ABN 25 009 069 005
ANNUAL REPORT
30 June 2017
TABLE OF CONTENTS
TABLE OF CONTENTS
Corporate Directory .......................................................................................................................................... 1
Directors’ Report ............................................................................................................................................... 2
Auditors’ Independence Declaration ............................................................................................................... 19
Corporate Governance Statement .................................................................................................................. 20
Consolidated Statement of Comprehensive Income ...................................................................................... 28
Consolidated Balance Sheet .......................................................................................................................... 29
Consolidated Statement of Cash Flows ......................................................................................................... 30
Consolidated Statement of Changes in Equity ............................................................................................... 31
Notes to the Consolidated Financial Statements ........................................................................................... 32
Directors’ Declaration ..................................................................................................................................... 81
Independent Auditor’s Report ......................................................................................................................... 82
Shareholder information .................................................................................................................................. 85
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
CORPORATE DIRECTORY
Directors
P. Hill (Chairman)
T. Barr (Managing Director)
G. Channon
D. Rakich
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 Australia Pty Ltd
770 Canning Highway
Applecross, Western Australia 6953
Telephone: 1300 992 916
Facsimile:
(08) 9315 2233
Bankers
National Australia Bank
100 St Georges Terrace
Perth, Western Australia 6000
Mutual of Omaha Bank
633 17th Street
Denver, Colorado, 80202
Solicitors
Squire Patton Boggs
Level 21, 300 Murray Street
Perth, Western Australia 6000
Davis Graham & Stubbs LLP
1550 Seventeenth Street, Suite 500
Denver, Colorado, 80202
Auditors
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade
Perth, Western Australia 6000
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 (2016: US Dollars)
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
1
DIRECTORS’ REPORT
30 June 2017
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 2017 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 or any part of
the financial year and until the date of this report, unless noted otherwise, are:
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.
Dr Peter Hill
Chairman, appointed 27 January 2016
Dr Hill has over 45 years of experience in the international oil and natural gas industry. He commenced his
career in 1972 and spent 22 years in senior positions at British Petroleum including Chief Geologist, Chief of
Staff for BP Exploration, President of BP Venezuela and Regional Director for Central and South America. Dr Hill
then worked as Vice President of Exploration at Ranger Oil Ltd. in England (1994-1995), Managing Director
Exploration and Production at Deminex GMBH Oil in Germany (1995-1997), Technical Director/Chief Operating
Officer at Hardy Oil & Gas plc (1998-2000), President and Chief Executive Officer at Harvest Natural Resources,
Inc. (2000-2005), Director/Chairman at Austral Pacific Energy Ltd. (2006-2008), independent advisor to Palo Alto
Investors (January 2008 to December 2009), Non-Executive Chairman at Toreador Resources Corporation
(January 2009 to April 2011), Director of Midstates Petroleum Company, Inc. (April 2013 to March 2015), and
interim President and Chief Executive Officer of Midstates Petroleum Company, Inc. (March 2014 to March
2015). In addition to the above Dr Hill was the President/CEO of Triangle Petroleum, a NYSE listed company,
from 2010-12 and Non Executive Chairman until 2016 when he resigned following a Chapter 11 bankruptcy
restructuring.
Dr Hill is currently a Non-Executive Director of Pardus Oil and Gas (formerly Energy and Exploration Partners (a
privately held company)) and a Non-Executive Director of Nine Point Energy (a privately held company) in March
2017
Dr Hill has a B.Sc. (Honors) in Geology and a Ph.D. He has provided advisory and consultancy roles to hedge
funds, banks, and companies involved in the upstream oil and gas sector. Held non-executive board positions,
Chairman, and been involved in international negotiations at government level.
Dr Hill is the Non Executive Chairman of the company and Chair of the Compensation Committee and a member
of the Audit Committee.
He has held no other directorships in the past three years.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
2
DIRECTORS’ REPORT
30 June 2017
Dr Hill is the Chair of the Compensation Committee and a member of the Audit Committee.
He has held no other directorships in the past three years.
Mr Greg Channon
Non Executive Director, appointed 27 January 2016
Mr Channon is a geologist with 31 years of global oil and gas experience in a great variety of technical and
leadership roles. He is currently the Executive Chairman of RL Energy Pty Ltd.
During his career, Mr Channon has worked with a range of E&P companies, including Santos, Fletcher
Challenge Energy, Shell, Swift Energy and BrightOil. He has lived and worked in Australia, New Zealand, USA,
Hong Kong, China and Africa. In the United States, he has worked on assets in Appalachia, Colorado, North
Dakota, Kansas, California and Texas.
Mr Channon is also a director of Ruby Lloyd Pty Ltd (a privately held company), Statesman Resources
(TSX:SRR) and Advent Energy (an Australian public unlisted company).
Mr Denis Rakich
Executive Director, appointed 27 January 2016
Mr Rakich is the Company Secretary of Samson and has served in that capacity for 19 years.
Mr Rakich is a fellow of CPA Australia, holds a Bachelor of Business from Edith Cowan University. Mr Rakich
started his business career with Dresser Industries Inc, Australia as an Accountant. Mr Rakich has served as a
Director and/ or Company Secretary on numerous ASX-listed public companies within the petroleum and
minerals industries over a period of 30 years, including Resolute Resources Limited, Marymia Exploration NL,
Reliance Mining Limited, Victoria Petroleum NL (now known as Senex Energy Limited), A-Cap Resources
Limited and Ausgold Limited.
Mr Rakich is currently an executive director of Ausgold Limited (ASX: AUC), Ausgold Exploration Pty Ltd
(privately held), Fortune Minerals Limited (privately held) and Elstree Nominees Pty Ltd (privately held).
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:
Number of Ordinary Shares
Number of Options over Ordinary Shares
T.M. Barr
P. Hill
G. Channon
D. Rakich
24,840,966
5,291,200
5,105,000
1,717,400
60,000,000
30,000,000
24,000,000
24,000,000
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
3
DIRECTORS’ REPORT
30 June 2017
PRINCIPAL ACTIVITIES
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
The result for the financial year ended 30 June 2017 from continuing operations, after provision for income tax
was a loss attributable to members of the parent of $2.5 million (2016: loss $11.4 million).
