limited is a Company limited by shares that is incorporated and domiciled in Australia.
EMPLOYEES
The Consolidated Entity employed 9 employees at 30 June 2015 (2014: 10 employees).
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The likely developments of the Consolidated Entity during the next financial year involve the ongoing
principal activities of oil and gas exploration, development and production in the United States of America.
The Consolidated Entity plans to pursue three objectives:
1) The appraisal and development of acreage in the Hawks Springs Project, Goshen County,
Wyoming
2) The appraisal and development of acreage in the Rainbow Project in Williams County, North
Dakota and
3) The continued review and appraisal of possible exploration targets in the United States of
America.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than the changes mentioned above in the operating review or below in significant events after balance
date, there has not been any matter or circumstance that has occurred during the year or that has arisen
since the end of the financial year that has significantly affected, or may significantly affect:
the operations;
the results of those operations;
or the state of affairs of the Consolidated Entity in subsequent financial years.
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 17 of 81
DIRECTORS’ REPORT
for the year ended 30 June 2015
ENVIRONMENTAL REGULATIONS AND PERFORMANCE
The Consolidated Entity has various permits and licenses to operate in different states within the United
States of America.
There have been no significant known breaches of the Consolidated Entity’s licence or permit conditions
during the year ended 30 June 2015.
DIRECTORS’ MEETINGS
The numbers of meetings of the Company’s board of Directors and of the Audit Committee held during the
year ended 30 June 2015, and the numbers of meetings attended by each director were:
Full meetings of Directors Audit Committee Meetings Compensation Committee
Meetings
attended
Meetings
attended
Meetings
attended
No. of
Meetings
held while
in office
18
18
18
18
18
No. of
Meetings
held while
in office
***
4
4
4
4
No. of
Meetings
held while
in office
***
6
6
6
6
***
6
6
6
4
***
4
4
4
3
T.M. Barr
D. Craig
K. Skipper
V. Rudenno
E. McColley
18
18
18
18
16
*** Not a member of the Audit Committee or Compensation Committee
INDEMNIFICATION AND INSURANCE OF DIRECTORS
During the financial year, the Consolidated Entity incurred a premium of $128,277 (2014: $129,527) to insure
Directors and officers of the Consolidated Entity.
The liabilities insured include costs and expenses that may be incurred in defending civil or criminal
proceedings that may be brought against the officers in their capacity as officers of the Consolidated Entity,
and any other payments arising from liabilities incurred by the officers in connection with such proceedings.
This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or
the improper use by the officers of their position or of any information to gain advantage for themselves or
someone else or to cause detriment to the Company. It is not possible to apportion the premium between
amounts relating to insurance against legal costs and those relating to other liabilities.
INDEMNIFICATION AND INSURANCE OF AUDITORS
The terms of engagement of Samson’s external auditor includes an indemnity in favour of the external
auditor. This indemnity is in accordance with RSM Bird Cameron Partners standard Terms of Business and
is conditional upon RSM Bird Cameron Partners acting as external auditor. Samson has not otherwise
indemnified or agreed to indemnify the external auditors of Samson at any time during the financial year.
CORPORATE GOVERNANCE
The Directors of Samson Oil & Gas Limited aspire to maintain the standards of corporate governance
appropriate to the size of the Company. The Company’s corporate governance statement is contained within
the next section of this report.
AUDIT COMMITTEE
The members of the Audit Committee during the year were Dr Victor Rudenno, Dr DeAnn Craig, Mr Eugene
McColley (prior to his resignation) and Mr Keith Skipper.
See detail under Directors Meetings for details of Audit Committee meetings attended by the Directors.
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 18 of 81
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Except for the above matters, no other matter or circumstance has arisen since 30 June 2015 that has
significantly affected, or may significantly affect:
DIRECTORS’ REPORT
for the year ended 30 June 2015
the Consolidated Entity’s operations in future financial years; or
the results of those operations in future financial years; or
the Consolidated Entity’s state of affairs in future financial years.
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties
where the auditor’s expertise and experience with the Company are important.
No non-audit services were provided by RSM Bird Cameron Partners (the Company’s auditors for the year
ended 30 June 2015) during the current year.
No non-audit services were provided by PricewaterhouseCoopers (the Company’s auditors for the year
ended 30 June 2014) during the year ended 30 June 2014.
AUDITOR INDEPENDENCE
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act
2001 is set out on page 20.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
Signed in accordance with a resolution of the Board of Directors.
Terence M. Barr
Director
Denver, Colorado
16 September 2015
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 19 of 81
AUDITORS INDEPENDENCE DECLARATION
for the year ended 30 June 2015
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 20 of 81
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
CORPORATE GOVERNANCE STATEMENT
Samson Oil & Gas Limited (“the Company”) and the board are committed to achieving and demonstrating
the highest standards of Corporate Governance. The Board continues to review the framework and
practices to ensure they meet the interests of shareholders. The Company and its controlled entities together
are referred to as the Consolidated Entity in this statement.
A description of the Consolidated Entity’s main corporate governance practice is set out below. All these
practices, unless stated otherwise, were in place for the entire year. They comply with the 2013 ASX
Corporate Governance Principles and Recommendations.
Principle 1 – Lay solid foundations for management and oversight.
The relationship between the board and senior management is critical to the Consolidated Entity’s long term
success. The Directors are responsible to the shareholders for the performance of the Consolidated Entity in
both the short and longer term and seek to balance often competing objectives in the best interests of the
Consolidated Entity as a whole. Their focus is to enhance the interests of the shareholders and other key
stakeholders and to ensure the Consolidated Entity is properly managed.
The responsibilities of the Board include:
providing leadership and setting the strategic objectives of the entity;
appointing the Chairman of the Board;
appointing and when necessary replacing the CEO;
overseeing management’s
performance generally;
implementation of
the entity’s strategic objectives and
its
approving operating budgets and major capital expenditure;
overseeing the integrity of the entity’s accounting and corporate reporting systems, including the
external audit
overseeing the entity’s process for making timely and balanced disclosure of all material
information concerning the entity
ensuring that the entity has in place an appropriate risk management framework
approving the entity’s remuneration framework; and
monitoring the effectiveness of the entity’s governance practices.
Management is responsible for implanting the Board’s strategy and objectives within the risk framework
established by the Board. Management is also responsible for providing the Board with accurate, timely and
clear information in order to enable the Board to perform its responsibilities as outlined above.
The Board Charter, available on the Company’s website, recognizes and acknowledges that the Board acts
on behalf of the shareholders and is accountable to the shareholders. The Board seeks to identify the
expectations of the shareholders, as well as other regulatory and ethical expectations and obligations. In
addition, the Board is responsible for identifying areas of significant business risk and ensuring
arrangements are in place to adequately manage those risks.
All members of the Board, and in particular non-executive Directors, are entitled to seek independent
professional advice, at expense to the entity, when such advice is necessary to allow the Directors to
discharge their responsibilities as Directors.
The Company Secretary of the Consolidated Entity plays an important role in supporting the effectiveness of
the Board and its Committees. The role of the Company Secretary includes:
advising the Board and its committees on governance matters;
monitoring that Board and committee policy and procedures are followed;
ensuring that the business at Board and committee meetings is accurately captured in the minutes;
coordinating the timely completion and despatch of board and committee papers;
and
helping to organise and facilitate the induction and professional development of the directors
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 21 of 81
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
The Company Secretary reports directly to the Board through the Chairman and is accessible to all directors.
The Board is responsible for the removal and appointment of the Company Secretary.
The Board had not formalised a Diversity Policy due to the size of the Company, however the Company is
committed to diversity and recognises the benefits arising from employee and board diversity and the
importance of benefiting from all available talent. The Company operates a strictly non-discriminatory
employment policy under which employees are recruited and promoted on the basis of merit alone without
regard to gender, age, race, cultural background or ethnicity.
As a matter of record, the Consolidated Group currently employs 2 women fill-time and one part time (out of
a total staff of 9), including Ms Robyn Lamont the Company’s Chief Financial Officer. In addition, Dr DeAnn
Craig is one of three non-executive directors of the company.
The company undertakes comprehensive reference checks prior to appointing a director, or putting that
person forward as a candidate to ensure that person is competent, experienced, and would not be impaired in
any way from undertaking the duties of director. The company provides relevant information to shareholders
for their consideration about the attributes of candidates together with whether the Board supports the
appointment or re-election.
Although the process has not been formalised, the Board of Directors regularly reviews its performance, the
performance of senior executives and the entity’s performance against goals periodically set. The most
recent review happened in April 2015.
The terms of the appointment of a non-executive director, executive directors and senior executives are
agreed upon and set out in writing at the time of appointment.
Principle 2 – Structure the Board to add value
The board operates in accordance with the broad principles set out in its charter which is available from the
corporate governance information section of the company’s website at www.samsonoilandgas.com. The
charter details the board’s composition and responsibilities.
Board composition
The charter states:
The board is to be comprised of both executive and non-executive Directors with a majority of non-
executive Directors. Non-executive Directors bring a fresh perspective to the board’s consideration to
strategic, risk and performance matters
In recognition of the importance of independent views and the board’s role in supervising the activities of
management, the Chair must be independent of management and all Directors are required to exercise
independent judgement and review and constructively challenge the performance of management
The Chair is elected by the full board and is required to meet regularly with the Managing Director
The Company is to maintain a mix of Directors on the board from different backgrounds with
complementary skills and experience.
The board seeks to ensure that:
At any point in time, its membership represents an appropriate balance between Directors with
experience and knowledge of the Consolidated Entity and Directors with an external or fresh perspective
The size of the board is conducive to effective discussion and efficient decision-making.
Directors’ Independence
The board has adopted specific principles in relation to Directors’ independence. These state that when
determining independence, a director must be a non-executive and the board should consider whether the
director:
Is a substantial shareholder of the Company or an officer or, or otherwise associated directly with, a
substantial shareholder of the Company
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 22 of 81
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
Is or has been employed in an executive capacity by the Company or any other Consolidated Entity
member within three years before commencing to serve on the board
Within the last year has been a principal of a material professional adviser or material consultant to the
Company or any other Consolidated Entity member, or an employee materially associated with the
service provided
Is a material supplier or customer of the Company or any other Consolidated Entity member, or an
officer or otherwise associated directly or indirectly with a material supplier or customer
Has a material contractual relationship with the Company or a controlled entity other than as director of
the Consolidated Entity
Is free from any business or other relationship which could, or could reasonably be perceived to,
materially interfere with the director’s independent exercise of their judgement.
“Materiality” for these purposes is determined on a qualitative basis. A transaction of any amount or a
relationship is deemed material if knowledge of it may impact the shareholders’ understanding of the
director’s performance.
Recent thinking on corporate governance has introduced the view that a director’s independence may be
perceived to be impacted by lengthy service on the board. To avoid any potential concerns, the board has
determined that a director will not be deemed independent if he or she has served on the board of the
Company for more than ten years. The board continues to monitor developments on this issue.
The board assess independence each year. To enable this process, the Directors must provide all
information to the Chief Financial Officer that may be relevant to the assessment.
Board members
Details of the members of the board, their experience, expertise, qualifications, term of office and their
independent status are set out in the Directors report under the heading “Directors”. At the date of signing
the Directors’ report, there is one executive director and three non-executive Directors. All non-executive
Directors are deemed to be independent.
The Board's skills matrix indicates the mix of skills, experience and expertise that are considered necessary
at Board level for optimal performance of the Board. The matrix reflects the Board's objective to have an
appropriate mix of industry and professional experience including skills such as leadership, governance,
strategy, finance, risk, IT, HR, policy development, international business and customer relationship. External
consultants may be brought it with specialist knowledge to address areas where this is an attribute deficiency
in the Board.
Although not formally documented, the Board feels that it has the appropriate mix of skills and diversity to
appropriately perform its duties and obligations.
New directors undertake an induction program coordinated by the Company Secretary that briefs and
informs the director on all relevant aspects of the company's operations and background. A director
development program is also available to ensure that directors can enhance their skills and remain abreast
of important developments.
Term of office
The Company’s Constitution specifies that all non-executive Directors appointed during the year,
automatically retire at the next annual general meeting (“AGM”) and are eligible for re-election at that general
meeting. Any director that has been appointed during the year and is subject to automatic retirement at the
AGM is not taken into account in the automatic retirement of one third of the Directors as detail below.
At each AGM:
(a) one third (or if that is not a whole number, the whole number nearest to one third) of the Directors
who are not:
(i)
(ii)
(iii)
appointed, and required to retire, as detailed above; or
the Managing Director; or
Directors only because they are Alternates; and
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 23 of 81
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
(b) any Director who would, if that Director remained in office until the next AGM, have held that office for
more than 3 years must retire from office and is eligible for re-election.
Chair and Chief Executive Officer
The Chair is responsible for leading the board, ensuring Directors are properly briefed in all matters relevant
to their role and responsibilities, facilitating board discussions and managing the board’s relationship with the
Company’s senior executives. In accepting the position, the Chair has acknowledged that it will require a
significant time commitment and has confirmed that other positions would not hinder his effective
performance in the role of Chair.
The CEO is responsible for implementing the Consolidated Entity’s strategies and policies. The board
charter specifies that these are separate roles to be undertaken by separate people. The CEO role is
performed by the Managing Director.
Commitment
The board held 18 meetings (including those held by circulating resolution) during the year. The number of
meetings of the Company’s board of Directors and of each board committee held during the year ended 30
June 2015, and the number of meetings attended by each director is disclosed on page 18.
It is the Company’s practice to allow its non-executive Directors to accept appointments outside the
Company with prior written approval of the board. No appointments of this nature were requested during the
year.
Prior to appointment or being submitted for re-election, each non-executive director is required to specifically
acknowledge that they will have and continue to have the time available to discharge their responsibilities to
the Company.
Board committees
The board has established an Audit Committee to assist in the execution of the supervision of the audit by
the Board. Effective 28 July 2011, the Board also formed a Compensation Committee to assist in the Board
in its responsibility in relation to the compensation of the Consolidated Entity’s executive officers and
Directors.
Audit Committee
The Audit Committee consists entirely of independent Directors, being Dr. DeAnn Craig, Mr. Keith Skipper,
Mr Eugene McColley (prior to his resignation) and Dr. Victor Rudenno. The Audit Committee operates in
accordance with a formal written charter, a copy of which is available on the Company’s website. This
committee oversees, reviews and acts on reports to the board on various auditing and accounting matters,
selects the independent auditors and oversees the scope of annual audits, fees to be paid to the
independent auditors, the performance of the independent auditors and our accounting practices. In
addition, the Audit Committee oversees the Company’s compliance programs relating to legal and regulatory
requirements.
It is the board’s responsibility to ensure that an effective internal control framework exists within the entity.
This includes internal controls to deal with both the effectiveness and efficiency of significant business
processes. This also includes the safeguarding of assets, the maintenance of proper accounting records,
and the reliability of financial information.
Nomination Committee
The Company has a Nomination Committee; however the Board as a whole review the qualifications of any
new board member and approve new appointments due to the size of the Board and the Company’s
operations.
Principle 3 – Act ethically and responsibly
Code of Conduct
The Company has developed a Code of Conduct (“the Code”) which has been fully endorsed by the board
and applies to all Directors and employees. The Code is regularly reviewed and updated as necessary to
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 24 of 81
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
ensure it reflects the highest standards of behaviour and professionalism and the practices necessary to
maintain confidence in the Consolidated Entity’s integrity and to take into account legal obligations and
reasonable expectations of the Company’s stakeholders.