Development Activities
Foreman Butte Project – Williston Basin, North Dakota and Montana
Various working interests
In April 2016, the Company closed on the acquisition of the Foreman Butte project. This project includes a
number of producing and non-producing, operated and non-operated wells in the Ratcliffe and Madison
formations in Montana and North Dakota. The wells are conventional wells drilled as early as 1980 to as recently
as 2010.
Since acquisition, field operations continue to improve individual pump efficiencies through the use of well bore
fluid level monitoring and the modification of pump stroke, pump frequency and when convenient pump change
outs.
In September 2017, the Company received approval for a water flood pilot project for the Home Run Field
utilizing an existing wellbore which is located on the flank of the field and which is non-productive. This well, the
Mays 1-20H has been tested and readied for injected water once the NDIC has approved the plan. Injection of
water into the water flood is expected to commence in October 2017. .The water flood is being used to add
pressure to the reservoir which should enhance the recovery of oil. The well performance in the offsetting wells
will be monitored to establish the viability of the flood. The water being used is produced formation water so that
there is no chemical compatibility issues, in essence the water is being returned to the reservoir from which it
originated. Initially this water will be trucked to the injector from the existing producing wells but will ultimately be
pipelined.
The Home Run Field (aka as the Foreman Butte Field) is the largest areal oil field in Samson’s portfolio. It was
developed on a 640 acre spacing pattern and our engineering and geologic analyses have determined that only
3.2% of the original oil in place has been recovered to date. Given that oil fields typically recover up to around
20% of their oil in place there would appear to be significant un-developed oil to be recovered from this field.
This has been confirmed through the use of a 3 dimensional numerical simulation of the reservoir volume, and
the expected production curve for these wells has been developed from the resulting numerical model.
The current reservoir pressure has also been established using a field wide fluid level study, and the initial
development wells will be located in areas of demonstrated higher pressure.
Following the completion of the Company’s debt refinance, the Company is planning to drill its first development
well. The first lateral will test the Ratcliffe Formation of the Mississippian Madison Group. The lateral in the
Ratcliffe Formation will help define the pressure depletion radius from the existing producing wellbores which will
ultimately determine the number of PUD’s (proven undeveloped drilling locations) we can drill in this reservoir.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
4
Currently we have 20 Ratcliffe PUD locations identified. The second lateral will test an undeveloped reservoir in
the Mission Canyon Formation of the Mississippian Madison Group. This lateral could prove up a new oil field
with the potential for many additional well locations (up to 20 vertical wells or 8 drill-out laterals). A 3,500 acre 4-
way structural closure has been mapped from an abundance of existing well control in the area.
The wells in this field produced 253,168 barrels of oil and 52,281 mcf of gas during the year ended 30 June
2017.
DIRECTORS’ REPORT
30 June 2017
Bakken Field, Williams County, North Dakota
North Stockyard Project
Various working interests
The Bakken Formation gained significant prominence after the United States Geological Survey (USGS)
published an estimate in April 2008 stating that the unit could recover between 3.0 and 4.3 billion barrels of
oil. The USGS estimated that the Bakken Formation represents a “continuous” oil accumulation and suggested
that advances in completion technology have increased the estimated recovery potential by 25 times since an
earlier USGS study in 1995.
Together with fellow working interest owners, the Company has drilled twenty four wells in this field, fourteen in
the Bakken formation, eight in the Three Forks formation, one in the Mission Canyon formation and one in the
second bench of the Three Forks formation. All wells were producing as at the date of this report.
On 30 June 2016 the Company entered into a purchase and sale agreement to sell its North Stockyard property
for $15 million. This transaction closed on 29 October 2016.
Exploration Activities
Hawk Springs Project, Goshen County, Wyoming
Defender US 33 #2-29H
37.5% working interest
This well commenced production in February 2012 and has experienced numerous operational and pumping
issues. In July 2012, the well was cleaned out 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.
This well was plugged in October, 2016.
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 acreage position situated without
project area. The MMDA is has been not been executed by Samson. 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 2017
5
DIRECTORS’ REPORT
30 June 2017
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
During the year, the Consolidated Entity repaid its short term promissory note with an extension to the credit
facility with Mutual of Omaha Bank. The Consolidated Entity also repaid $11.5 million of its outstanding facility to
Mutual of Omaha Bank following the sale of the North Stockyard project in October 2016. In June 2017, the
term of the credit facility was extended from October 2017 to October 2018.
An investment banker has been retained in order to assist the Company with refinancing the current facility to
extend the term and value of the loan in order to provide additional working capital to allow the Company to start
its drilling program.
Production Activities
During the year the Consolidated Entity produced approximately 298,517 (2016: 240,424) barrels of oil and
147,765 (2016:569,008) Mcf of gas.
Reserves
PDP
PDNP
PUD
TOTAL PROVED
As at 30 June 2017
NET OIL
MBBLS
3,115
143
2,239
5,497
NET GAS
MMCF
1,640
242
1,796
3,678
NET BOE
MBBLS
3,388
183
2,538
6,109
NPV 10
$ MILLION
$39.490
$1.411
28.912
$69.813
Notes to Reserves Estimates
BOE MBBBLS is thousand barrels of oil equivalent
BOE is calculated using a heating value of gas and converted as 1 BOE equals 6 MCF
PDP is Proved Developed Producing
PDNP is Proved Developed Non Producing
PUD is Proved Un-Developed
NPV 10 is Net Present Value at 10% discount rate
Oil prices are based on 30 June 2017, NYMEX West Texas Intermediate prices and are adjusted for quality,
transportation fees and market differentials. Gas prices are based on 30 June 2017, NYMEX Henry Hub prices
and are adjusted for energy content, transportation fees and market differentials. All prices, before adjustments,
are shown in the following table:
Period Ending
31 December 2017
31 December 2018
31 December 2019
31 December 2020
31 December 2021
Thereafter
Oil/BBL -$
45.98
48.12
49.41
50.52
51.77
53.03
Gas/MCF -$
3.096
2.993
2.853
2.846
2.878
2.923
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
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DIRECTORS’ REPORT
30 June 2017
The PUD reserve is dominated by the locations within the Home Run Field and two new laterals are planned to
be drilled from an existing well bore within the core area The PUDs reserve estimate have been developed using
the wealth of technical data available from this field, that has established the current reservoir pressure, the field
limit, the original oil in place volume and matching the observed reservoir performance to the rock properties.
These analyses have established a theoretical flow model for a single PUD location which has then been applied
to each of the separate locations taking into account the performance of the “parent well” This treatment
therefore delivers a production performance from these wells which is linked to the rock properties which are not
uniform across the field area ,
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 Benjamin Johnson, an employee of Netherland Sewell & Associates Inc, an independent petroleum
engineering consulting firm based on the definitions and disclosures guidelines set forth in the 2007 Petroleum
Resource Management System approved by the Society of Petroleum Engineers. The reserves included in this
release were estimated using deterministic methods and presented as incremental quantities.
Mr. Johnson 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 a licensed professional engineer in the State
of Texas.
Mr. Johnson and Netherland Sewell & Associates Inc. 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 reserve estimate is comprised of 173 individual wells and have the following net revenue interest, reserve
volumes and value.
5
PDP
PDP
PDNP
PUD
Total
Well count
Avg. NRI
136
9
28
173
50.327%
62.915%
74.618%
62.62%
Net Oil
MBBLS
3,115
143
2,239
5,497
Net Gas
MMCF
1,640
242
1,796
3,677
Net BOE
MBBLS
3,388
13
2,538
6,109
NPV 10
$ MILLION
$39.490
$1.42
28.913
$69.813
All PDP reserves are held by production.
DIVIDENDS
No dividend was paid or recommended for payment during the year (2016: $Nil).
SHARE OPTIONS
As at the date of this report, there were 411,033,246 (2016: 320,615,486) unissued ordinary shares under
option. All option exercise prices are denominated in Australian Dollars unless noted otherwise.
In November 2016, the Company issued 48,000,000 options to Directors and employees of the Company. These
options have an exercise price of $0.007 per share and an expiry date of 15 November 2026. They vest on 17
November 2017.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
7
DIRECTORS’ REPORT
30 June 2017
In November 2016, the company issued 272,000,000 options to Directors and employees of the Company.
These options have an exercise price of $0.0055 per share and an expiry date of 15 November 2026. They vest
on 17 November 2017. In August 2017, an employee resigned prior to the vesting date therefore 5,500,000
options have been cancelled.
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.
These options expired unexercised during the prior year.
During the year ended June 30, 2013, the Company 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 140,143 (2016: 52,279) were exercised. The remaining 97,090,015 expired
on 31 March 2017.
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. These
options were not exercised and expired on 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 140,143, (2016: 52,279) ordinary shares were issued upon the exercise of 140,143 3.8 cent
options (2016: 52,279) (2016: 3.8 cent options).
Remuneration Report (Audited)
The remuneration report is set out under the following headings:
A
B
C
D
E
F
G
H
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
Other transactions and balances with 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:
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
8
DIRECTORS’ REPORT
30 June 2017
Terry Barr
Peter Hill
Greg Channon
Denis Rakich
Robyn Lamont
David Ninke
Mark Ulmer
Managing Director
Non-executive Director, Chairman
Non-executive Director
Company Secretary, Executive Director
Chief Financial Officer
Vice President – Exploration
Vice President - Operations
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. The current members of the Compensation Committee
are Dr Hill and Mr Channon. 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 2016 and 30 June 2017.
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
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DIRECTORS’ REPORT
30 June 2017
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.
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 2017 and 2016 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.
Refer to KMP compensation table 1 for share based payments to Directors during the year ended 30 June 2017.
Bonus plan for calendar year ended 31 December 2016
The Compensation Committee agreed not to put a bonus plan in place for the calendar year ended 31
December 2016.
Bonus plan for calendar year ended 31 December 2017
The Compensation Committee agreed not to put a bonus plan in place for the calendar year ended 31
December 2017.
Voting and comments made at the company's 2016 Annual General Meeting ('AGM')
At the 2016 AGM, 82% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2016.
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 2017
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DIRECTORS’ REPORT
30 June 2017
Table 1: Key Management Personnel compensation for the year ended 30 June 2017
Short Term
Post
Employment
Share-based Payments
Total
Total
Performance
Related
Salary &
Fees
$
Non-
monetary
Benefits
$
Super -
annuation
Options
Ordinary
Shares
$
$
$
$
%
390,000
5,982
18,000
103,640
96,078
52,815
81,408
-
-
-
-
-
7,864
51,820
41,127
41,127
56,903
30,865
19,864
5,602
620,301
5,982
25,864
237,714
113,234
574,525
178,763
113,806
136,001
1,003,095
275,945
14,267
269,798
15,237
370,500
1,536,544
18,519
54,005
18,821
18,000
18,000
80,685
63,911
60,456
82,912
444,993
27,463
31,402
17,968
190,067
400,407
394,893
507,899
2,306,294
18.0%
29.0%
36.1%
30.2%
16.0%
15.3%
16.3%
Directors
T.Barr
P. Hill
G. Channon
D. Rakich
Executives
R. Lamont
D. Ninke
M. Ulmer
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
11
Table 2: Key Management Personnel compensation for the years ended 30 June 2016
Short Term
Post Employment
Share-based Payments
Total
DIRECTORS’ REPORT
30 June 2017
Total Performance
Related
Directors
T.Barr
D. Craig1
K. Skipper2
V. Rudenno1
E. McColley3
N. Fearis4
P. Hill5
G. Channon5
D. Rakich6
Executives
R. Lamont
D. Ninke
M. Ulmer
Salary &
Fees
$
Non-
monetary
Benefits
$
Super -annuation
Options Ordinary Shares
$
$
$
$
%
350,000
8,947
17,500
44,934
17,740
39,906
7,665
14,526
19,955
12,134
85,211
-
-
-
-
-
-
-
-
592,071
8,947
211,750
242,127
80,750
1,126,698
14,035
14,914
4,621
42,517
-
-
-
-
-
-
-
8,521
26,021
15,855
17,760
6,056
65,692
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
376,447
44,934
17,740
39,906
7,665
14,526
19,955
12,134
93,732
627,039
241,640
274,801
91,427
1,234,907
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Notes:
1 Ceased to hold office on 27 January 2016
2 Ceased to hold office 29 on October 2015
3 Resigned on 5 August 2015
4 Appointed 4 October 2015 and resigned 27 January 2016
5 Appointed 27 January 2016
6 Appointed as a Director on 27 January 2016
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
12
Table 3: The proportion of remuneration linked to performance and the fixed proportion are as follows
DIRECTORS’ REPORT
30 June 2017
Name
Directors
T.Barr
D. Craig1
K. Skipper2
V. Rudenno 1
E. McColley3
N. Fearis4
P. Hill5
G. Channon5
D. Rakich6
Executives
R. Lamont
D. Ninke
M. Ulmer
Fixed remuneration
2016
2017
At risk - STI
At risk - LTI
2017
2016
2017
2016
100%
NA
NA
NA
NA
NA
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
18%
NA
NA
NA
NA
NA
29%
36%
88%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
NA
NA
NA
NA
NA
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
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. 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. Mr Barr signed a new contract effective 31 December 2015,
this contract has a two year term. As of 1 January 2016, the contract allows for total compensation of $418,000
(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.