In summary, the Code requires that at all times all Company employees will:
Act in the best interests of the Consolidated Entity
Act honestly and with high standards or personal integrity
Comply with the laws and regulations that apply to the Consolidated Entity and its operations
Not knowingly participate in any illegal or unethical activity
Not enter into any arrangement or participate in any activity that would conflict with the entity’s best
interests or that would be likely to negatively affect the entity’s reputation
Not take advantage of the property or information of the Consolidated Entity or its customers for
personal gain or to cause detriment to the Consolidated Entity or its customers; and
Not take advantage of their position or the opportunities arising therefrom for personal gain.
The Consolidated Entity also has an Insider Trading Policy which outlines the appropriate times for the
purchase and sale of the Company’s securities by Directors and employees. The purchase and sale of
Company securities by Directors and employees is only permitted during non-black out periods. Black out
periods are defined in the Company’s Insider Trading Policy. Any transactions undertaken must be notified
to the CEO or CFO prior to being entered into.
The Code and the Company’s trading policy is discussed with each new employee. Further training is
periodically provided and all employees are asked to sign an annual declaration confirming their compliance
with the Code and trading policy.
The Code requires employees who are aware of unethical practices with the Consolidated Entity or breaches
of the Company’s trading policy to report these using the Company’s whistleblower program.
The Directors are satisfied that the Consolidated Entity has complied with its policies on ethical standards,
including trading in securities.
A copy of the Code and the Insider Trading Policy are available on the Company’s website.
Principle 4 – Safeguard integrity in corporate reporting
Audit Committee
The Audit Committee consists of the following non-executive independent Directors:
D. Craig
K. Skipper
V. Rudenno
E. McColley (prior to his resignation)
Details of these Directors’ qualifications and attendance at Audit Committee meetings are set out in the
Directors report on pages 2, 3 and 18.
All members of the Audit Committee are financially literate and have an appropriate understanding of the oil
and gas industry. Dr Rudenno is deemed to be the financial expert.
The Audit Committee operates in accordance with a charter which is available on the Company’s website.
The main responsibilities of the committee are to review and make recommendations to the Board in relation
to:
The adequacy of the Consolidated Entity’s corporate reporting processes;
Whether the Consolidated Entity’s financial statements reflect the understanding of the Committee
members of, and otherwise provide a true and fair view of, the financial position and performance of
the Consolidated Entity;
The appropriateness of the accounting judgements or choices exercised by management in
preparing the Consolidated Entity financial statements;
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 25 of 81
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
The appointment or removal of the external auditor;
The rotation of the audit engagement partner;
The scope and adequacy of the external audit;
The independence and performance of the external auditor;
Any proposal for the external auditor to provide non-audit services and whether it might compromise
the independence of the external auditor
Prior to approving the Consolidated Entity’s financial statements for a financial period, the Audit Committee
receives a declaration from the CEO and CFO that, in their opinion, the financial records of the Consolidated
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.
The CEO and CFO also certify that the opinion has been formed on the basis of sounds system of risk
management and internal control which is operating effectively.
In fulfilling its responsibilities, the Audit Committee:
receives regular reports from management and the external auditors;
meets with external auditors at least twice a year, or more frequently if necessary;
reviews the processes the CEO and CFO have in place to support their certifications to the board;
reviews any significant disagreements between the auditors and management, irrespective of
whether they have been resolved;
is given the opportunity to meet with external auditors without the presence of management if
required; and
provides the external auditors with a clear line of communication at any time to the either the audit
committee or the Chair of the board.
The Audit Committee has authority, within the scope of its responsibilities, to seek any information it requires
from any employee or external party.
External auditors
The Company’s and Audit Committee’s policy is to appoint external auditors who clearly demonstrate quality
and independence. The performance of the external auditor is reviewed annually and applications for tender
of external audit services are requested as deemed appropriate, taking into consideration assessment of
performance, existing value and tender costs. The external audit was put to tender in 2008 with
PricewaterhouseCoopers being appointed external auditors in October 2008.
The external audit was put to tender again in 2014 and RSM Bird Cameron Partners was appointed external
auditors in November 2014.
An analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is
provided in the Directors’ report and in note 21 to the financial statements. It is the policy of the external
auditors to provide an annual declaration of their independence to the Audit Committee.
The external auditor will attend the AGM and be available to answer shareholder questions about the
conduct of the audit and the preparation and content of the audit report.
Principle 5 - Make timely and balanced disclosures
The Company recognises the importance of ensuring its continuous disclosure requirements are met, and
maintains a written policy that outlines the responsibilities relating to the directors, officers and employees in
complying with the company's disclosure obligations. Where any such person is of any doubt as to whether
they possess information that could be classified as market sensitive, they are required to notify the
Company Secretary immediately in the first instance. The Company Secretary is required to consult with the
CEO in relation to matters brought to his or her attention for potential announcement.
The Company Secretary has been nominated as the person responsible for communications with the
Australian Securities Exchange (“ASX”). This role includes responsibility for ensuring compliance with the
continuous disclosure requirements in the ASX Listing Rules and overseeing and co-ordinating information
disclosure to the ASX, analysts, brokers, shareholders, the media and the public.
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 26 of 81
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
All announcements and presentations made by the Consolidated Entity, are prepared by management and
reviewed and authorised by the Board prior to being released. The authorisation process in place seeks to
ensure that announcements made are factual, complete, balanced and expressed in a clear and objective
manner that allows investors to assess the impact of the information when making investment decisions.
Principle 6 – Respect the rights of security holders
The Consolidated Entity actively seeks to provide its security holder appropriate information and facilities to
allow them to exercise their rights as security holders effectively. This includes:
giving security holders ready access to information about the Consolidated Entity and its
governance;
communicating openly and honestly with security holders; and
encouraging and facilitating their participation in meetings of security holders.
Detailed information with respect to the Directors and Executives of the Consolidated Entity is included on
the Consolidated Entity’s website: www.samsonoilandgas.com. The following information is also available
on the Consolidated Entity’s website:
Audit Committee Charter
Compensation Committee Charter
Corporate Governance and Nominating Committee Charter
Code of Ethics
Insider Trading Policy
All information disclosed to the ASX is posted on the Company’s website as soon as it is disclosed to the
ASX. When analysts are briefed on aspects of the Consolidated Entity’s operations, the material used in the
presentation is released to the ASX and posted on the Company’s website. Procedures have also been
established for reviewing whether any price sensitive information has been inadvertently disclosed and, if so,
this information is also immediately released to the market.
The Company actively promotes communication with shareholders through a variety of measures, including
the use of the Company’s website and email. The Company’s reports and ASX announcements may be
viewed and downloaded from its website: www.samsonoilandgas.com or the ASX website: asx.com.au
under ASX code “SSN”. The Company also maintains an email list for the distribution of the Company’s
announcements via email in a more timely manner.
The Consolidated Entity also welcomes communication and feedback from its security holders. The
Consolidated Entity’s website contains information in order to enable security holders to contact the Directors
or Management via email, phone or mail. The Consolidated Entity also makes time available at the Annual
General Meeting for questions from security holders and holds meeting with security holders at other times
as necessary.
From 30 June 2009, shareholders could elect whether or not they wished to receive a hard copy of the
Annual Report. A copy of the Annual Report is sent to all shareholders who elected to receive one. All
shareholders receive the Notice of Meeting for the Company’s Annual General Meeting.
Principle 7- Recognise and manage risk
The board, through the Audit Committee, is responsible for ensuring there are adequate policies in relation to
risk management, compliance and internal control systems. A separate Risk Committee has not been
established. The Company believes that the regular communication between senior management and the
board ensures that risks are identified and dealt with, when appropriate, in a timely manner.
The Board and the Audit Committee are responsible for:
The adequacy of the Consolidated Entity’s processes for managing risk; and
The response of the Consolidated Entity for incidents involving fraud or other break down of the
Consolidated Entity’s internal controls.
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 27 of 81
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2015
Each year, the Board performs a review of the Consolidated Entity’s fraud risk environment and makes any
recommendations necessary to management to decrease fraud risk. No recommendations were made
during the current years review.
Considerable importance is placed on maintaining a strong control environment. There is an organisation
structure with clearly drawn lines of accountability and delegation of authority. Adherence to the Code of
Conduct is required at all times and the board actively promotes a culture of quality and integrity.
The Consolidated Entity has outsourced its internal audit function to an accounting firm in the United States
unrelated to its external auditors. This internal audit function assists the Consolidated Entity with its internal
controls by bringing a systematic, disciplined approach to evaluating and continually improving the
effectiveness of its risk management and internal control processes.
Environmental Risk System
The Company recognises the importance of environmental risk management and is committed to the highest
level of sound environmental management. The Company has established best practice environmental
policies for those fields that it operates and seeks to ensure the operators of its non-operated properties
operate in an environmentally sound manner.
Principle 8 – Remunerate fairly and responsibly
A Compensation Committee was formed on 28 July 2011. The Compensation Committee Charter can be
found on the Consolidated Entity’s website. The Compensation Committee is chaired by an independent
director.
The Compensation Committee is responsible for determining and reviewing compensation arrangements for
the Directors. Further detail in relation to the Company’s remuneration policies can be found in the
Remuneration Report included within the Directors’ Report.
Members of the senior executive team sign a formal employment contract at the time of their appointment
covering a range of matters including their duties, rights, responsibilities and any entitlements on termination.
The standard contract refers to a specific formal job description.
Further information on Directors’ and executives’ remuneration, including principles used to determine
remuneration, is set out in the Directors’ report under the heading “Remuneration report”.
The board also assumes responsibility for overseeing management succession planning.
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 28 of 81
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note
3 (a)
3 (a)
3 (a)
3 (b)
3 (c)
3 (e)
3 (f)
11
4
16
Revenue from operations
Sale of oil and gas
Total Revenue
Cost of Sales
Gross Profit
Gain on sale of oil and gas properties
Other Income
General and administrative expenses
Finance costs
Exploration and evaluation expense
Derivative instruments
Abandonment cost
Impairment expense
Loss before income tax
Income tax (expense)/benefit
Loss after income tax from continuing operations
Net loss for the year attributable to owners of
Samson Oil & Gas Limited
Other comprehensive expense, net of tax
Item that may be classified to profit and loss
Currency translation differences
Total comprehensive expense for the year
attributable to the owners of Samson Oil & Gas
Limited
Basic loss per share (cents) from continuing operations
attributable to ordinary equity holds of the Company
Diluted loss per share (cents)
Basic loss per share for profit attributable to the ordinary
equity holders of the company
Diluted loss per share (cents)
22
22
22
22
Consolidated Entity
2015
$
2014
$
13,295,006
13,295,006
10,618,628
10,618,628
(12,887,425)
(7,644,040)
407,581
2,974,588
-
2,918,083
168,616
138,846
(4,949,782)
(788,925)
(12,686,943)
3,112,268
(412,588)
(19,857,456)
(6,580,570)
(204,556)
(380,283)
(504,592)
(468,432)
(272,438)
(35,007,229)
(2,379,354)
(3,021)
(885,215)
(35,010,250)
(3,264,569)
(35,010,250)
(3,264,569)
(305,838)
(676,153)
(35,316,088)
(3,940,722)
(1.23)
(1.23)
(1.23)
(1.23)
(0.13)
(0.13)
(0.13)
(0.13)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying
notes.
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 29 of 81
CONSOLIDATED BALANCE SHEET
As at 30 June 2015
CONSOLIDATED BALANCE SHEET
Consolidated Entity
Note
2015
$
2014
$
Current assets
Cash and cash equivalents
Trade and other receivables
Derivative instruments
Prepayments
Total current assets
Non-current assets
Other receivables
Derivative instruments
Plant and equipment
Exploration and evaluation assets
Oil and gas properties
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Derivative instruments
Total current liabilities
Non-current liabilities
Derivative Instruments
Borrowings
Provisions
Total non-current liabilities
Total Liabilities
Net assets
Equity
Contributed equity
Accumulated losses
Reserves
Total equity
6
7
23
8
7
23
9
10
11
12
14
23
23
13
14
15
16
15
2,062,720
3,645,152
159,216
372,080
6,846,394
5,533,444
-
5,388,428
6,239,168
17,768,266
117,258
101,269
248,521
3,880,220
28,794,738
33,142,006
39,381,174
3,358,846
-
-
3,358,846
-
18,474,188
1,682,383
20,156,571
23,515,417
140,885
-
365,566
15,732,416
32,261,936
48,500,803
66,269,069
6,939,186
1,044,228
284,376
8,267,790
128,998
5,681,716
964,600
6,775,314
15,043,104
15,865,757
51,225,965
98,296,001
98,340,121
(88,703,374)
6,273,130
15,865,757
(53,693,124)
6,578,968
51,225,965
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 30 of 81
CONSOLIDATED STATEMENT OF CASHFLOWS
for the year ended 30 June 2015
CONSOLIDATED STATEMENT OF CASHFLOWS
Cash flows from operating activities
Receipts from customers
Cash received from commodity derivative instruments
Payments to suppliers & employees
Interest received
Interest paid
Payment for derivative instruments
Payments of abandonment costs
Income taxes refund received
Consolidated Entity
Note
2015
$
2014
$
13,177,704
8,411,998
2,275,026
(10,987,741)
31,061
(481,714)
-
(862,762)
(107,135)
-
(9,892,748)
118,351
(60,780)
(80,593)
(23,491)
-
Net cash flows from/(used in) operating activities
19
3,044,439
(1,527,263)
Cash flows from investing activities
Proceeds from sale of oil and gas properties
Payments for furniture and fittings
Cash proceeds from cash calls
Payments for plant & equipment
Payments for exploration and evaluation
Payments for oil and gas properties
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Proceeds from borrowings
Repayments of borrowings
Payments for costs associated with borrowings
Payments for costs associated with capital raising
Net cash flows from financing activities
-
5,192,819
(20,249)
-
-
(66,845)
490,338
-
(2,406,192)
(68,968)
(17,670,628)
(27,122,802)
(20,097,069)
(21,575,458)
880
12,777,722
13,000,000
6,000,000
(301,000)
-
(83,690)
(276,856)
(45,000)
(1,045,856)
12,571,190
17,455,010
Net decrease in cash and cash equivalents
(4,481,440)
(5,647,711)
Cash and cash equivalents at the beginning of the financial year
6,846,394
13,170,627
Effects of exchange rate changes on cash and cash equivalents
(302,234)
(676,522)
Cash and cash equivalents at end of year
2,062,720
6,846,394
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Samson Oil & Gas Limited
Financial Statements – 30 June 2015
Page 31 of 81
CONSOLIDATED
Balance at 1 July 2013
Loss for the year
Other comprehensive expense
Options vested
Issue of share capital
Share issue costs
Balance at 1 July 2014
Loss for the year
Other comprehensive expense
Options issued
Issue of share capital
Share issue costs
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2015
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the parent
Contributed
Equity
Accumulated
Losses
Foreign
Currency
Translation
Reserve
Equity Reserve Share Based
Total Equity
Payments
Reserve
$
$
$
$
$
$
86,608,255
-
(50,428,555)
(3,264,569)
3,076,029
-
(1,097,780)
-
5,190,628
-
Total comprehensive expense for the year
Transactions with owners in their capacity as owners:
-
(676,153)
(3,264,569)
(676,153)
-
-
-
-
-
-
-
-
-
-
-
12,777,722
(1,045,856)
Balance at 30 June 2014
98,340,121
(53,693,124)
2,399,876
(1,097,780)
5,276,872
51,225,965
43,348,577
(3,264,569)
(676,153)
(3,940,722)
-
-
86,244
86,244
-
-
12,777,722
(1,045,856)
Total comprehensive expense for the year
Transactions with owners in their capacity as owners:
98,340,121
(53,693,124)
2,399,876
(1,097,780)
5,276,872
51,225,965
(35,010,250)
-
-
(305,838)
(35,010,250)
(305,838)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(35,010,250)
(305,838)
(35,316,088)
-
880
(45,000)
880
(45,000)
Balance at 30 June 2015
98,296,001
(88,703,374)
2,094,038
(1,097,780)
5,276,872
15,865,757
The above statement of Consolidated Changes in Equity should be read in conjunction with the accompanying notes.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 32 of 81
-
-
-
-
-
-
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1.