A new two year contract was signed by Mr Ninke, effective 1 January 2017. As of 1 January 2017, the contract
allows for total compensation of $304,717 (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. A new three year contract was signed with Ms Lamont, effective 1
January 2017. As of 1 January 2017, the contract allows for total compensation of $308,000 (cash and non
cash benefits).
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
13
DIRECTORS’ REPORT
30 June 2017
Mr Ulmer – VP - Operations
Effective 1 April 2016, Mr Ulmer has been retained by the Company to act as the Vice President – Operations.
Mr Ulmer signed a contract effective 1 January 2017 for this position for a period of three years. As of 1 January
2017, the contract allows for total compensation of $398,000 (cash and non cash benefits).
Key management personnel have no entitlement to termination payments in the event of removal for
misconduct.
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 2017
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 2017
30 June 2017
Directors
T. Barr
D. Rakich
P. Hill
G. Channon
Executives
R. Lamont
D. Ninke
M. Ulmer
Total
1 July
2016
802,938
-
-
-
-
-
-
802,938
-
-
-
-
-
-
-
-
(802,938)
60,000,000
-
-
-
-
-
24,000,000
30,000,000
24,000,000
37,000,000
35,000,000
-
(802,938)
48,000,000
258,000,000
- 60,000,000
- 24,000,000
- 30,000,000
- 24,000,000
- 37,000,000
- 35,000,000
- 48,000,000
- 258,000,000
-
-
-
-
-
-
-
-
(ii)
Shares issued on exercise of options
No directors or executive options were exercised during the year ended 30 June 2017 (2016: nil)
(iii)
Shareholdings of key management personnel
30 June 2017
Balance at beginning
of period
Granted as
compensation
On exercise of
options
1 July 2016
Net change other Balance at end
of period
30 June 2017
Directors
T. Barr
D. Rakich
P. Hill
G. Channon
Executives
R. Lamont
14,546,446
16,258,000
200,000
-
100,000
1,517,400
8,818,800
5,005,000
-
-
-
(5,963,480)
24,840,966
-
(3,527,600)
-
1,717,400
5,291,200
5,105,000
2,472,038
8,718,400
-
(2,929,260)
8,261,178
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
14
DIRECTORS’ REPORT
30 June 2017
D. Ninke
M. Ulmer
2,112,400
-
19,430,884
9,969,000
5,704,200
55,990,800
-
-
-
(3,365,200)
8,716,200
36,560,000
20,774,460
42,264,200
96,196,144
Notes:
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”
represents shares held by the Company as Treasury stock to pay for the taxes payable on the shares issued.
Net Change Other for M. Ulmer relates to shares purchased by him in on market transactions.
F
No loans have been granted to key management personnel during the current or prior year.
Loans to key management personnel
Other transactions and balances with key management personnel
G
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
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 2017, 2016, 2015, 2014 and 2013 has been measured based on the net
(loss)/profit as calculated by the application of Australian Accounting Standards.
This concludes the remuneration report, which has been audited
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
15
DIRECTORS’ REPORT
30 June 2017
CORPORATE STRUCTURE
Samson Oil & Gas Limited is a Company limited by shares that is incorporated and domiciled in Australia.
EMPLOYEES
The Consolidated Entity employed 16 employees at 30 June 2017 (2016: 9 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 Foreman Butte project, North Dakota and
Montana
2) The continued appraisal and acquisition of acreage in the Cane Creek project area in Utah and
3) The continued review and appraisal of possible producing and 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.
ENVIRONMENTAL REGULATIONS AND PERFORMANCE
The Consolidated Entity has various permits and licenses to operate in different states within the United States
of America.
The Consolidated Entity is not subject to any significant environmental regulation under Australian
Commonwealth or State law.
There have been no significant known breaches of the Consolidated Entity’s licence or permit conditions during
the year ended 30 June 2017.
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 2017, and the numbers of meetings attended by each director were:
Full meetings of Directors
Audit Committee
Meetings
Compensation Committee
Meetings
attended
T.M. Barr
D. Rakich
P. Hill
18
18
18
No. of
Meetings
held while
in office
18
18
18
Meetings
attended
***
-
5
No. of
Meetings
held while
in office
***
-
5
Meetings
attended
***
1
1
No. of
Meetings
held while
in office
***
1
1
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
16
DIRECTORS’ REPORT
30 June 2017
G. Channon
18
18
5
5
1
1
*** 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 $100,000 (2016: $100,000) 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.
INDEMINFICATION 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 Australia Partner’s standard Terms of Business and is conditional
upon RSM Australia Partner’s 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 Peter Hill and Mr Greg Channon.
See detail under Directors Meetings for details of Audit Committee meetings attended by the Directors.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
There are no matters or circumstances that have arisen since 30 June 2017 that have significantly affected, or
may significantly affect:
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.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for
the purpose of taking responsibility on behalf of the company for all or part of those proceedings.
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
17
DIRECTORS’ REPORT
30 June 2017
No non-audit services were provided by RSM Australia Partners (the Company’s auditors for the year ended 30
June 2017) during the current year.
OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF RSM AUSTRALIA PARTNERS
There are no officers of the company who are former partners of RSM Australia Partners.
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 19.
AUDITOR
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
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
29 September 2017
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
18
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Samson Oil & Gas Limited for the year ended 30 June 2017,
I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 29 September 2017
J A KOMNINOS
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2017
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 – ANNUAL REPORT 2017
20
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2017
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 full-time and one part time (out of
a total staff of 9), including Ms Robyn Lamont the Company’s Chief Financial Officer.
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
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
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
21
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2017
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
(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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
22
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2017
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 2017, and the number of meetings attended by each director is disclosed on page 16.
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. Mr Channon and Dr Hill are the current
members of the Audit Committee and have been since their appointment to the Board on 27 January 2016.
Both are deemed to be independent Directors. 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
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
23
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2017
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 entirely of independent Directors. Mr Channon and Dr Hill are the current
members of the Audit Committee and have been since their appointment to the Board on 27 January 2016.
Both are deemed to be independent Directors.
Details of these Directors’ qualifications and attendance at Audit Committee meetings are set out in the
Directors report on pages 2, 3 and 16.
All members of the Audit Committee are financially literate and have an appropriate understanding of the oil
and gas industry. Dr Hill 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;
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
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
24
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2017
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 Australia Partner’s 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.
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
25
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2017
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.
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
26
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2017
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 – ANNUAL REPORT 2017
27
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Revenue
Sale of oil and gas
Total revenue
Cost of sales
Gross profit
Bargain purchase on acquisition of properties
Other Income
Expenses
General and administrative expenses
Finance costs
Exploration and evaluation expense
Derivative instruments
Abandonment cost
Impairment expense
Loss before income tax
Income tax expense
Loss after income tax
Net loss for the year attributable to owners of
Samson Oil & Gas Limited
Other comprehensive loss, net of tax
Item that may be classified to profit and loss
Currency translation differences
Total comprehensive loss for the year attributable to
the owners of Samson Oil & Gas Limited
Note
3 (a)
3 (a)
3 (a)
3 (b)
3 (c)
3 (e)
3 (f)
4
16
Consolidated Entity
2017
$
2016
$
13,056,009
13,056,009
9,002,355
9,002,355
(11,496,250)
(9,942,986)
1,559,759
(940,631)
-
10,775,231
2,183,643
900,017
(5,153,912)
(2,099,732)
(78,391)
1,297,472
(3,055)
(244,480)
(3,770,612)
(1,516,852)
(4,216,077)
(2,657,963)
-
(9,940,045)
(2,538,696)
(11,366,932)
-
-
(2,538,696)
(11,366,932)
(2,538,696)
(11,366,932)
(35,701)
(68,538)
(2,574,397)
(11,435,470)
Basic loss per share for profit attributable to the ordinary
equity holders of the company (cents)
Diluted loss per share (cents)
22
22
(0.08)
(0.08)
(0.39)
(0.39)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying
notes.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
28
CONSOLIDATED BALANCE SHEET
As at 30 June 2017
CONSOLIDATED BALANCE SHEET
Consolidated Entity
Note
2017
$
2016
$
Current assets
Cash and cash equivalents
Trade and other receivables
Oil inventory
Prepayments
Assets held for sale
Total current assets
Non-current assets
Other receivables
Restricted cash
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
Borrowings
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
8
11
7
6
23
9
10
11
12
14
23
13
23
13
14
628,778
1,550,366
219,288
54,518
-
2,452,950
136,198
450,000
99,583
296,078
271,078
32,106,508
33,359,445
35,812,395
5,066,504
-
363,940
23,264,767
28,695,211
-
-
3,362,204
3,362,204
32,057,415
2,654,812
1,996,344
463,768
183,305
13,798,987
19,097,216
139,552
450,000
-
308,474
220,703
31,827,573
32,946,302
52,043,518
5,958,285
300,000
1,671,654
15,546,428
23,476,367
1,233,077
18,665,227
3,011,150
22,909,454
46,385,821
3,754,980
5,657,697
15
16
15
99,643,104
99,523,411
(102,609,002)
6,720,878
3,754,980
(100,070,306)
6,204,592
5,657,697
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
29
CONSOLIDATED STATEMENT OF CASHFLOWS
For the year ended 30 June 2017
CONSOLIDATED STATEMENT OF CASHFLOWS
Cash flows from operating activities
Receipts from customers
Cash (paid)/received from commodity derivative instruments
Payments to suppliers and employees
Interest received
Interest paid
Payments of abandonment costs
Payments for operating bonds
Proceeds from legal settlement
Consolidated Entity
Note
2017
$
2016
$
13,953,796
10,443,411
(1,342,901)
(13,042,935)
411
(1,878,382)
(300,949)
-
-
637,980
(9,034,163)
2,573
(808,144)
(34,680)
(450,000)
725,000
Net cash flows (used in)/from operating activities
19
(2,610,960)
1,481,977
Cash flows from investing activities
Proceeds from sale of oil and gas properties
Payments for furniture and fittings
Payments for exploration and evaluation
Payments for oil and gas properties
Net cash flows from/(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 (used in)/from financing activities
15,150,000
1,000,000
(106,726)
(138,715)
(183,266)
(749,731)
(3,198,083)
(17,620,436)
11,706,476
(17,553,433)
3,198
1,400,150
-
15,801,000
(11,047,443)
(40,000)
(3,771)
-
(295,151)
(172,740)
(11,088,016)
16,733,259
Net (decrease)/increase in cash and cash equivalents
(1,992,500)
661,803
Cash and cash equivalents at the beginning of the financial year
2,654,812
2,062,720
Effects of exchange rate changes on cash and cash equivalents
(33,534)
(69,711)
Cash and cash equivalents at end of year
628,778
2,654,812
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
30
CONSOLIDATED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2017
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
$
$
$
$
$
$
Balance at 1 July 2015
Loss after income tax
98,296,001
-
(88,703,374)
(11,366,932)
2,094,038
-
(1,097,780)
-
5,276,872
-
Other comprehensive loss, net of tax
Total comprehensive expense for the year
-
-
-
(11,366,932)
(68,538)
(68,538)
Transactions with owners in their capacity as owners:
Issue of share capital
Share issue costs
1,400,150
(172,740)
-
-
-
-
-
-
-
-
-
-
-
-
15,865,757
(11,366,932)
(68,538)
(11,435,470)
1,400,150
(172,740)
Balance at 30 June 2016
99,523,411
(100,070,306)
2,025,500
(1,097,780)
5,276,872
5,657,697
99,523,411
(100,070,306)
2,025,500
(1,097,780)
5,276,872
5,657,697
Balance at 1 July 2016
Loss after income tax
Other comprehensive loss, net of tax
Total comprehensive expense for the year
-
-
-
(2,538,696)
-
(2,538,696)
-
(35,701)
(35,701)
Transactions with owners in their capacity as owners:
Issue of share capital
Share based payment
Share issue costs
4,516
159,506
(44,329)
-
-
-
-
-
-
-
-
-
-
-
-
-
551,987
-
(2,538,696)
(35,701)
(2,574,397)
4,516
711,493
(44,329)
Balance at 30 June 2017
99,643,104
(102,609,002)
1,989,799
(1,097,780)
5,828,859
3,754,980
The above statement of Consolidated Changes in Equity should be read in conjunction with the accompanying notes.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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 2017 were authorised for
issue in accordance with a resolution of the Directors on 29 September 2017. 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".