CORPORATE INFORMATION
The financial statements of the Company for the year ended and as at 30 June 2015 were authorised for
issue in accordance with a resolution of the Directors on 16 September 2015. The financial statements
include the financial statements for the Consolidated Entity comprised of Samson Oil & Gas Limited and its
subsidiaries, referred to hereafter as the Consolidated Entity.
Samson Oil & Gas Limited is a Company limited by shares incorporated in Australia whose shares are
publicly traded on the Australian Securities Exchange. Samson also trades an American Depository Share
(“ADS”) on NYSE AMEX under the symbol "SSN". Effective 30 March 2015, the Company changed the
number of ordinary shares represented by each ADS from 20 to 200. The number of the Company’s
ordinary shares outstanding was not affected.
The nature of the operations and principal activities of the Consolidated Entity are described in Note 18
Segment Reporting.
NOTE 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these consolidated financial statements are
set out below. These policies have been consistently applied to all the years presented, unless stated
otherwise.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations
Act 2001.
Statement on liquidity, capital resources and capital requirements
The Group has cash and cash equivalents of $2.0 million as at 30 June 2015 (2014 - $6.8 million) and a
working capital surplus of $2.7 million (2014 - $9.5 million). The Consolidated Entity’s primary use of capital
resources has been the exploration and development of existing projects. The Consolidated Entity has no
obligation to execute exploration activities within a set timeframe and therefore has the ability to select the
timing of these activities as long as the minimum amounts required to retain tenure are met. Refer Note 17
for further information on these commitments. Accordingly, the Consolidated Entity’s actual capital
expenditure can be accelerated or decelerated largely at its discretion.
Cash balances and ongoing cash generated from current operations may place limits on the Consolidated
Entity’s ability to facilitate further necessary development of existing exploration and development projects.
Therefore the Consolidated Entity must extend or secure sufficient funding through renewed or additional
borrowings, equity raising and or asset sales to enable sufficient cash to be available to further its
development plans. An additional $13.0 million has been drawn down from the Mutual of Omaha Bank
facility and $0.3 million was repaid. $0.3 million remains available for drawdown. The Directors expect that
the Consolidated Entity will be able to secure the necessary ongoing financing through one, or a combination
of, the aforementioned alternatives. Accordingly, these consolidated financial statements have been
prepared on a going concern basis in the belief that the Consolidated Entity will realise its assets and settle
its liabilities and commitments in the normal course of business and for at least the amounts stated, for a
period not less than one year from the date of signing the financial report.
Historical cost convention
These financial statements have been prepared under the historical cost convention, except for derivative
instruments, which have been measured at fair value.
Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of the applying the Consolidated Entity’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are discussed at d) below.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 33 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
a)
Compliance Statement
The consolidated financial statements of the Consolidated Entity also comply with International
Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB).
b)
New and amended accounting standards adopted by the Consolidated Entity
The Consolidated Entity has applied the following standards and amendments for first time for their
annual reporting period commencing 1 July 2015:
O
Reference
Title
Summary
AASB 2015-3
AASB 2014-3
AASB 2014-4
Amendments to
Australian
Accounting
Standards arising
from the
Withdrawal of
AASB 1031
Materiality
Amendments to
Australian
Accounting
Standards –
Accounting for
Acquisitions of
Interests in Joint
Operations
Amendments to
Australian
Accounting
Standards –
Clarification of
Acceptable
Methods of
Depreciation and
Amortisation
AASB 2014-10 Amendments to
Australian
Accounting
Standards – Sale
or Contribution of
Assets between
an Investor and
its Associate or
Joint Venture
The Standard completes the
AASB’s project to remove
Australian guidance on materiality
from Australian Accounting
Standards.
This Standard amends AASB 11
to provide guidance on the
accounting for acquisitions of
interests in joint operations in
which the activity constitutes a
business.
This Standard amends AASB 116
and AASB 138 to establish the
principle for the basis of
depreciation and amortisation as
being the expected pattern of
consumption of the future
economic benefits of an asset,
and to clarify that revenue is
generally presumed to be an
inappropriate basis for that
purpose.
This amending standard requires
a full gain or loss to be
recognised when a transaction
involves a business (even if the
business is not housed in a
subsidiary), and a partial gain or
loss to be recognised when a
transaction involves assets that
do not constitute a business
(even if those assets are housed
in a subsidiary).
Application
date
(financial
years
beginning)
1 July 2015
Expected
Impact
No expected
impact
1 January
2016
No expected
impact
1 January
2016
No expected
impact
1 January
2016
No expected
impact
AASB 2015-1
Amendments to
Australian
Accounting
Standards –
The Standard makes
amendments to various
Australian Accounting Standards
arising from the IASB’s Annual
1 January
2016
No expected
impact
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 34 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
Annual
Improvements to
Australian
Accounting
Standards 2012-
2014 Cycle
Amendments to
Australian
Accounting
Standards –
Disclosure
Initiative:
Amendments to
AASB 101
Financial
Instruments
AASB 2015-2
AASB 9
AASB 2014-7
Amendments to
Australian
Accounting
Standards arising
from AASB 9
(December 2014)
Improvements process, and
editorial corrections.
The Standard makes
amendments to AASB 101
Presentation of Financial
Statements arising from the
IASB’s Disclosure Initiative
project.
This Standard supersedes both
AASB 9 (December 2010) and
AASB 9 (December 2009) when
applied. It introduces a “fair value
through other comprehensive
income” category for debt
instruments, contains
requirements for impairment of
financial assets, etc.
Consequential amendments
arising from the issuance of
AASB 9
1 January
2016
Disclosures
Only
1 January
2018
No expected
impact
1 January
2018
No expected
impact
c) New standards and interpretation not yet adopted by the Consolidated Entity
Certain new accounting standards and interpretations have been published that are not mandatory for
30 June 2015 reporting periods. The Consolidated Entity’s assessment of the impact of the new
standards and interpretations is set out below.
AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting
Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting
Standards arising from AASB 9 (December 2010) (effective from 1 January 2015) AASB 9
Financial Instruments addresses the classification, measurement and derecognition of
financial assets and financial liabilities. The standard is not applicable until 1 January 2017.
When adopted, the standard will affect the Consolidated Entity’s accounting for its available
for sale financial assets (if any are held), since AASB 9 only permits the recognition of fair
value gains and losses in other comprehensive income if they relate to equity instruments
that are not held for trading. Fair value gains and losses on available for sale debt
instruments, for example, will therefore have to be recognised directly in profit or loss.
The Consolidated Entity has not yet assessed how its derivative liabilities would be affected
by the new rules, and it has not yet decided whether to adopt any part of AASB 9 early.
The de-recognition rules have been transferred from AASB 139 Financial Instruments:
Recognition and Measurement and have not been changed. The Consolidated Entity does
not intend to adopt the new standard before its operative date of 1 January 2017.
There are no other standards that are not yet effective and that are expected to have a material impact
on the entity in the current or future reporting periods and on foreseeable future transactions.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 35 of 81
d) Principles of Consolidation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
Samson Oil & Gas Limited (“parent entity” or “Company”) as at 30 June 2015 and the results of all
subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Consolidated Entity has the power to govern the
financial and operating policies, generally accompanying a shareholding of more than one-half of the
voting rights. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Consolidated Entity controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Consolidated
Entity. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the
Consolidated Entity (refer to Note 2 (cc)).
All intercompany balances and transactions, including unrealised profits arising from intra-group
transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be
recovered.
The financial statements of subsidiaries are prepared for the same reporting period as the parent
entity, using consistent accounting policies.
Non-controlling interests not held by the Consolidated Entity are allocated their share of net profit after
tax in the profit and loss and are presented within equity in the Consolidated Balance Sheet,
separately from parent shareholders’ equity.
The Consolidated Entity treats transactions with non-controlling interests that do not result in a loss of
control as transactions with equity owners of the Consolidated Entity. A change in ownership interest
results in an adjustment between the carrying amounts of the controlling and non-controlling interests
to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment
to non-controlling interests and any consideration paid or received is recognised in a separate reserve
within equity attributable to owners of Samson Oil & Gas Limited.
When the Consolidated Entity ceases to have control, joint control or significant influence, any retained
interest in the entity is remeasured to its fair value with the change in carrying amount recognised in
profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting
for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any
amounts previously recognised in other comprehensive income in respect of that entity are accounted
for as if the Consolidated Entity had directly disposed of the related assets or liabilities. This may mean
that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a jointly-controlled entity or an associate is reduced but joint control or
significant influence is retained, only a proportionate share of the amounts previously recognised in
other comprehensive income are reclassified to profit or loss where appropriate.
e) Significant accounting judgments, estimates and assumptions
Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that may have a financial impact on the entity and that
are believed to be reasonable under the circumstances.
Critical judgements in applying the entity’s accounting policies
Management has identified the critical accounting policies set out below for which significant
judgments, estimates and assumptions are made. Actual results may differ from these estimates
under different assumptions and conditions and may materially affect financial results of the financial
position reported in future periods. Further details of the nature of these assumptions and conditions
may be found in the relevant notes to the financial statements.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 36 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
Exploration and evaluation
The Consolidated Entity’s accounting policy for exploration and evaluation is set out in Note 2 (r). The
application of this policy necessarily requires management to make certain estimates and assumptions
as to future events and circumstances, in particular the assessment of whether economic quantities of
reserves have been found. Any such estimates and assumptions may change as new information
becomes available. If, after having capitalised expenditure under our policy, we conclude that we are
unlikely to recover the expenditure by future exploitation or sale, then the relevant capitalised amount
will be written off to the profit and loss.
When assessing whether deferred exploration expenditure should be carried forward from the prior
year the Consolidated Entity reviews each project on an individual basis, taking into account, but not
limited, to the ongoing activity in relation to that field, including any new agreements or contracts
entered into during the year and the Consolidated Entity’s near future plans for the field or prospect.
The Consolidated Entity believes that exploration expenditures are incurred with the intent of making
further investment decisions and are not directly related to the revenue producing activities of the
Consolidated Entity and are therefore more appropriately presented as investing activities.
Critical accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The resulting accounting estimates will, by definition, seldom equal the
related actual results. The key estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of certain assets and liabilities within the next annual
reporting period are:
Share-based payment transactions
The Consolidated Entity measures the cost of equity-settled transactions with employees by reference
to the fair value of the equity instruments at the date at which they are granted. The fair value is
determined using a Black-Scholes option pricing model.
The value of equity-settled transactions with other service providers, excluding employees, are
measured based on the value of the service received by the Consolidated Entity. If a value for this
cannot be reasonably measured, the value will be measured by reference to the fair value of the equity
instruments at the date services are provided. The Consolidated Entity also uses a Black-Scholes
option pricing model to determine this fair value, where appropriate.
Impairment of assets
In determining the recoverable amount of assets, in the absence of quoted market prices, estimations
are made regarding the present value of future cash flows using asset specific discount rates. For oil
and gas properties, expected future cash flow estimation is based on proved and probable reserves,
future production profiles, commodity prices and costs. The estimates of future cash flows are made
as at each balance date, using the price estimates from the forward curve as at that date.
Restoration obligations
The Consolidated Entity estimates the future removal costs of oil and gas wells and production
facilities at the time of installation of the assets. In most instances, the removal of assets will occur
many years into the future. This requires judgmental assumptions regarding removal data, future
environmental
the engineering
methodology for estimating future cost, future removal technologies in determining the removal cost,
and liability specific discount rates to determine the present value of these cash flows. For more detail
regarding the policy in respect of the provision for restoration refer to Note 2 (v). The discount rate
used to determine the present value of the cash flows was 6.45% (2014:6.45%).
the extent of reclamation activities required
legislation, and
Reserves estimates
Estimates of recoverable quantities of proven and probable reserves, that are used to review the
carrying value of oil and gas properties, include assumptions regarding commodity prices, exchange
rates, discount rates, and production and transportation costs for future cash flows. It also requires
interpretation of complex and difficult geological and geophysical models in order to make an
assessment of the size, shape, depth and quality of reservoirs and their anticipated recoveries. The
economic, geological and technical factors used by the Consolidated Entity to estimate reserves may
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 37 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
change from period to period. Changes in reserves can impact asset carrying values, the provision for
restoration and the recognition of deferred tax assets, due to changes in estimated future cash flows.
Reserves are integral to the amount of depreciation, depletion, amortisation and impairment charged
to the profit and loss.
The impairment expense recognised in the Consolidated Statement of Comprehensive Income is
$19.9 million (2014: $0.3 million).
Reserve estimates are prepared by internal engineers and external independent third parties in
accordance with guidelines prepared by the Society of Petroleum Engineers. The reserve estimates
as at 30 June 2015 and 30 June 2014 were prepared by independent reserve engineers, Ryder Scott
Company.
Units of production method of depreciation and amortisation
The Consolidated Entity applies the units of production method for depreciation of its oil and gas
properties and assets based on hydrocarbons produced. These calculations require the use of
estimates and assumptions. Significant judgment is required in assessing the available reserves and
future production associated with the assets to be depreciated under this method. Factors that must
be considered in determining reserves and future production are the Company’s history of exploiting
reserves and the relevant time frames, markets and future developments. When these factors change
or become known in the future, such differences will impact pre-tax profit and carrying values of
assets. It is impracticable to quantify the effect of these changes in these estimates and assumptions
in future periods. The reassessment of rates occurs at 31 December and 30 June each and is
performed consistently from period to period.
f) Revenue Recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable to
the extent it is probable that the economic benefits will flow to the Consolidated Entity and the revenue
can be reliably measured. Amounts disclosed as revenue are net of rebates and amounts collected on
behalf of third parties.
The following specific recognition criteria must also be met before revenue is recognised:
Sale of oil and gas
Revenue is recognised when the significant risks and rewards of ownership of the product have
passed to the buyer and the amount of revenue can be measured reliably. Risks and rewards are
considered to have passed to the buyer at the time of delivery of the product to the customer.
Gas imbalances occur when the Consolidated Entity sells more or less than its entitled ownership
percentage of total gas production. Any amount received in excess of the Consolidated Entity’s share
is treated as a liability. If the Company receives less than its entitled share, the underproduction is
recorded as a receivable.
Interest income
Interest income is recognised using the effective interest method. When a receivable is impaired, the
Consolidated Entity reduces the carrying amount to its recoverable amount, being the estimated future
cash flow discounted at the original effective interest rate of the instrument, and continues unwinding
the discount as interest income. Interest income on impaired loans is recognised using the original
effective interest rate
Dividend income
Revenue is recognised when the Consolidated Entity’s right to receive the payment is established.
g) Borrowing Costs
Borrowing costs incurred for the construction of any qualifying assets are capitalised during the period
of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing
costs are expensed.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 38 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
h) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent
on the use of a specific asset or assets and whether the arrangement conveys a right to use the asset.
Consolidated Entity as lessee
Finance leases, which transfer to the Consolidated Entity substantially all the risks and benefits
incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value
of the leased property or, if lower, at the present value of the minimum lease payments. Lease
payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
recognised as an expense in profit or loss.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and
the lease term if there is no reasonable certainty that the Consolidated Entity will obtain ownership by
the end of the lease term.
Operating lease payments are recognised as an expense in the profit and loss on a straight line basis
over the lease term. Operating lease incentives are recognised as a liability when received and
subsequently reduced by allocating lease payments between rental expense and reduction of the
liability.
i) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
For the purposes of Consolidated Cash Flow Statement, cash and cash equivalents consist of cash
and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are
included within borrowings in current liabilities on the balance sheet.
Cash and cash equivalents exclude restricted cash.
j) Restricted cash
The Consolidated Entity may be required to place funds with third parties as bonds for environmental
restoration. These bonds are carried as non-current receivables when the release of cash is not
expected to occur within twelve months. The bonds are represented by cash and are valued as cash.
k) Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest rate method, less provision for impairment. Trade receivables are generally
due for settlement within 30-90 days. They are presented as current assets unless collection is not
expected for more than 12 months from reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be
uncollectible are written off by reducing the carrying amount directly. An allowance account (provision
for impairment of trade receivables) is used when there is objective evidence that the Consolidated
Entity will not be able to collect all amounts due according to the original terms of the receivables.
Significant financial difficulties in the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments (more than 60 days overdue) are considered
indicators that the trade receivable is impaired. The amount of the impairment allowance is the
difference between the asset’s carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate. Cash flows relating to short-term receivables are not
discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in profit and loss within other expenses. When a
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 39 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
trade receivable for which an impairment allowance had been recognised becomes uncollectible in a
subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are credited against other expenses in profit and loss.
l) Prepayments
Prepayments relate to certain goods and services whereby the payment has been made and the
resultant benefit is derived over future periods.
m) Foreign currency translation
(i) Functional and presentation currency
The functional currency of Samson Oil & Gas Limited is Australian Dollars. The functional currency of
Samson Oil & Gas USA, Inc and Samson Oil and Gas USA Montana, Inc is United States Dollars. The
presentation currency of the Consolidated Entity is United States Dollars.
(ii)Transaction and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when
they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are
attributable to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the profit and loss,
within finance costs. All other foreign exchange gains and losses are presented in the profit and loss
on a net basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined. Translation differences on assets and
liabilities carried at fair value are reported as part of the fair value gain or loss. For example,
translation differences on non-monetary assets and liabilities such as equities held at fair value
through profit or loss are recognised in profit or loss as part of the value gain or loss and translation
differences on non-monetary assets such as equities classified as available-for-sale financial assets
are recognised in other comprehensive income.
(iii) Translation of Consolidated Entity functional currency to presentation currency
The results and financial position of Consolidated Entity entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
Assets and liabilities for each balance sheet presented are translated at the closing rate at the
date of that balance sheet
Income and expense for each profit and loss are translated at average exchange rates (unless
this is not a reasonable approximation of the cumulative effect of the rates prevailing on
transaction dates, in which case income and expenses are translated at the dates of the
transactions)
Equity is translated at the historical exchange rate that approximates the rate in effect at the date
of the transaction, and
All resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign
entities, and of borrowings and other financial instruments designated as hedges of such investments,
are taken to shareholders’ equity. When a foreign operation is sold or any borrowings forming part of
the net investment are repaid, a proportionate share of such exchange differences are recognised in
profit and loss, as part of the gain or loss on sale where applicable.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets
and liabilities of the foreign entities and translated at the closing rate.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 40 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
n)
Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable
income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax rates and laws enacted or
substantively enacted at the end of the reporting period in the countries where the company’s
subsidiaries operate and generate taxable income. Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amounts expected to be
paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements. However, the deferred income tax is not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and
are expected to apply when the related deferred income tax asset is realised or the deferred income
tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if
it is probable that future taxable amounts will be available to utilise those temporary differences and
losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset
and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised
in other comprehensive income or directly in equity, respectively.
o) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST
incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost
of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the taxation authority is included with other
receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing
or financing activities which are recoverable from, or payable to the taxation authority, are presented
as operating cash flows.
p) Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation
when the cost of replacing the parts is incurred. Similarly, when each major overhaul is performed its
cost is recognised in the carrying amount of plant and equipment as a replacement only if it is eligible
for capitalisation. All other repairs and maintenance are recognised in profit or loss as incurred.
Depreciation expense is estimated over the useful life of the assets as follows:
Furniture and fittings – over two to five years using the straight line method
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 41 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
Computer equipment – over two to five years using the straight line method
Motor vehicles – over three to five years using the straight line method
Lease and well equipment – over the life of the reserve (usually 3-25 years) – approximated using the
units of production method.
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
Refer Note 2 (t) for the Consolidated Entity’s policy in relation to Impairment of Non-Financial Assets.
Derecognition and disposal
An item of plant and equipment is derecognised upon disposal or when no further future economic
benefits are expected from its use or disposal.
Any gain or loss arising on derecognition (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in profit and loss in the year the asset is
derecognised.
q) Oil and gas properties
Oil and gas properties include capitalised project expenditure and development expenditure.
The Consolidated Entity uses the units of production method to amortise costs carried forward in
relation to its oil and gas properties. For this approach, the calculations are based on proved and
probable reserves as determined by our reserves determination.
Impairment on the carrying value of oil and gas properties is based on proved and probable reserves
and is assessed on a field by field basis.
r) Exploration and evaluation assets
Exploration and evaluation expenditure in respect of each area of interest is accounted for using the
successful efforts method of accounting. The successful efforts method requires all exploration and
evaluation expenditure to be expensed in the period in which it is incurred, except the costs of wells
and the costs of acquiring interests in new exploration assets, which are capitalised as intangible
exploration and evaluation assets. The costs of wells that have been initially capitalised pending the
results of the well, are reviewed at the completion of the well when well results are known and
transferred to oil and gas properties or expensed as appropriate.
An area of interest refers to an individual geographical area where the presence of oil or a natural gas
field is considered favourable or has been proved to exist, and in most cases will comprise an
individual oil or gas field. This means all exploration and evaluation costs, including general permit
activity, geological and geophysical costs are expensed as incurred except where:
the expenditure or asset acquired relates to an exploration discovery, that at balance date, the
assessment of whether or not an economically recoverable reserve is not yet complete and
active and significant operations in relation to the area of interest is continuing; or
it is expected that the expenditure or asset acquired will be recouped through successful
exploitation, or alternatively, by its sale.
Exploration costs are classified as cash flows from investing activities in the cash flow statement.
Exploration and evaluation assets are assessed for impairment when facts and circumstances indicate
that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.
When assessing for impairment consideration is given to but not limited to the following:
the period for which the Consolidated Entity has the right to explore
planned and budgeted future exploration expenditure
activities incurred during the year, and
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 42 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
activities planned for future periods.
s)
Investments and other financial assets
Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and
Measurement are categorised as either financial assets at fair value through profit or loss, loans and
receivables, or available-for-sale financial assets. The classification depends on the purpose for which
the investments were acquired. Designation is re-evaluated at each financial year end, but there are
restrictions on reclassifying to other categories.
When financial assets are recognised initially, they are measured at fair value, plus in the case of
assets not at fair value through profit or loss, directly attributable transaction costs.
Recognition and Derecognition
Regular purchases and sales of financial assets are recognised on trade-date – the date on which the
group commits to purchase or sell the asset. Financial assets are derecognised when the rights to
receive cash flows from the financial assets have expired or have been transferred and the group has
transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments
recognised in other comprehensive income are reclassified to profit or loss as gains and losses from
investment securities.
Measurement
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs that are directly attributable to
the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through
profit or loss are expensed in profit or loss.
Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at fair value through profit or loss are
subsequently carried at fair value. Gains or losses arising from changes in the fair value of the
‘financial assets at fair value through profit or loss’ category are presented in profit or loss within other
income or other expenses in the period in which they arise. Dividend income from financial assets at
fair value through profit or loss is recognised in profit or loss as part of revenue from when the
Consolidated Entity’s right to receive payments is established. Interest income from these financial
assets is included in the net gains/(losses).
Changes in the fair value of monetary securities denominated in a foreign currency and classified as
available-for-sale are analysed between translation differences resulting from changes in amortised
cost of the security and other changes in the carrying amount of the security. The translation
differences related to changes in the amortised costs are recognised in profit or loss, and other
changes in carrying amount are recognised in other comprehensive income. Changes in the fair value
of other monetary and non-monetary securities classified as available-for-sale are recognised in the
other comprehensive income.
Financial assets at fair value through profit or loss
(i)
Financial assets classified as held for trading are included in the category ‘financial assets at fair value
through profit or loss’. Financial assets are classified as held for trading in that they are acquired for
the purpose of selling in the near term with the intention of making a profit. Derivatives are also
classified as held for trading unless they are designated as effective hedging instruments. Gains or
losses on financial assets held for trading are recognised in profit or loss and the related assets are
classified as current assets in the balance sheet.
Loans and receivables
(ii)
Loans and receivables are non-derivative financial assets with fixed determinable payments that are
not quoted in an active market. Such assets are carried at amortised cost using the effective interest
rate method. Gains and losses are recognised in the profit and loss when the loans and receivables
are derecognised or impaired. These are included in current assets, except for those with maturities
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 43 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
greater than 12 months after the balance date, which are classified as non-current.
Impairment
(iii)
The Consolidated Entity assesses at each reporting period whether there is objective evidence that a
financial asset or group of financial assets is impaired. A financial asset or group of financial assets is
impaired and impairment losses are incurred only if there is objective evidence of impairment as result
of one more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss
event (or events) has an impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliability estimated. In the case of equity investments classified as
available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is
considered an indicator that the assets are impaired. Impairment losses are recognised through the
profit and loss.
Assets carried at amortised cost
For loans and receivables, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit losses
that have not been incurred) discounted at the financial asset’s original effective interest rate. The
carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated
profit and loss. If a loan has a variable interest rate, the discount rate for measuring any impairment
loss is the current effective interest rate determined under the contract. As a practical expedient, the
Consolidated Entity may measure impairment on the basis of an instrument’s fair value using an
observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised (such as an
improvement in a debtor’s credit rating), the reversal of the previously recognised impairment loss is
recognised in the consolidated profit and loss.
Assets classified as available-for-sale
If there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss –
measured as the difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in profit or loss – is removed from equity
and recognised in profit or loss.
Impairment losses on equity instruments that were recognised in profit or loss are not reversed
through profit or loss in a subsequent period.
If the fair value of a debt instrument classified as available-for-sale increases in a subsequent period
and the increase can be objectively related to an event occurring after the impairment loss was
recognised in profit or loss, the impairment loss is reversed through profit or loss.
t)
Impairment of non-financial assets
The Consolidated Entity assesses at each reporting date whether there is an indication that an asset
may be impaired. If any such indication exists, or when annual impairment testing for an asset is
required, the Consolidated Entity makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of its fair value less costs to sell and its value in use and is
determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets and the asset’s value in use cannot be
estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the
cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating
unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is
written down to its recoverable amount. Impairment losses relating to continuing operations are
recognised in profit and loss.
An assessment is also made at each reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may have decreased. If such an
indication exists, the recoverable amount is estimated. A previously recognised impairment loss is
reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised. If that is the case the carrying amount of the
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 44 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
asset is increased to its recoverable amount. That increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such reversal is recognised in profit or loss. After such a
reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.
u) Trade and other payables
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to
the end of the financial year which are unpaid. These amounts are unsecured and are usually paid
within 30 days of recognition. Trade and other payables are presented as current liabilities unless
payment is not due within 12 months from the reporting date. They are recognised initially at their fair
value and subsequently measured at amortised cost using the effective interest method.
v) Provisions
Provisions for legal claims and make good obligations are recognised when the Consolidated Entity
has a present legal or constructive obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised
even if the likelihood of an outflow with respect to any one item including in the same class of
obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the end of the reporting period. The discount rate used to
determine the present value is a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The increase in the provision due to the passage
of time is recognised as interest expense.
w) Restoration costs
The Consolidated Entity records the present value of the estimated cost of legal and constructive
obligations to restore operating locations in the period in which the obligation arises. The nature of
restoration activities includes the removal of facilities, abandonment of wells and rehabilitation of
affected areas.
Typically, the obligation arises when the asset is installed at the production location. When the liability
is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related
oil and gas properties. Over time, the liability is increased for the change in present value based on a
risk adjusted pre-tax discount rate appropriate to the risks inherent in the liability. The unwinding of
the discount is recorded as an accretion charge within finance costs. The carrying amount capitalised
in oil and gas properties is depreciated over the useful life of the related asset.
Each year, the Consolidated Entity reviews the estimated restoration costs and the estimated period in
which the obligation is likely to occur to ensure that they are appropriate. The Consolidated Entity
also reviews the discount rate to ensure it is still appropriate. If changing any of these variables results
in a decrease in the liability the difference is recorded against the corresponding asset, which is
included in oil and gas properties in the balance sheet.
Costs incurred that relate to an existing condition caused by past operations, and that do not have a
future economic benefit, are expensed.
x) Employee leave benefits
Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating
sick leave expected to be settled within 12 months of the reporting date are recognised in other
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 45 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
payables in respect of employee’s services up to the reporting date. They are measured at the
amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave
are recognised when the leave is taken and measured at the rates paid or payable.
Long service leave
The liability for long service is measured as the fair value of expected future payments to be made in
respect of services provided by employees up to the reporting date using the projected unit credit
method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on national government bonds with terms to maturities and currencies that match,
as closely as possible, the estimated future cash outflows. The liability for long service leave is
presented in current payables.
y) Share-based payment transactions
Equity settled transactions:
The Consolidated Entity provides benefits to employees (including senior executives) of the
Consolidated Entity in the form of share based payments, whereby employees render services in
exchange for shares or rights over shares (equity-settled transactions).
The cost of equity-settled transactions with employees is measured by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value at grant date is determined
using a Black-Scholes option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
In valuing equity settled transactions, no account is taken of any performance conditions, other than
conditions linked to the price of the shares of Samson Oil & Gas Limited (market conditions) if
applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period, if any, in which the performance and/or services conditions are fulfilled, ending on the
date on which the relevant employees become fully entitled to the award (the vesting period).
At each subsequent reporting date until vesting, the cumulative charge to profit and loss is the product
of:
i.
ii.
iii.
The grant date fair value of the award;
The current best estimate of the number of awards that will vest, taking into account such
factors as the likelihood of employee turnover during the vesting period and the likelihood of
non-market performance conditions being met; and
The expired portion of the vesting period.
The charge to profit and loss for the period is the cumulative amount as calculated above, less the
amounts already charged in previous periods. There is a corresponding entry to equity.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer
awards vest than originally anticipated to do so. Any award subject to a market condition is considered
to vest irrespective of whether or not that market condition is fulfilled, provided that all other conditions
are satisfied.
If the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the
terms had not been modified. In addition, an expense is recognised for any modification that
increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the
employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and the new award are treated as they were a modification of the original
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 46 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
award, as described in the previous paragraph.
The dilutive effect, if any, of the outstanding options is reflected as additional share dilution in the
computation of earnings per share.