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.
Going concern
These financial statements have been prepared on the going concern basis, which contemplates the
continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal
course of business.
As disclosed in the financial statements, the Consolidated Entity incurred a net loss of $2,538,696 and had
net cash outflows from operating activities of $2,610,960 for the year ended 30 June 2017. As at that date,
the Consolidated Entity’s total current liabilities of $28,695,211 exceeded its total current assets of
$2,452,950. The Consolidated Entity’s ability to continue as a going concern is dependent on the re-
negotiation of debt, the sale of assets and raising further capital. These factors indicate a material
uncertainty which may cast significant doubt over the ability of the Consolidated Entity to continue as a going
concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of
business and at the amounts stated in the financial report.
The directors believe there are reasonable grounds to believe that the Consolidated Entity will be able to
continue as a going concern, after consideration of the following factors:
- As at the reporting date the Consolidated Entity is in breach of its covenants with the Mutual of
Omaha Bank (the “Bank”), resulting in borrowings payable of $23,264,767 being classified as current
liabilities (Note 13). Samson is currently negotiating with the Mutual of Omaha Bank in an effort to
obtain a waiver for the breach. As at the date of this report, no waiver has been received;
- Samson has recently engaged a financial advisor in connection with the proposed private placement
of up to USD$40 million, or such other amount as may be agreed in writing between the parties, of
debt or equity linked debt securities. This reflects Samson’s plan to re-pay borrowings to the Bank in
addition to providing working capital in accordance with management’s plan to drill the proved
undeveloped well locations in the Forman Butte Project. This proposed financing may also include
placement of equity securities of the Consolidated Entity, including preferred shares; and
- The Consolidated Entity is currently negotiating with a number of parties with respect to the potential
sale of between 25% and 50% of Samson’s working interest in its oil and gas properties. This sale
would again provide Samson with the necessary working capital to carry out its drilling program. A
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
portion of the revenue generated from such activities would be used to fund the repayment of the
Consolidated Entity’s borrowings.
Accordingly, the Directors believe that the Consolidated Entity will be able to continue as a going concern
and that it is appropriate to adopt the going concern basis in the preparation of the financial report.
The financial report does not include any adjustments relating to the amounts or classification of recorded
assets or liabilities that might be necessary if the Consolidated Entity does not continue as a going concern.
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.
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 and interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for
the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory
have not been early adopted.
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 2017 reporting periods. The Consolidated Entity’s assessment of the impact of the new
standards and interpretations is set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39
'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new classification and
measurement models for financial assets. A financial asset shall be measured at amortised cost, if it is
held within a business model whose objective is to hold assets in order to collect contractual cash
flows, which arise on specified dates and solely principal and interest. All other financial instrument
assets are to be classified and measured at fair value through profit or loss unless the entity makes an
irrevocable election on initial recognition to present gains and losses on equity instruments (that are
not held-for-trading) in other comprehensive income ('OCI'). For financial liabilities, the standard
requires the portion of the change in fair value that relates to the entity's own credit risk to be
presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting
requirements are intended to more closely align the accounting treatment with the risk management
activities of the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to
recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit
risk on a financial instrument has increased significantly since initial recognition in which case the
lifetime ECL method is adopted. The standard introduces additional new disclosures. The consolidated
entity will adopt this standard from 1 July 2018 but the impact not expected to be significant.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard provides a single standard for revenue recognition. The core principle of the standard is that
an entity will recognise revenue to depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services. The standard will require: contracts (either written, verbal or implied) to be
identified, together with the separate performance obligations within the contract; determine the
transaction price, adjusted for the time value of money excluding credit risk; allocation of the
transaction price to the separate performance obligations on a basis of relative stand-alone selling
price of each distinct good or service, or estimation approach if no distinct observable prices exist; and
recognition of revenue when each performance obligation is satisfied. Credit risk will be presented
separately as an expense rather than adjusted to revenue. For goods, the performance obligation
would be satisfied when the customer obtains control of the goods. For services, the performance
obligation is satisfied when the service has been provided, typically for promises to transfer services to
customers. For performance obligations satisfied over time, an entity would select an appropriate
measure of progress to determine how much revenue should be recognised as the performance
obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial
position as a contract liability, a contract asset, or a receivable, depending on the relationship between
the entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure
is required to enable users to understand the contracts with customers; the significant judgments
made in applying the guidance to those contracts; and any assets recognised from the costs to obtain
or fulfil a contract with a customer. The consolidated entity will adopt this standard from 1 July 2018
but the impact of its adoption is not expected to be significant.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The
standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating
leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the
statement of financial position, measured as the present value of the unavoidable future lease
payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or
less and leases of low-value assets (such as personal computers and small office furniture) where an
accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments
are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be
recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and
an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease
expense recognition will be replaced with a depreciation charge for the leased asset (included in
operating costs) and an interest expense on the recognised lease liability (included in finance costs).
In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be
higher when compared to lease expenses under AASB 117. However EBITDA (Earnings Before
Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is
replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within
the statement of cash flows, the lease payments will be separated into both a principal (financing
activities) and interest (either operating or financing activities) component. For lessor accounting, the
standard does not substantially change how a lessor accounts for leases. The consolidated entity will
adopt this standard from 1 July 2019 and the impact of its adoption is being assessed by the
consolidated entity.
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.
d) Principles of Consolidation
In accordance with the Corporations Act 2001, these financial statements present the results of the
consolidated entity only. Supplementary information about the parent entity is disclosed in note 29.
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 2017 and the results of all
subsidiaries for the year then ended.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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 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.
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
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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 (w). The discount rate
used to determine the present value of the cash flows was 13.43% (2016:13.43%).
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
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
The impairment expense, relating to oil and gas properties recognised in the Consolidated Statement
of Comprehensive Income is $nil (2016: $9.9 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 2017 and 2016 were prepared by Netherland, Sewell and Associates, Inc, independent
reserve engineers.
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 year and is
performed consistently from period to period.
Business combinations
As discussed at cc), business combinations are initially accounted for on a provisional basis. The fair
value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the
consolidated entity taking into consideration all available information at the reporting date. Fair value
adjustments on the finalisation of the business combination accounting is retrospective, where
applicable, to the period the combination occurred and may have an impact on the assets and
liabilities, depreciation and amortisation reported.
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
Other 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
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing
costs are expensed.
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.
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 the 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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
The amount of the impairment loss is recognised in profit and loss within other expenses. When a
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 entities within the 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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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.
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.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to, the tax authority.
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
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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
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.
Plant and equipment under lease are depreciated over the unexpired period of the lease or the
estimated useful life of the assets, whichever is shorter.
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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
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
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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
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
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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 and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be
settled within 12 months of the reporting date are recognised in other 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.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they
are incurred.
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
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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
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, 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
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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
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 interest 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
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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
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.
An 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 held 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 price 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
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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 there is a significant change in fair value
of an asset or liability from one period to another, an analysis is undertaken, which includes a
verification 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 2017
49
NOTE 3.
REVENUE AND EXPENSES
Revenue and expenses
a Revenue
Sale of oil and gas
Oil sales
Gas sales
Other liquids
Total revenue
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
Consolidated Entity
2017
$
2016
$
12,581,358
8,240,529
436,362
38,289
714,103
47,723
13,056,009
9,002,355
Bargain purchase recognised on acquisition
-
10,775,231
$10.8 million in bargain purchase on acquisition of properties relates to the acquisition of the Foreman Butte
project area. The cash purchase price of the asset was $16.0 million and the fair value of the assets
acquired on the acquisition date was determined to be $27.2 million, after allowing for $1.8 million in asset
retirement obligations assumed. The fair market value was determined through reference to the reserve
value of the assets after discounting the future cash flows between 10% and 20% (estimated at the
Company’s cost of capital).
Other Income
Interest income
Sale of oil and gas assets
Other
Total other income
Consolidated Entity
2017
$
2016
$
411
2,150,047
33,185
2,183,643
2,569
-
897,448
900,017
Sale of oil and gas assets relates to the sale of two properties during the year ended 30 June 2017. $0.6
million relates to profit on the sale of the State GC field in New Mexico and $1.5 million relates to profit on
the sale of the North Stockyard property in North Dakota. Both fields were non operated fields.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
b) General and Administration
Employee Benefits
Salary and employee 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
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
Consolidated Entity
2017
$
2016
$
(2,970,910)
(2,025,332)
(336,605)
(153,375)
(176,599)
(447,431)
(144,846)
(119,346)
(287,969)
(67,246)
(98,725)
(350,860)
(2,183,002)
(5,153,912)
(287,999)
(157,094)
(277,759)
(173,357)
(92,954)
(3,350)
(284,860)
(234,017)
(5,004)
(228,886)
(1,745,280)
(3,770,612)
Consolidated Entity
2017
$
(1,592,802)
(219,810)
(287,120)
(2,099,732)
2016
$
(1,217,440)
(185,138)
(114,274)
(1,516,852)
Consolidated Entity
2017
$
2016
$
(95,974)
(821,498)
(1,441,296)
(3,693,736)
(1,537,270)
(4,515,234)
(119,165)
(1,656,435)
(84,937)
(4,600,171)
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
51
e) Exploration and evaluation expense
General exploration expense
Deferred exploration expenditure written off
Dry hole costs
Total exploration and evaluation expense
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
Consolidated Entity
2017
$
2016
$
(78,391)
(28,415)
-
(4,167,628)
-
(78,391)
(20,034)
(4,216,077)
Consolidated Entity
2017
$
2016
$
f) Derivative instruments
Realised income recognised in relation to derivative instruments
(1,342,901)
507,252
Unrealised (expense)/income recognised in relation to the movement
in the fair value of derivative instruments
Total derivative instruments income/(expense)
2,640,373
(3,165,215)
1,297,472
(2,657,963)
NOTE 4. INCOME TAX
The major components of income tax expense are:
Profit and Loss
Current income tax
Deferred income tax
Aggregate income tax expense
Numerical reconciliation of income tax expense and tax at statutory
rate
Consolidated Entity
2017
$
2016
$
-
-
-
-
-
-
Loss before income tax
(2,538,696)
(11,366,932)
At the Australian statutory income tax rate of 27.5% (2016: 28.5%)
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
698,141
(177,922)
109,559
197,926
3,329,576
(14,918)
305,120
753,584
(901,225)
(2,695,375)
-
73,521
-
-
(1,677,987)
-
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
Consolidated
Balance Sheet
Profit and Loss
2017
$
2016
$
2017
$
2016
$
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
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
-
-
-
-
-
-
-
-
-
-
-
-
Balance Sheet
Profit and Loss
2017
$
2016
$
2017
$
2016
$
34,613,898
33,545,876
1,068,021
7,550,160
(2,653,708)
(3,318,022)
664,314 (6,215,297)
795,172
1,626,283
(831,110)
1,360,511
780,444
780,444
-
-
(33,535,806) (32,634,581)
-
-
(901,225) (2,695,374)
-
-
-
-
-
-
-
-
-
-
The Consolidated Entity has tax losses carried forward arising in Australia of $13,539,160 (2016:
$12,675,887). The benefit of these losses of $3,579,824 (2016: $3,485,869) 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 continues 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
$82,320,781 (2016: $79,980,377). 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 2037.