The expense for share based payments in relation to Directors and executives is recognised in the
parent entity.
z) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Where any member of the Consolidated Entity purchases the Company’s equity instruments, for
example as a result of a share buy-back or share based payment plan, the consideration paid,
including any directly attributable incremental costs (net of income taxes) is deducted from equity
attributable to the owners of Samson Oil & Gas Limited. Where such ordinary shares are
subsequently reissued, any consideration received, net of any directly attributable incremental
transaction costs and the related income tax effects, and is included in equity attributable of the
owners of Samson Oil & Gas Limited.
aa) Earnings per share
i)
Basic earnings per share
Basic earnings per share is calculated by dividing:
The result attributable to equity holders of the Company, excluding any costs of servicing
equity other than ordinary shares
By the weighted average number of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued during the year and excluding
treasury shares (Note 22).
ii)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share
to take into account:
The after income tax effect of interest and other financing costs associated dilutive potential
ordinary shares, and
The weighted average number of additional ordinary shares that would have been
outstanding assuming the conversion of all dilutive potential ordinary shares.
bb) Joint Operations
Joint arrangements
Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint
operations or joint ventures. The classification depends on the contractual rights and obligations of
each investor, rather than the legal structure of the joint arrangement. The Consolidated Entity has
joint operations. The Consolidated Entity recognises its direct right to the assets, liabilities, revenues
and expenses of joint operations and its share of any jointly held or incurred assets, liabilities,
revenues and expenses. These have been incorporated in the financial statements under the
appropriate headings. Details of the joint operation are set out in note 25.
cc) Business Combinations
The acquisition method of accounting is used to account for all business combinations, including
business combinations involving entities or businesses under common control, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a
subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity
interests issued by the group. The consideration transferred also includes the fair value of any
contingent consideration arrangement and the fair value of any pre-existing equity interest in the
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 47 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
subsidiary. Acquisition related costs are expensed as incurred. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the
group recognises any non-controlling interesting in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred and the amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair
value of the group’s share of the net identifiable assets acquired is recorded as goodwill. If those
amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the
measurement of all amounts has been reviewed, the different is recognised directly in profit or loss as
a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a
financial liability are subsequently remeasured to fair value with changes in fair value recognised in
profit or loss.
dd) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
Chief Operating Decision Maker “CODM”. The CODM, who is responsible for allocating resources and
assessing performance of operating segments, has been identified as the Board of Directors.
ee) Derivative Financial Instruments
The Company utilizes swap and collar option contracts to hedge the effect of price changes on a
portion of its future oil and natural gas production. The objective of the Company’s hedging activities
and the use of derivative financial instruments is to achieve more predictable cash flows. While the use
of these derivative instruments limits the downside risk of adverse price movements, they also may
limit future revenues from favorable price movements. The Company may, from time to time,
opportunistically restructure existing derivative contracts or enter into new transactions to effectively
modify the terms of current contracts in order to improve the pricing parameters in existing contracts or
realize the current value of the Company’s existing positions. The Company may use the proceeds
from such transactions to secure additional contracts for periods in which the Company believes it has
additional unmitigated commodity price risk.
The use of derivatives involves the risk that the counterparties to such instruments will be unable to
meet the financial terms of such contracts. The Company’s derivative contracts are with a single
multinational bank with no history of default with the Company. The derivative contracts may be
terminated by a non-defaulting party in the event of default by one of the parties to the agreement.
Previously, collateral under the revolving credit facility supported the Company’s collateral obligations
under the Company’s derivative contracts. Therefore, the Company is not required to post additional
collateral when the Company is in a derivative liability position.
The Company has elected not to apply hedge accounting to any of its derivative transactions and,
consequently, the Company recognizes mark-to-market gains and losses in earnings currently, rather
than deferring such amounts in accumulated other comprehensive income for those commodity
derivatives that would qualify as cash flow hedges.
ff) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowing are
subsequently measured at amortised costs. Any difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in profit and loss over the period of the borrowings
using the effective interest method. Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 48 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
down. Deferred transaction costs are expensed to the profit and loss over the period of the borrowings
using the effective interest rate.
Borrowings are classified as current liabilities unless the Consolidated Entity has an unconditional right
to defer settlement of the liability for at least 12 months after the reporting date.
gg) Parent entity financial information
The financial information for the parent entity, Samson Oil & Gas Limited, disclosed in Note 29 has
been prepared on the same basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries, associates and joint operations entities
(i)
Investments in subsidiaries, associates and joint operations entities are accounted for at cost in the
financial statements of Samson Oil & Gas Limited.
The Consolidated Entity does not meet the definition of a Group for the purposes of Tax Consolidation
therefore there are no tax sharing or funding agreements in place.
hh) Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-
current classification.
As asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in normal operating cycle; it is help primarily for the purpose of trading; it is expected to be
realised within 12 months after the reporting cycle; or the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle a liability for at least 12 months after the reporting
period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is
held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting
period; or there is no unconditional right to defer the settlement of the liability for at least 12 months
after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
ii) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or
disclosure purposes, the fair value is based on the priced that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement
date; and assumes that the transaction will take place either: in the principal market; or in the absence
of principal market, the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair
value measurement is based on its highest and best use. Valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to measure fair value, are used,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy
that reflects the significance of the inputs use in making the measurements. Classifications are
reviewed at each reporting date and transfers between levels are determined based on a
reassessment of the lowest level of input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal
expertise is either not available or when the valuation is deemed to be significant. External valuers are
selected based on market knowledge and reputation. Where this a significant change in in fair value of
an asset or liability from one period to another, an analysis is undertaken, which includes a verification
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 49 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
of the major inputs applied in the latest valuation and a comparison, where applicable, with external
sources of data.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 50 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
NOTE 3.
REVENUE AND EXPENSES
Revenue and Expenses from Continuing Operations
a Revenue
Sale of oil and gas
Oil sales
Gas sales
Other liquids
Total revenue
Consolidated Entity
2015
$
2014
$
12,460,171
834,835
-
9,616,660
1,001,341
627
13,295,006
10,618,628
Gain on sale of oil and gas properties
-
2,918,083
$2.5 million of the gain on sale of oil and gas properties shown on the Statement of Comprehensive
Income for the year ended 30 June 3014 relates to the sale of a portion of the Consolidated Entity’s
interest in undeveloped acreage in our North Stockyard project, $0.2 million relates to the sale of our
Deep Draw well, a single well field in Wyoming and $0.2 million relates to the sale of the Rennerfeldt wells
in our North Stockyard project.
Other Income
Interest income
Other
Total other income
b General and Administration
Employee Benefits
Salary and employee benefits
Share based payments
Total employee expense benefits
Other General and Administration
Consultants’ fees
Lease payments
Legal costs
Assurance, accounting and taxation advice
Travel and accommodation
Filing and listing fees
Insurance
Investor and public relations
Printing, postage and stationery
Other
Total other general and administration expenses
Total general and administration expenses
Samson Oil & Gas Limited
30,759
137,857
168,616
118,076
20,770
138,846
Consolidated Entity
2015
$
2014
$
(2,682,292)
(2,963,028)
-
(86,244)
(2,682,292)
(3,049,272)
(284,770)
(169,340)
(235,455)
(510,151)
(151,531)
(5,451)
(266,779)
(295,031)
(4,574)
(344,408)
(476,626)
(128,890)
(694,972)
(1,274,240)
(241,806)
(38,876)
(302,690)
(342,169)
(25,670)
(5,359)
(2,267,490)
(4,949,782)
(3,531,298)
(6,580,570)
Annual Report – 30 June 2015
Page 51 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
c Finance costs
Interest expense
Amortisation of borrowing costs
Unwinding of discount associated with restoration obligation
Total finance costs
d Depreciation and amortisation
Included in cost of sales:
Depreciation on lease and well equipment
Depletion of oil and gas properties
Subtotal included in cost of sales
Included in general and administrative
Depreciation of furniture and fittings
Total depreciation and amortisation
e Exploration and evaluation expense
General exploration expense
Deferred exploration expenditure written off
Dry hole costs
Total exploration and evaluation expense
Consolidated Entity
2015
$
(598,940)
(135,694)
(54,291)
(788,925)
2014
$
(91,422)
(33,632)
(79,502)
(204,556)
Consolidated Entity
2015
$
2014
$
(1,226,618)
(5,543,590)
(6,770,208)
(693,325)
(2,844,906)
(3,538,231)
(137,114)
(6,907,322)
(122,759)
(3,660,990)
Consolidated Entity
2015
$
2014
$
(222,427)
(193,429)
(12,416,909)
(47,607)
(12,686,943)
-
(186,854)
(380,283)
Consolidated Entity
2015
$
2014
$
f Derivative instruments
Realised income/(expense) recognised in relation to derivative
instruments
Unrealised income/(expense) recognised in relation to the movement
in the fair value of derivative instruments
Total derivative instruments income/(expense)
2,438,409
(91,218)
673,859
(413,374)
3,112,268
(504,592)
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 52 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
NOTE 4. INCOME TAX
The major components of income tax benefit are:
Profit and Loss
Current income tax
Deferred income tax
Income tax benefit reported in the profit and loss
Loss before income tax
At the Australian statutory income tax rate of 30% (2014: 30%)
Expenditure not allowable for income tax purposes
Change in deferred tax rate
Effect of US tax rate differential
Deferred tax assets not brought to account as realisation is not considered
probable
Alternative minimum tax receivable written off
Adjustment for deferred tax of prior periods
Aggregate income tax benefit
Consolidated Entity
2015
$
2014
$
(3,021)
(885,215)
-
-
(3,021)
(885,215)
(35,007,229)
(2,379,354)
10,502,169
42,481
(101,415)
2,178,034
(13,779,957)
(2,821)
1,158,488
(3,021)
713,806
(91,181)
190,633
107,842
(1,028,511)
(777,804)
-
(885,215)
In the prior year, the Consolidated Entity has recognised income tax expense of $0.1 million with respect to
income tax payable to the State of North Dakota following the sale of exploration acreage in Wyoming in
2011. The Consolidated Entity has also recognised $0.8 million in federal income tax expense following a
change in recoverability with respect to an amount previously recognised as a receivable from the Internal
Revenue Service. During the course of an ongoing audit by the IRS, the Consolidated Entity has concluded
that it does not qualify for the Small Business tax payer exemption from the payment of AMT and therefore is
not entitled to a refund.
This audit was concluded during year ended 30 June 2015 and the Consolidated Entity was required to pay
$2,087 in additional taxes with respect to this audit.
Consolidated
Balance Sheet
Profit and Loss
2015
$
2014
$
2015
$
2014
$
Deferred Income Tax
Deferred income tax at 30 June relates to
the following:
Deferred tax liabilities
Hedge Liability
Loan fees
Gross deferred tax liabilities
Deferred tax assets
Tax losses
Oil and gas properties
Samson Oil & Gas Limited
-
-
-
-
-
-
-
-
-
-
25,995,717
16,570,466
2,897,275
(1,510,321)
9,425,250
2,993,524
4,407,596
(4,394,885)
Annual Report – 30 June 2015
Page 53 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
Other
Alternative minimum tax credit
Deferred tax assets not brought to account
as realisation is not regarded as probable
Gross deferred tax assets
Deferred tax benefit
Net deferred tax recognised in the
balance sheet
265,771
167,944
780,444
-
97,828
54,611
780,444
-
(29,939,207) (15,228,089)
-
-
-
-
-
-
(14,711,118)
1,346,750
-
-
The Consolidated Entity has tax losses carried forward arising in Australia of $13,316,288 (2014:
$11,040,738). The benefit of these losses of $3,994,887 (2014: $3,312,221) will only be obtained in future
years if:
i.
ii.
iii.
the Consolidated Entity derives future assessable income of a nature and an amount sufficient to
enable the benefit from the deduction for the losses to be realised; and
the Consolidated Entity has complied and continue to comply with the conditions for deductibility
imposed by law; and
no changes in tax legislation adversely affect the Consolidated Entity in realising the benefit from
deduction for the losses.
The Consolidated Entity has Federal net operating tax losses in the United States of approximately
$61,688,534 (2014: $36,755,473). Future years are limited to an estimated $403,194 per year as a result of
a change in ownership of the one of the subsidiaries which occurred in January 2005. Net operating losses
generated after this ownership change are not limited due to any known ownership changes. If not utilised,
the tax net operating losses will expire during the period from 2020 to 2035.
In addition to the above mentioned Federal carried forward losses in the United States, the Company also
has approximately $31,231,317 (2014: $20,871,364) of State carried forward tax losses, with expiry dates
between June 2016 and June 2034. A deferred income tax asset in relation to these losses has not been
recognised as realisation of the benefit is not regarded as probable.
The deferred tax benefit the Consolidated Entity will ultimately realise is dependent both upon the loss
recoupment legislation in the United States and taxable income at the time recoupment.
The Consolidated Entity does not meet the definition of a group for the purposes of applying tax
consolidation.
NOTE 5.
DIVIDENDS
No dividends have been declared during the year (2014: $Nil).
The balance of the franking account at the end of the year was nil (2014:$Nil).
NOTE 6.
CASH AND CASH EQUIVALENTS
Consolidated Entity
2015
$
2014
$
Cash at bank and on hand
2,062,720
6,846,394
Cash at bank earns interest at floating interest rates based on daily bank deposit rates.
a)
Risk exposure
The Consolidated Entity’s exposure to interest rate risk is discussed in note 27. The maximum exposure to
credit risk at the reporting date is the carrying amount of cash mentioned above.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 54 of 81
NOTE 7.
TRADE AND OTHER RECEIVABLES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
CURRENT
Trade receivables (i)
Net GST Receivable
Receivable – JO partner (ii)
Accrued JO partner receivables (iii)
Receivable - sale of well bore
Other receivables (iv)
Consolidated Entity
2015
$
2014
$
3,224,595
30,665
251,028
24,120
-
114,744
3,645,152
3,107,292
20,314
473,398
1,022,820
890,781
18,839
5,533,444
(i)
(ii)
These receivables relate to the sale of oil and gas. They are non-interest bearing, unsecured and are
generally on 30-90 day terms.
These receivables relate to monies to be recovered from joint operation partners who participate in
wells that Samson are the operator of. These funds are non-interest bearing and unsecured.
(iii) These receivables relate to monies for which the costs have been incurred by Samson but have not
yet been billed to the joint operation partners.
(iv) These receivables are non-interest bearing, unsecured and are due for repayment within the next
twelve months.
a)
Foreign exchange and interest rate risk - current receivables
Information about the Consolidated Entity’s exposure to foreign currency risk and interest rate risk in
relation to trade and other receivables is provided in Note 27.
b)
Fair value and credit risk – current receivables
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate
their fair value.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of
receivables mentioned above. All receivables are unsecured. Refer to Note 27 for more information on the
risk management policy of the Consolidated Entity and the credit quality of trade receivables.
No receivables are past due (2014:$Nil). No impairment has been recognised in respect of any of these
receivables (2014:$Nil).
NON CURRENT
Other receivables (v)
Consolidated Entity
2015
$
2014
$
117,258
117,258
140,885
140,885
(v)
These receivables are non-interesting bearing, unsecured and not due for repayment within the twelve
months. The carrying value of these receivables approximates their fair value.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 55 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
c)
Risk Exposure – non current receivables
Information about the Consolidated Entity’s exposure to credit risk, foreign exchange and interest rate risk is
provided in Note 27. The maximum exposure to credit risk at the reporting date is the carrying amount of the
receivables mentioned above.
NOTE 8.
PREPAYMENTS
CURRENT
Prepaid drilling expenses (i)
Other prepaid expenses
Consolidated Entity
2015
$
2014
$
153,846
218,234
372,080
5,163,708
224,720
5,388,428
(i)
Prepaid drilling expenses include cash advanced to the operators of the drilling operations in
advance of the drilling commencing.
NOTE 9.
PLANT & EQUIPMENT
Office Equipment
Cost
Accumulated depreciation
Total Plant and Equipment
At 1 July, net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
At 30 June, net of accumulated depreciation and impairment
NOTE 10.
EXPLORATION AND EVALUATION ASSETS
Balance at the beginning of the year
Expenditure capitalised
Consolidated Entity
2015
$
2014
$
801,949
(553,428)
248,521
365,566
20,069
-
(137,114)
248,521
787,009
(421,433)
365,576
367,656
142,635
(21,966)
(122,759)
365,566
Consolidated Entity
2015
$
2014
$
15,732,416
564,713
14,831,749
1,087,521
Value written off to the Statement of Comprehensive Income
(12,416,909)
(186,854)
Balance at the end of the year
3,880,220
15,732,416
Expenditure incurred in the current year and prior year, relates to drilling costs associated with the Bluff well
in the Hawk Springs project. This well has been drilled to the target depth and the plans for the completion
of the well are currently being reviewed. During the drilling of this well, hydrocarbon shows were recorded
however the economic viability of this well has yet to be established.
Expenditure written off in the current year relates to the Consolidated Entity’s Roosevelt and South Prairie
project. Although the Consolidated Entity reached an agreement with Momentus Energy (“Momentus”) in the
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 56 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
prior year with respect to the sale of acreage in the Roosevelt project, Momentus failed to drill the well
required under the agreement and the agreement was voided. The Consolidated Entity is not planning any
further exploration in the area and therefore the decision was made to write off all costs associated with the
project during the year. The Consolidated Entity has also written off certain costs associated with the Hawk
Springs project in Wyoming following the expiration of leases.
In September 2014, a second well was drilled in the South Prairie project in North Dakota. This well was the
second dry hole in the project, therefore the Consolidated Entity wrote off all costs associated with the
project during the year.
Expenditure written off in the prior year relates to the costs associated with drilling of Spirit of America 2 in
the Hawk Springs project.
The recoverability of the carrying value of deferred exploration and evaluation expenditure is dependent on
the successful exploitation, or alternatively sale, of the respective areas of interest.
NOTE 11.
OIL AND GAS PROPERTIES
Oil and Gas Properties
Work in progress
Accumulated depletion
Accumulated Impairment
Total Oil and Gas Properties
Proved Developed Producing Properties
Consolidated Entity
2015
$
72,550,529
-
(19,884,806)
(23,870,985)
28,794,738
2014
$
43,790,310
6,308,468
(13,343,949)
(4,492,893)
32,261,936
At 1 July, net of accumulated depreciation and impairment
32,261,936
18,801,422
Additions
Additions - WIP, net of amounts relating to wells completed
during the year, which are recorded in additions
Disposals
Net impairment expense
Depreciation charge
At 30 June, net of accumulated depreciation and
impairment
Work in progress
28,760,219
19,273,061
(5,599,753)
1,246,455
-
(19,857,456)
(6,770,208)
(3,248,333)
(272,438)
(3,538,231)
28,794,738
32,261,936
Work in progress in the prior year relates to costs associated with the permitting and drilling of wells in
Samson’s in fill development project in its North Stockyard field. During the current year all wells that had
costs recorded in work in progress at 30 June 2014 were completed and the associated costs were
transferred to proved developed producing properties.
Sale of Assets
On 15 August 2013, the Company divested half its equity position in the undeveloped acreage in the North
Stockyard project to Slawson Exploration Company Inc. (“Slawson”) for $5.6 million in cash, while retaining
our full interest in the currently producing wells in the North Stockyard field. $0.9 million of the purchase
price was subject to the delivery of a useable well bore in the Billabong well. The workover of the Billabong
well has been completed and subsequent to year end, Slawson agreed to take ownership of the well bore.
As a result this transaction the rig contract with Frontier was also terminated, with no penalty payment
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 57 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
or additional liability to Samson. Slawson are now the operator of the project going forward for the
development of the undeveloped acreage.
Along with the undeveloped acreage for which a gain on sale was recognized in the Statement of
Comprehensive Income of $2.5 million (valued at $2.6 million less net assets sold of $0.1 million), the
Consolidated Entity has also transferred 25% working interest in the drilled but not yet completed, at the time
of sale, Billabong and Sail and Anchor wells, leaving the Consolidated Entity with a 25% working interest in
each of the two wells for $2.9 million, recognized as a reimbursement in the capitalised costs for these
assets in the Balance Sheet.
In April 2014, the Consolidated Entity sold its interests in Rennerfeldt 1-13H and Rennerfeldt 2-13H in the
North Stockyard project in North Dakota to the operator of the project for $0.2 million, resulting in a $0.2
million gain. The Consolidated Entity had made cash prepayments with respect to these wells to the
operator, which were applied to new wells that it’s participating in.
In March 2014, the Consolidated Entity finalised the sale of it’s Deep Draw well in Campbell County,
Wyoming for cash of $0.2 million, resulting in a $0.2 million gain. This well had been previously fully impaired
and had no value.
There were no sales of properties during the year ended 30 June 2015.
Impairment of oil and gas properties
At 30 June 2015, the Consolidated Entity reviewed the carrying value of its oil and gas properties for
impairment. An independent review by the Consolidated Entity’s reserve engineers, Ryder Scott Company
was performed to assess the recoverable amount based on the net present value of the Consolidated
Entity’s assets on a field by field basis (by cash generating unit). The factors used to determine net present
value include, but are not limited to, recent sales prices of comparable properties, the present value of future
cash flows, net of estimated operating and development costs using estimates of reserves, future commodity
pricing,
future production estimates, anticipated capital expenditures and various discount rates
commensurate with the risk associated with realizing the projected cash flows. The discount rate used to
assess the recoverable amount (based on the fair value less cost of disposal) was 10% (2014: 12%). The
fair value less cost of disposal has been based on the expected useful lives of the respective fields.
The current year impairment expense of $19.9 million (2014: $0.3 million) is result of the impact of the
decreasing oil price on the Consolidated Entity’s reserve value in relation to the North Stockyard and
Rainbow properties. The prior year impairment relates to poor production results of our non-operated
Abercrombie well in our Roosevelt project in Montana.
NOTE 12.
TRADE AND OTHER PAYABLES
Trade payables (i)
Accrual of bonus payable (ii)
Other payables (iii)
Total Trade and Other Payables
Consolidated Entity
2015
$
3,139,432
-
219,414
3,358,846
2014
$
6,576,551
132,324
230,311
6,939,186
(i)
(ii)
(iii)
Trade payables are non-interest bearing and normally settled on 30 day terms.
The accrual in the prior year relates to the accrual of the bonus payable for the period 1 January 2014 to 31
December 2014. This was paid out during the current year. There is no bonus plan in place for the calendar
year ended 31 December 2015, therefore no accrual has been made.
Other payables include accruals for annual leave. The entire obligation is presented as current, since the
Consolidated Entity does not have an unconditional right to defer settlement. Based on past experience, the
Consolidated Entity expects employees to take the full amount of accrued leave within the next twelve months.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 58 of 81
NOTE 13.
BORROWINGS
Non Current
Secured
Credit facility with Mutual of Omaha (i)
Less deferred borrowing costs
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
Consolidated Entity
2015
$
2014
$
18,699,000
(224,812)
6,000,000
(318,284)
18,474,188
5,681,716
(i)
Fair values are not materially different to their carrying amounts
In January 2014, the Consolidated Entity entered into a $25 million credit facility with Mutual of Omaha Bank,
with an initial borrowing base (funds available to be drawdown) of $8 million, of which $6 million has been
drawn down at 30 June 2014. During the current year, the borrowing base was increased to $19 million, of
which $18.7 million is drawdown. The next borrowing base redetermination is expected to be completed in
October 2015, based on June 2015 reserve values. The facility matures 28 January 2017. The interest rate
is LIBOR plus 4.0% or approximately 4.02% for the year ended 30 June 2015 (2014: 3.98%).
The credit facility includes the following covenants, tested on a quarterly basis:
Current ratio greater than 1
Debt to EBITDAX (annualized) ratio no greater than 3.5
Interest coverage ratio minimum of between 2.5 and 1.0
As at 30 June 30 2015 we were in compliance with all of these quarterly covenants.
The credit facility also includes an annual cap on general and administrative expenditure of $6.0 million per
calendar year. The first test date for this covenant was for the 12 months ended 31 December 2014 and the
Consolidated Entity was in compliance with this covenant.
While the Consolidated Entity expect to be in compliance with these covenants based on the current debt
levels, if the Consolidated Entity is not in compliance with the financial covenants in the credit facility, or the
Consolidated Entity does not receive a waiver from the lender, and if the Consolidated Entity fails to cure any
such noncompliance during the applicable cure period, the due date of the debt could be accelerated by the
lender. In addition, failure to comply with any of the covenants under the credit facility could adversely affect
the Consolidated Entity’s ability to fund ongoing operations.
The credit facility is secured by all assets of the Consolidated Entity.
The Consolidated Entity incurred $0.2 million in borrowing costs which have been deferred and will be
amortized over the life of the facility using the effective interest rate method.
NOTE 14.
PROVISIONS
Consolidated Entity
2014
$
2013
$
Provision for Restoration - current
-
1,044,228
Provision for Restoration - non current
Total provision for restoration
Samson Oil & Gas Limited
1,682,383
1,682,383
964,600
2,008,828
Annual Report – 30 June 2015
Page 59 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
A provision for restoration is recognised in relation to the oil and gas activities for costs such as reclamation,
plugging wells and other costs associated with the restoration of oil and gas properties. Estimates of the
restoration obligations are based on anticipated technology and legal requirements and future costs, which
have been discounted to their present value. In determining the restoration provision, the entity has
assumed no significant changes will occur in the relevant government legislation in relation to the restoration
of such oil and gas properties in the future.
Provision for Restoration
Balance at beginning of year
Recognised upon acquisition or development of new
assets
Work performed
Increase/(decrease) in liability due to change in
estimated costs
Unwinding of discount
Balance at end of the year
Consolidated Entity
2015
$
2014
$
2,008,828
1,333,095
169,561
(876,742)
326,445
54,291
1,682,383
245,407
(23,493)
374,317
79,502
2,008,828
The increase during the year ended 30 June 2015 relates to the provision recognised for new drilling in our
North Stockyard field.
CONTRIBUTED EQUITY AND RESERVES
NOTE 15.
(a) Issued and paid up capital
Contributed Equity
2,837,847,022 ordinary fully paid shares including shares to be
issued (2014 – 2,837,821,933 ordinary fully paid shares
including shares to be issued)
Consolidated Entity
2015
$
2014
$
98,296,001
98,340,121
Movements in contributed equity
for the year
2015
2014
Opening balance
Capital Raising (i)
Shares issued upon exercise of
options (ii)
Transaction costs incurred
Shares on issue at balance date
Shares to be issued as part of
Kestrel acquisition (iii)
No. of shares
$
No. of shares
$
2,837,756,933
-
98,340,121
-
2,229,165,163
608,562,986
86,608,255
12,776,715
25,089
880
28,784
1,007
-
2,837,782,022
(45,000)
98,296,001
-
2,837,756,933
(1,045,856)
98,340,121
65,000
-
65,000
-
Closing Balance
2,837,847,022
98,296,001
2,837,821,933
98,340,121
(i)
In August and September 2013, the Company issued 318,452,166 ordinary shares priced at 2.5 cents
(Australian) each to raise US$7,337,138 to investors in the United States and Australia.
In April 2014, the Company issued 290,110,820 ordinary shares priced at 0.02 cents (Australian) each
to raise US$5,439,577 to investors in the United States and Australia
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 60 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
(ii)
During the course of the year the Company issued 25,089 (2014: 28,784) ordinary shares upon the
exercise of 25,089 (2014: 28,784) options.
The exercise price of the options exercised was (average price based on the exchange rate on the
date of exercise) A$0.038 per share/US$0.035 per share (2014: A$0.038 per share/US$0.035 per
share) to raise US$880 (2014: US$1,007).
(iii)
These shares were issued to Kestrel shareholders throughout 2008 as part of the offer to non-US
resident shareholders whereby they received five Samson shares for every one Kestrel share held.
The Samson share price on the date the acceptance of the offer was received was deemed to be the
fair value of the share. As at balance date acceptances had been received for 65,000 (2014:65,000)
shares which have not yet been issued. These shares will be issued upon the presentation of Kestrel
Share Certificates by the owner of the shares.
(b) Share Options
All references to exercise price and deemed value of options are in Australian Dollars.
At the end of the year, there were 324,667,765 (2014: 389,192,854) unissued ordinary shares under
option. All option exercise prices are denominated in Australian Dollars unless noted otherwise.
In November 2010, 29,000,000 options were issued to the Directors. These options have an exercise
price of 8 cents per share and an expiry date of 31 October 2014. These options vested immediately and
expired unexercised.
In December 2010, 32,000,000 options were issued to employees of the Company. These options have
an exercise price of 8 cents and an expiry date of 31 December 2014. One third of the options vested on
31 January 2011, one third vested on 31 January 2012 and the remaining third vested on 31 January
2013. 500,000 of these options were exercised during the year ended 30 June 2011. The remaining
options expired unexercised.
In July 2011, 4,000,000 options were issued to an employee of the Company. These options have an
exercise price of 16.4 cents and an expiry date of 31 December 2014. One third of the options vested on
31 July 2011, one third vested on 31 July 2012 and the remaining third vested on 31 July 2013. These
options expired unexercised.
In November 2011, 4,000,000 options were issued to a Non-executive Director of the Company. These
options have an exercise price of 15.5 cents and an expiry date of 31 October 2015. These options
vested immediately.
During the year ended June 30, 2013, we issued 97,307,526 options in conjunction with two placements
and a rights offering. The options have an exercise price of 3.8 cents and an expiry date of 31 March
2017. During the current year 25,089 (2014: 28,784) were exercised.
In August and September 2013, we issued 132,380,866 options in conjunction with two placements.
The options have an exercise price of 3.8 cents and an expiry of 31 March 2017.
In November 2013, we issued 4,000,000 options to a Director of the Company. These options have an
exercise price of 3.9 cents and an expiry of 30 November 2017. The options vested immediately.
In April 2014, we issued 87,033,246 options in conjunction with a placement. The options have an
exercise price of 3.3 cents and an expiry of 30 April 2018.
(c) Terms and Conditions of Contributed Equity
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number
of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the
Company.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 61 of 81
(d) Reserves
Reserves
Foreign currency translation reserve
Equity reserve
Share based payments reserve
Total Reserves
Movement in Reserves
Foreign currency translation reserve
Balance 1 July
Currency translation differences
Balance at 30 June
Share based payments reserve
Balance 1 July
Options vested
Balance at 30 June
Nature and purpose of reserves
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
Consolidated Entity
2015
$
2,094,038
(1,097,780)
5,276,872
6,273,130
2014
$
2,399,876
(1,097,780)
5,276,872
6,578,968
Consolidated Entity
2015
$
2014
$
2,399,876
(305,838)
2,094,038
3,076,029
(676,153)
2,399,876
5,276,872
-
5,276,872
5,190,628
86,244
5,276,872
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange rate differences arising from the
translation of financial statements of the Parent Entity with a functional currency that differs to the
presentation currency of the Consolidated Entity.
Share Based Payments Reserve
This reserve is used to record the value of share based payments granted.
Equity Reserve
This reserve is used to recognise the difference between the consideration paid and book value of minority
interests’ acquired.
NOTE 16.
ACCUMULATED LOSSES
Consolidated Entity
2015
$
2014
$
Balance previously reported at the beginning of the year
(53,693,124)
(50,428,555)
Net (loss)/profit attributable to members of
Samson Oil & Gas Limited, after income tax
(35,010,250)
(3,264,569)
Balance at the end of the year
(88,703,374)
(53,693,124)
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 62 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
NOTE 17.
COMMITMENTS
(a) Exploration Commitments
Due to the nature of the Consolidated Entity’s operations in exploring and evaluating areas of interest, it is
very difficult to accurately forecast the nature or amount of future expenditure, although it will be necessary
to incur expenditure in order to retain present interests. Expenditure commitments on mineral tenure for the
Consolidated Entity can be reduced by selective relinquishment of exploration tenure or by the renegotiation
of expenditure commitments.
The minimum level of exploration commitments expected as at year ended 30 June 2015 is $25,000 (2014:
$200,000), which includes the minimum amounts required to retain tenure. It is anticipated that the
exploration expenditure commitments in the ensuing periods will be at a similar level.
(b) Development Expenditure
As at 30 June 2015, the Consolidated Entity has to drill a second well in its Rainbow project area prior to 4
February 2016. If the Consolidated Entity fails to drill this well, it will lose 655 acres in the Rainbow project.
This well has yet to proposed and the Consolidated Entity has not yet determined if this well will be drilled.
(c) Operating Lease Commitments – Consolidated Entity as lessee
The Parent and its subsidiaries have entered into operating leases for the lease of its office space in Perth,
Western Australia and Denver, Colorado.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
Minimum lease payments
- not later than one year
- later than one year and not later than five years
Aggregate lease expenditure contracted for at balance date
Consolidated Entity
2015
$
2014
$
135,658
19,944
155,602
139,032
136,633
275,665
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 63 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
NOTE 18.
SEGMENT REPORTING
Operating segments are now reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker (“CODM”). The
CODM, who is responsible for allocating resources and assessing performance of operating segments, has been identified as the Board of Directors.
The group operates primarily in one business segment being oil and gas exploration, development and production in the United States of America.
The following table presents revenue and loss information regarding geographic segments for the year ended 30 June 2015 and 30 June 2014 as presented
to the Board of Directors.
United States of America –
continuing operations
Other segments
Consolidated
Segment revenue from external
customers
Segment result before amortisation and
impairment
Impairment
Depreciation and amortisation
Total Segment result
2015
$
2014
$
2015
$
2014
$
2015
$
2014
$
13,295,006
10,618,628
-
-
13,295,006
10,618,628
(7,705,200)
2,312,654
(537,251)
(758,580)
(8,242,451)
1,554,074
(19,857,456)
(272,438)
(6,907,322)
(34,469,978)
(3,660,990)
(1,620,774)
-
-
(537,251)
-
(19,857,456)
-
(758,580)
(6,907,322)
(35,007,229)
(272,438)
(3,660,990)
(2,379,354)
Total Segment Assets
38,172,627
64,181,496
1,208,546
2,087,573
39,381,173
Additions to non current assets
23,745,248
21,749,672
-
-
23,745,248
66,269,069
21,749,672
Total Segment Liabilities
(23,007,265)
(14,875,744)
(154,607)
(167,360)
(23,161,872)
(15,043,104)
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 64 of 81
NOTE 18.
SEGMENT REPORTING (CONT)
Segment Result
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
Consolidated Entity
2015
$
2014
$
Total segment result
(35,007,229)
(2,379,354)
Income tax expense from continuing operations
(3,021)
(885,215)
Net loss for the year attributable to owners of Samson Oil
& Gas Limited
(35,010,250)
(3,264,569)
All revenue from the United States of America segment is from customers based in the United States of
America.
Other Segments revenue relates principally to interest income earned on cash balances in Australia.
NOTE 19.
OPERATING ACTIVITIES
RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH FLOW FROM
Reconciliation of the net loss after tax to the net cash flows
from operations
Net loss after tax
Depreciation of non-current assets
Net gain on sale of assets
Share based payments
Amortisation of borrowing costs
Unwinding of discount associated with restoration obligation
Abandonment costs
Exploration expenditure expensed
Net (gain)/ loss on fair value movement of fixed forward
swaps
Consolidated Entity
2015
$
2014
$
(35,010,250)
6,907,322
-
-
135,694
54,291
412,588
12,686,943
(673,859)
(3,264,569)
3,660,990
(2,918,083)
86,244
33,632
79,502
468,432
380,283
423,999
Impairment losses of oil and gas properties
19,857,456
272,438
Changes in assets and liabilities:
(Increase)/decrease in receivables
(Decrease)/increase in employee benefits
(Decrease)/increase in payables
(223,559)
(10,897)
(1,091,290)
(1,376,522)
(12,057)
638,448
NET CASH FLOWS USED IN OPERATING ACTIVITIES
3,044,439
(1,527,263)
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 65 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
NOTE 20.
RELATED PARTY DISCLOSURES
The consolidated financial statements include the financial statements of Samson Oil & Gas Limited and the
following subsidiaries:
Name
Samson Oil & Gas USA Inc
Country of
Incorporation
% Equity
Interest
Investment
2015 2014
2015
2014
$
$
United States
100
100
38,505,362
30,079,414
Samson Oil and Gas Montana USA, Inc (100%
owned subsidiary of Samson Oil & Gas USA Inc) United States
100
100
34,167,452
33,926,739
72,672,814
64,006,153
Ultimate parent
Samson Oil & Gas Limited is the ultimate parent Company.
Key management personnel compensation
Short Term
Post Employment
Share-based Payments
Consolidated Entity
2015
$
1,484,833
68,338
-
1,553,171
2014
$
1,715,460
64,499
80,989
1,860,948
Other related party transactions
There were no related party transactions during 2015 and 2014.
NOTE 21.
AUDITORS’ REMUNERATION
Amounts received or due and receivable 2015: by RSM
Bird Cameron Partners and 2014: PricewaterhouseCoopers
(Australia) for:
an audit or review of the financial report of the entity and
any other entity in the Consolidated Entity
Amounts received or due and receivable by 2015: Hein &
Associates and 2014:PricewaterhouseCoopers
International for:
an audit or review of the reporting forms of the
Consolidated Entity
Samson Oil & Gas Limited
Consolidated Entity
2015
$
2014
$
70,000
70,000
98,371
98,371
220,000
220,000
670,000
670,000
Annual Report – 30 June 2015
Page 66 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
NOTE 22.
LOSS PER SHARE
Basic loss per share amounts are calculated by dividing net result for the year attributable to ordinary equity
holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted loss per share amounts are calculated by dividing the net result attributable to ordinary equity holders
of the parent by the weighted average number of ordinary shares outstanding during the year plus the
weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential
ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted loss per share computations:
Consolidated Entity
2015
$
2014
$
Net loss for the year attributable to owners of Samson Oil & Gas Limited
(used in calculating basic and diluted loss per share)
(35,010,250)
(3,264,569)
Weighted average number of ordinary shares used as the denominator
in calculating basic loss per share
Adjustments for calculation of diluted earnings per share:
Options
Bonus element for rights issue
Weighted average number of ordinary shares and potential ordinary
shares used as the denominator in calculating diluted earnings per
share
Number of Shares
2015
2014
2,837,777,322
2,558,418,209
-
-
-
-
2,837,777,322 2,558,418,209
At the end of the current year there were 324,667,765 (2014:389,192,854) potential ordinary shares on
issue. These potential ordinary shares are not dilutive for 30 June 2015 or 2014 as applicable.
There have been no transactions involving ordinary shares that would significantly change the number of
ordinary shares or potential ordinary shares outstanding between the reporting date and the date of
completion of these financial statements.
NOTE 23.
FINANCIAL INSTRUMENTS
a)
Guarantees
The parent entity has provided a guarantee to Mutual of Omaha Bank with respect to the credit facility
provided to Samson Oil and Gas USA, Inc. for the entire outstanding balance. (2014: the Mutual of Omaha
Bank facility).
b) Derivative Instruments
The Company enters into derivative contracts, primarily collars, swaps and option contracts, to hedge future
crude oil and natural gas production in order to mitigate the risk of market price fluctuations. All derivative
instruments are recorded on the balance sheet at fair value. All of the Company's derivative counterparties
are commercial banks that were previously parties to its revolving credit facility. The Company has elected
not to apply hedge accounting to any of its derivative transactions and consequently, the Company
recognizes mark-to-market gains and losses in earnings currently, rather than deferring such amounts in
other comprehensive income for those commodity derivatives that qualify as cash flow hedges.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 67 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
At 30 June 2015, the Company’s commodity derivative contracts consisted of collars and fixed price swaps,
which are described below:
Collar
Collars contain a fixed floor price (put) and fixed ceiling price (call). If the market
price exceeds the call strike price or falls below the put strike price, the Company
receives the fixed price and pays the market price. If the market price is between
the call and the put strike price, no payments are due from the either party.
Fixed price swap The Company receives a fixed price for the contract and pays a floating market
price to the counterparty over a specified period for a contracted volume.
All of the Company’s derivative contracts are with the same counterparty and are shown on a net basis on
the Balance Sheet. The Company’s counterparty has entered into an inter-creditor agreement with Mutual of
Omaha Bank, the provider of the Company’s credit facility, as such, no additional collateral is required by the
counterparty.
Fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date (exit price). The Company
utilizes market data or assumptions that market participants would use in pricing the asset or liability,
including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs
can be readily observable, market corroborated, or generally unobservable. The Company classifies fair
value balances based on the observability of those inputs. The FASB has established a fair value hierarchy
that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority
to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy are as follows:
Level 1—Quoted prices are available in active markets for identical assets or liabilities
as of the reporting date. Active markets are those in which transactions for the asset or
liability occur in sufficient frequency and volume to provide pricing information on an
ongoing basis.
Level 2—Pricing inputs are other than quoted prices in active markets included in
level 1, but are either directly or indirectly observable as of the reported date and for
substantially the full term of the instrument. Inputs may include quoted prices for similar
assets and liabilities. Level 2 includes those financial instruments that are valued using
models or other valuation methodologies.
Level 3—Pricing inputs include significant inputs that are generally less observable from
objective sources. These inputs may be used with internally developed methodologies
that result in management’s best estimate of fair value.
As at 30 June 2015 and 2014, the fair value of the Consolidated Entity’s derivative instruments was as
follows:
Current Assets
Derivative instruments
Non Current Assets
Derivative instruments
Current Liability
Samson Oil & Gas Limited
Fair Value at 30 June 2015
Level 1
Level 2
Level 3
Netting (1)
Total
-
379,540
-
(220,324)
159,216
-
298,703
-
(197,434)
101,269
Annual Report – 30 June 2015
Page 68 of 81
Derivative instruments
-
220,324
-
(220,324)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
-
197,434
-
(197,434)
Fair Value at 30 June 2014
Level 1
Level 2
Level 3
Netting (1)
Total
-
-
56,380
-
(56,380)
61,493
-
(61,493)
-
-
-
-
-
340,756
-
190,491
-
-
(56,380)
284,376
(61,493)
128,998
Non Current Liability
Derivative instruments
Current Assets
Derivative instruments
Non Current Assets
Derivative instruments
Current Liability
Derivative instruments
Non Current Liability
Derivative instruments
(1) Financial assets and liabilities are offset and the net amount reported in the balance sheet where the
Consolidated Entity currently has a legally enforceable right to offset the recognised amounts, and there is an
intention to settle on a net basis or realise the asset and settle the liability simultaneously. Agreements with
derivative counterparties are based on an ISDA Master Agreement. Under the terms of these arrangements, only
where certain credit events occur (such as default), the net position owing/ receivable to a single counterparty in
the same currency will be taken as owing and all the relevant arrangements terminated.
Commodity Derivative Contracts. The Company’s commodity derivative instruments consisted of collars
and swap contracts for oil. The Company values the derivative contracts using industry standard models,
based on an income approach, which considers various assumptions including quoted forward prices and
contractual prices for the underlying commodities, time value and volatility factors, as well as other relevant
economic measures. Substantially all of the assumptions can be observed throughout the full term of the
contracts, can be derived from observable data or are supportable by observable levels at which transactions
are executed in the marketplace and are therefore designated as level 2 within the fair value hierarchy. The
discount rates used in the assumptions include consideration of non-performance risk. The Company
accounts for its commodity derivatives at fair value on a recurring basis.
NOTE 24. CONTINGENCIES
There are no unrecorded contingent assets or liabilities in place for the Consolidated Entity at balance
date (2014: $Nil).
NOTE 25.
INTEREST IN JOINTLY CONTROLLED OPERATIONS
The Consolidated Entity has an interest in the following joint operations whose principal activities are oil and
gas exploration and production.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 69 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
Working Interest Held
Project/Property Name
Exploration
Baxter Shale
Hawk Springs
Location
United States of America
United States of America
Gold Coast Unit CBM
United States of America
South Goose Lake
Roosevelt
United States of America
United States of America
Production
Big Hand
Bird Canyon
Deep Draw
Hilight
Jalmat
Jayson Unit
Kicken Draw
LA Ward
Neta
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
Powder River Basin
United States of America
San Simon
Scribner
Wagensen
North Stockyard
Sabretooth
United States of America
United States of America
United States of America
United States of America
United States of America
%
2015
-
25-100
-
25.00
66.00
4.00
16.00
0.00
9.00
60.00
2.00
15.00
3.00
13.00
18.00
27.00
28.00
8.00
%
2014
10.00
25-100
50.00
25.00
66.00
4.00
16.00
0.00
9.00
60.00
2.00
15.00
3.00
13.00
18.00
27.00
28.00
8.00
25-34.5
12.50
25-34.5
12.50
Oil and gas properties held as jointly controlled assets total $28,794,738 (2014: $32,261,936).
NOTE 26.
EVENTS SUBSEQUENT TO BALANCE DATE
The Directors are not aware of any matters or circumstances not otherwise dealt with in this report that have
significantly or may significantly affect the operations of the Consolidated Entity, the results of those
operations or the state of affairs of the Consolidated Entity in the subsequent financial years.
NOTE 27.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Consolidated Entity’s principal financial assets and financial liabilities comprise receivables, payables,
derivative instruments and cash.
The Consolidated Entity manages its exposure to key financial risk in accordance with the Board’s financial
risk management strategy. The objective of the strategy is to support the delivery of the Consolidated
Entity’s financial targets whilst protecting future financial security.
The Consolidated Entity may enter into derivative transactions, principally oil and gas price fixed forward
swaps, to manage the price risk arising from the Consolidated Entity’s operations. These derivatives have
not previously qualified for hedge accounting.
The main risks arising from the Consolidated Entity’s financial instruments are interest rate risk, foreign
currency risk, credit risk, price risk and liquidity risk. The Consolidated Entity uses different methods to
measure and manage the different types of risks to which it is exposed. These include monitoring levels of
exposure to foreign currency and price risk and assessments of market forecasts for foreign exchange and
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 70 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
commodity prices. Ageing analysis and monitoring of specific debtors are undertaken to manage credit risk
and liquidity risk is monitored through the development of future rolling cash flow forecasts.
Primary responsibility for identification and control of financial risks rests with the executive management
group, specifically the Chief Executive Officer and Chief Financial Officer, under the authority of the Board.
The Board reviews and approves policies and strategies for managing each of the risks identified below.
Risk Exposures and Responses
Capital Management
When managing capital, management’s objective is to ensure the entity continues as a going concern as
well as to maintain optimal returns to shareholders and benefits for other stakeholders. The Consolidated
Entity funds its activities through capital raisings and debt funding, where appropriate. The Consolidated
Entity is not subject to any externally imposed capital requirements.
Interest rate risk
The Consolidated Entity continually reviews its interest rate exposure. Consideration is given to potential
restructuring of its existing positions and alternative financing.
The Consolidated Entity has $18,699,000 in borrowings which is subject to a floating interest rate of the 90
day LIBOR (London Interbank Offered Rate) plus 4.0%. The Consolidated Entity does not have any
derivative instruments in place to protect the Consolidated Entity from movements in this interest rate. While
this rate is subject to change, it has remained around 0.23% in recent months.
At 30 June 2015 if interest rates had moved, as illustrated in the table below (estimated from historical
movements), with all other variables held constant, the impact would be:
Pre tax result
Higher/(Lower)
2015
$
2014
$
Other Equity
Higher/(Lower)
2015
$
2014
$
Borrowings
+ 0.25% (25 basis points)
- 0.23% (23 basis points)
46,748
(43,008)
15,000
(13,800)
-
-
-
The Consolidated Entity’s cash assets are exposed to minimal interest rate risk. The Consolidated Entity’s
cash accounts are primarily held in low or no interest rate accounts. Interest revenue is not a significant
income item for the Consolidated Entity and the Consolidated Entity does not rely on the cash generated
from interest income.
Cash exposed to Australian interest rates
Cash exposed to United States of America interest rates
Consolidated Entity
2015
$
1,105,573
957,149
2,062,722
2014
$
1,961,774
4,884,620
6,846,394
The average floating interest rate for the Consolidated Entity in the United States was 0.016% per annum
(2014: 0.052%).
The average fixed interest rate for the Consolidated Entity in the United States was 2.861% (2014: 0.0%).
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 71 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
The average floating interest rate for the Consolidated Entity in Australia was per annum 2.183% (2014:
2.213%)
The average fixed interest rate for the Consolidated Entity in Australia was 0.0% per annum (2014:3.072%).
At year end, the Consolidated Entity has $nil (2014: $nil) in short term deposits that have fixed interest rates.
These term deposits have terms no longer than 90 days.
At 30 June 2015 if interest rates had moved, as illustrated in the table below (estimated from historical
movements), with all other variables held constant, the impact would be:
Cash exposed to AUS interest
rates
+ 0.25% (25 basis points)
- 0.50% (50 basis points)
Pre tax result
Higher/(Lower)
2015
$
2014
$
Other Equity
Higher/(Lower)
2015
$
2014
$
2,764
(5,528)
4,904
(9,809)
-
-
Pre tax result
Higher/(Lower)
2015
$
2014
$
Other Equity
Higher/(Lower)
2015
$
2014
$
Cash exposed to US interest
rates
+ 0.10% (10 basis points)
- 0.25% (25 basis points)
957
(2,393)
4,885
(12,212)
-
-
-
-
-
-
Foreign Currency Risk
As a result of significant operations in the United States, the Consolidated Entity’s financial statements can
be affected significantly by movements in the US$/A$ exchange rates.
The majority of the transactions (both revenue and expenses) of the United States subsidiaries are
denominated in US dollars.
The Consolidated Entity does not have any foreign currency cash flow hedges.
At balance date, the Consolidated Entity had the following exposure to A$ foreign currency that is not
designated in cash flow hedges:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Net Exposure
Samson Oil & Gas Limited
Consolidated Entity
2015
$
2014
$
1,105,573
102,184
1,961,774
124,829
155,762
169,672
1,051,995
1,916,931
Annual Report – 30 June 2015
Page 72 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
At 30 June 2015 if foreign exchange rates had moved, as illustrated in the table below (estimated from
historical movements), with all other variable held constant, the impact would be:
Consolidated
A$:US$ +10%
A$:US$ -10%
Pre tax result
Higher/(lower)
2015
$
2014
$
Other Equity
Higher/(lower)
2015
$
2014
$
-
-
-
-
80,943
(80,943)
192,021
(192,021)
Consolidated Entity
The impact of the foreign exchange on the Consolidated Entity relates to the value of assets, net of liabilities
that are held in the Consolidated Entity which are held in the Parent Entity, which has a functional currency
of Australian Dollars.
For the Consolidated Entity, the change in foreign exchange rate does not have any impact on the profit and
loss of the entity as the impact of the foreign exchange movements is recorded in the foreign exchange
reserve.
Management believes the balance date risk exposures are representative of the risk exposure inherent in the
financial instruments.
Price risk
Price risk arises from the Consolidated Entity’s exposure to oil and gas prices. These commodity prices are
subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond the control of
the Consolidated Entity. Sustained weakness in oil and natural gas prices may adversely affect the
Consolidated Entity’s financial condition.
The Consolidated Entity manages this risk by continually monitoring the oil and gas price and the external
factors that may affect it. The Board reviews the risk profile associated with commodity price risk periodically
to ensure that it is appropriately managing this risk. Derivatives are used to manage this risk where
appropriate. The Board must approve any derivative contracts that are entered into by the Company. As at
Balance Date, the Consolidated Entity has the following derivative contracts in place:
Oil Price
Collars -
WTI
2016
Oil Price
Swaps -
WTI
2016
Oil Price
Swaps -
WTI
2015
2016
2016
Volumes (bbls)
2,788
Floor US$
Ceiling US$
85.00
89.85
Volumes (bbls) Call Option Price US$
105.00
2,788
Volumes (bbls)
55,200
36,600
27,450
Sub Floor - US$
Floor US$
32.50
67.50
40.00
45.00
82.50
55.00
Ceiling US$
70.25
-
80.00
At 30 June 2015 if the price of natural gas and oil had moved, as illustrated in the table below (estimated
from historical movements, with all other variable held constant, the impact would be:
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 73 of 81
Consolidated
Oil
Oil price + 10%
Oil price – 20%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
Pre tax result
Higher/(lower)
2015
$
2014
$
Other Equity (pre tax)
Higher/(lower)
2015
$
2014
$
1,095,701
(2,091,163)
174,966
(195,512)
-
-
-
-
Credit Risk
The Consolidated Entity manages its credit risk through constantly monitoring its credit exposure, to ensure it
is acceptable.
Credit risk arises from the financial assets of the Consolidated Entity, which comprise cash and cash
equivalents and trade and other receivables. The Consolidated Entity’s exposure to credit risk arises from
potential default of the counter party, with a maximum exposure equal to the carrying amount of these
instruments. Exposure at balance date is addressed in each applicable note.
The Consolidated Entity trades only with recognised, creditworthy third parties, and as such collateral is not
requested nor is it the Consolidated Entity’s policy to securitise its trade and other receivables.
The Consolidated Entity holds its cash with large well respected banks, with no history of default and
therefore its credit exposure to cash is minimal. The minimum credit rating of the Consolidated Entity’s bank
is Prime-1 as determined by Moody’s Rating Agency.
Receivables balances are monitored on an ongoing basis with the result that the Consolidated Entity’s
exposure to bad debts is not significant.
Whilst a small number of debtors account for a large percentage of the Consolidated Entity’s receivable
balance, the Board does not consider this a significant risk to the Consolidated Entity as the debtors are all
creditworthy with no history of default. As at the date of this report, the Consolidated Entity does not have
any receivables which are past their due date and the Consolidated Entity has not recorded any impairment
in relation to its receivables.
Liquidity Risk
The Consolidated Entity’s objective is to fund future development through cash flow from operations, equity
and debt, where appropriate. It is the Consolidated Entity’s policy to review the cash flow forecasts regularly
to ensure that the Consolidated Entity can meet its obligations when they fall due.
The table below reflects all contractual repayments and interest resulting from recognised financial liabilities,
including derivative instruments as of 30 June 2015. For derivative financial instruments the market value is
presented, whereas for the other obligations the undiscounted cash flows for the respective upcoming fiscal
years are presented. Cash flows for financial liabilities without fixed amounts or timing are based on the
conditions existing at 30 June 2015.
The remaining contractual maturities of the Consolidated Entity’s financial liabilities are:
6 months or less
1-5 years
Consolidated Entity
2015
$
3,139,432
18,474,188
21,613,620
2014
$
6,576,551
5,681,716
12,258,267
The Consolidated Entity monitors rolling forecasts of liquidity reserve on the basis of expected cash flow.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 74 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
At balance date, the Consolidated Entity has $301,000 in unused credit facility available for draw down
(2014: $9.5 million).
Fair Value
The methods for estimating fair value and the fair value of the financial assets and liabilities are outlined in
the relevant notes to the financial statements.
The carrying amount of trade receivables and payables approximates their fair value. Derivatives are carried at
their fair value on the balance sheet. All financial assets and liabilities are held as level 2 (quoted prices in active
markets for identical assets or liabilities) in the fair value measurement hierarchy.
NOTE 28.
SHARE BASED PAYMENT PLANS
The Consolidated Entity provides benefits to employees (including senior executives) of the Consolidated
Entity in the form of share based payments, whereby employees render services in exchange for shares or
rights over shares (equity-settled transactions).
In a prior year, the Consolidated Entity filed a Form S-8 with the Securities and Exchange Commission. The
Form S-8 is a registration statement used by U.S. public companies to register securities to be offered
pursuant to employee benefit plans; in this case the ordinary shares issuable and reserved for issuance
underlying the options which may be issued pursuant to the Samson Oil & Gas Limited Stock Option Plan
were registered.
All references to inputs in this note are in Australian Dollars as they refer to Australian listed securities,
unless noted otherwise.
There we no options issued to Directors, Executives or other employees during the year ended 30 June
2015.
Options issued to Directors
During the year ended 30 June 2014 4,000,000 options were issued to a new Director with a value of
$0.0217 per option. The options have an exercise price of 3.9 cents and an expiry date of 30 November
2017. A Black-Scholes option pricing model taking into the following variables was used to value the
options:
Share price at grant date (cents)
Exercise price (cents)
Time to expiry (years)
Risk free rate (%)
Share price volatility (%)
Dividend yield
2.4
3.9
4
1.25
176.52
Nil
There were no share based payments during the year ended 30 June 2013, other than the vesting expense
recognised in relation to options issued during the year ended 30 June 2011.
At year end there were 8,000,000 (2014: 72,500,000) options outstanding that had been granted to
employees, Directors and other service providers. The weighted average exercise price was 9.7 cents
(2014: 8.65 cents) per option.
The weighted average remaining contractual life for the share options outstanding as at 30 June 2015 is
between 2.5 and 3.0 years (2014: between 6 months and 3.5 years).
The range of exercise prices for options outstanding at the end of the year was 3.8-16 cents (2014: 3.8 – 16
cents).
No options were issued during the year ended 30 June 2015. The weighted average fair value of options
granted during the year ended 30 June 2014 was 2.17 cents per option.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 75 of 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
NOTE 29.
PARENT ENTITY FINANCIAL INFORMATION
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholders’ equity
Issued capital
Reserves
Share based payments reserve
Foreign currency translation reserve
Accumulated Losses
Net shareholders’ equity
Profit for the year
Total comprehensive income
(b) Guarantees
2015
$
2014
$
1,154,669
13,401,204
2,021,488
35,899,282
154,607
154,607
167,360
167,360
13,246,597
35,731,922
98,296,001
98,340,121
5,276,872
(5,736,155)
(84,590,121)
13,249,597
(14,999,007)
(7,556,809)
5,276,872
1,706,043
(69,591,114)
35,731,922
(2,748,156)
(3,270,637)
Samson Oil and Gas Limited has provided a guarantee of the credit facility of Samson Oil and Gas USA,
Inc to Mutual of Omaha Bank. (2014: Mutual of Omaha Facility).
(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities at 30 June 2015 or 30 June 2014.
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 76 of 81
DIRECTORS’ DECLARATION
30 June 2015
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Samson Oil & Gas Limited, I state that:
In the opinion of the Directors:
(a)
the financial statements and notes set out on pages 29 to 76 are in accordance with the
Corporations Act 2001, including :
(i)
(ii)
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2015
and of its performance for the financial year ended on that date; and
complying with Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements, 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.
Note 2(a) confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the chief executive officer and chief financial officer
required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations
Act 2001.
On behalf of the directors
Terence M. Barr
Director
Denver, Colorado
16 September 2015
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 77 of 81
INDEPENDENT AUDIT REPORT
SHAREHOLDER INFORMATION
for the year ended 30 June 2015
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 78 of 81
SHAREHOLDER INFORMATION
for the year ended 30 June 2015
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 79 of 81
SHAREHOLDER INFORMATION
for the year ended 30 June 2015
SHAREHOLDER INFORMATION
Statement of Issued Securities at 14 September 2015
(a)
There are 2,837,834,301 fully paid ordinary shares and 229,582,240 options on issue which are
quoted on the Australian Stock Exchange.
(b) Members are entitled to one vote for each share held.
(c)
The twenty largest shareholders hold 79.63% of the Company’s issued capital.
Distribution of Securities
Spread of Holdings
Holders
Securities % of Issued Capital
NIL holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
Over 100,000
0
929
462
352
1,445
831
0
258,238
1,477,066
2,886,256
60,545,539
2,772,667,202
TOTAL ON REGISTER
4,019
2,837,834,301
0.00%
0.01%
0.05%
0.10%
2.13%
97.71%
100%
There are 3,084 shareholders who do not hold a marketable parcel of shares.
The following details appear in the company’s register of Substantial Shareholdings at 14 September 2015.
Substantial Shareholder
Nil
Twenty Largest Shareholders
No. of Shares
Percentage
Rank
Holder Name
Securities
%
National Nom Ltd
Hussein Jamil Mahomed
Vogliotti Peter Anthony
Mirkazemi Pedram
Milanto Pl
NEFCO Nom PL
Citicorp Nom PL
Baxter Michael
Miningnut PL
Doswell Julie
Paesler C B + A
Flush Nom PL
El-Bayeh Yvonne
JP Morgan Nom Aust Ltd
Kampar PL
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16 Monna Mirkazemi Super PL
17
18
19
20
Barr Super PL
O'brien John Walter G
Armdig PL
Stratford Linda
TOTAL
Samson Oil & Gas Limited
2,040,148,085 71.89%
0.76%
0.67%
0.63%
0.49%
0.47%
0.47%
0.46%
0.45%
0.42%
0.35%
0.35%
0.32%
0.31%
0.28%
0.28%
0.28%
0.25%
0.25%
0.25%
2,259,900,180 79.63%
21,500,000
19,000,009
18,000,000
14,000,000
13,450,289
13,230,794
13,171,576
12,800,000
11,936,010
10,000,000
10,000,000
8,989,477
8,663,996
8,046,312
8,000,000
7,834,621
7,129,012
7,000,000
6,999,999
Annual Report – 30 June 2015
Page 80 of 81
Twenty Largest Listed Option Holders
Rank
Holder Name
Securities
%
SHAREHOLDER INFORMATION
for the year ended 30 June 2015
Danty General Partnership
Seaside 88 LP
Alpha Cap Anstalt
Merrill Lynch Aust Nom PL
Cranshire Cap Fund Ltd
Citicorp Nom PL
Ironman Energy Fund
Paesler Trading PL
Empery Asset Ltd
Hartz Cap Inv LLC
Rattler General Ptnship
Anson Inv Fund LP
Colbern Fiduciary Nom PL
Hawthorne Peter
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15 Wolverine Flagship FT Ltd
16
17
18
19
20 Winnell Timothy
Carpenter Philip
Jones Thomas + Audrey E
GCA Strategic Inv Fund IT
Rattler General Partnersh
TOTAL
Unlisted options
19,365,407
15,403,870
12,509,904
11,625,972
11,264,928
7,818,428
7,673,125
7,000,000
6,405,072
6,405,072
5,208,336
4,803,800
4,500,000
4,323,854
3,850,968
3,472,224
3,251,499
3,080,774
3,049,966
3,026,667
8.44%
6.71%
5.45%
5.06%
4.91%
3.41%
3.34%
3.05%
2.79%
2.79%
2.27%
2.09%
1.96%
1.88%
1.68%
1.51%
1.42%
1.34%
1.33%
1.32%
144,039,866 62.75%
Exercise Price
Expiry Date
$0.155
$0.039
$0.033
Total
31 October 2015
30 November 2017
30 April 2018
Number of Unlisted
Options
4,000,000
4,000,000
87,033,246
95,033,246
Samson Oil & Gas Limited
Annual Report – 30 June 2015
Page 81 of 81