In addition to the above mentioned Federal carried forward losses in the United States, the Company also
has approximately $47,567,266 (2016: $46,211,485) of State carried forward tax losses, with expiry dates
between June 2017 and June 2037. 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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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 (2016: $Nil).
The balance of the franking account at the end of the year was nil (2016:$Nil).
NOTE 6.
CASH AND CASH EQUIVALENTS
CURRENT
Cash at bank and on hand (i)
NON CURRENT
Consolidated Entity
2017
$
2016
$
628,778
2,654,812
Restricted cash - operating bonds (ii)
450,000
450,000
Notes:
(i)
(ii)
Cash at bank earns interest at floating interest rates based on daily bank deposit rates.
The balance relates to several insurance bonds issued by Zurich American which are required by various state and
federal agencies for operators. In prior years, the Company paid an annual fee to Zurich for the insurance premiums,
however, following the decline of oil prices, Zurich moved toward requesting cash collateral for the bonds.
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.
NOTE 7.
TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables (i)
Net GST receivable
Receivable – joint operation partners (ii)
Consolidated Entity
2017
$
2016
$
894,523
19,847
635,996
1,550,366
1,717,110
3,616
275,618
1,996,344
Notes:
(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.
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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 (2016:$Nil). No impairment has been recognised in respect of any of these
receivables (2016:$Nil).
NON CURRENT
Other receivables (iii)
Consolidated Entity
2017
$
2016
$
136,198
136,198
139,552
139,552
Notes:
(iii)
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.
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.
OIL INVENTORY
CURRENT
Oil inventory
Notes:
(i)
This balance was acquired through the Foreman Butte acquisition.
NOTE 9.
PLANT & EQUIPMENT
NON-CURRENT
Office Equipment
Cost
Accumulated depreciation
Balance as at 1 July
Additions
Disposals
Depreciation charge for the year
Balance as at 30 June
Consolidated Entity
2017
$
2016
$
219,288
463,768
Consolidated Entity
2017
$
2016
$
990,022
(693,944)
296,078
308,474
106,769
-
(119,165)
296,078
882,469
(573,995)
308,474
248,521
144,890
-
(84,937)
308,474
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
55
NOTE 10.
EXPLORATION AND EVALUATION ASSETS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
NON-CURRENT
Balance as at 1 July
Expenditure capitalised
Expenditure written off
Balance as at 30 June
Consolidated Entity
2017
$
2016
$
220,703
50,375
3,880,220
508,111
-
(4,167,628)
271,078
220,703
The costs remaining in the Exploration and Evaluation assets relate to the Cane Creek project in Utah and
are option fees associated with acquiring the acreage and permitting fees associated with completing 3D
seismic shot in the project area. The Company is currently seeking a joint venture partner in order to
continue exploration and development of this project.
Expenditure incurred in the current year relates to an extension fee payable to State of Utah School and
Institutional Trust Lands Administration with the respect to the leases in the Cane Creek project.
The expenditure in the prior year, relates to drilling costs associated with the Bluff well 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
NON-CURRENT
Oil and Gas Properties
Accumulated depletion
Accumulated impairment
Proved developed producing properties
Balance as at 1 July
Additions
Disposals
Net impairment expense
Depreciation charge
Balance at 30 June
Less assets held for sale
Total oil and gas properties
Consolidated Entity
2017
$
2016
$
45,040,425
(5,410,510)
45,215,057
(4,789,763)
(7,523,407)
(8,597,721)
32,106,508
31,827,573
45,626,560
2,458,275
28,794,738
31,287,101
(14,441,057)
-
-
(9,940,045)
(1,537,270)
32,106,508
(4,515,234)
45,626,560
-
(13,798,987)
32,106,508
31,827,573
Assets held for sale
On 30 June 2016 the Company signed a purchase and sale agreement for the sale of the North Stockyard
project in North Dakota. The sale price was $15 million; the purchaser provided a deposit of $1 million. The
transaction was initially scheduled to close on 31 August 2016, under the terms of the purchase and sale
agreement, the purchaser could extend the closing date to 30 September 2016 through the payment of
$50,000. The purchaser exercised this option on 31 August 2016. This transaction closed on 29 October
2016.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
This asset consists of 22 producing bakken and three forks formation assets. The effective date of the
transaction was the day after the transaction closed. The asset sale was not been treated as a discontinued
operation as the Company did not believe it met the criteria required.
There were no sales of properties during the year ended 30 June 2016.
Impairment of oil and gas properties
At 30 June 2017, 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, Netherland Sewell and
Associates Inc 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 12% (2016:
12%). The fair value less cost of disposal has been based on the expected useful lives of the respective
fields.
The prior year impairment expense of $9.9 million is result of the impact of the decreasing oil price on the
Consolidated Entity’s reserve value in relation to the North Stockyard, State GC and Rainbow properties.
NOTE 12.
TRADE AND OTHER PAYABLES
CURRENT
Trade payables (i)
Revenue payable (ii)
Deposit from proposed sale of North Stockyard
properties (iii)
Interest payable (iv)
Other payables (v)
Total Trade and Other Payables
Consolidated Entity
2017
$
2016
$
3,248,548
1,382,366
3,586,504
737,983
-
1,000,000
186,530
249,060
5,066,504
439,101
194,497
5,958,085
Notes:
i)
ii)
iii)
iv)
v)
Trade payables are non-interest bearing and normally settled on 30 day terms.
Revenue payable is revenue received by the Company as operator of a property, payable to other revenue and royalty
interest owners. Revenue payable is non-interest bearing and is typically settled on 45-60 days terms unless deemed
otherwise.
The deposit was received on 30 June 2016 and is non-refundable other than for title or environmental defects identified
by the purchaser during their due diligence. No defects have been identified as at the date of the report. The transaction
closed on 29 October 2016.
Interest payable is interest and other expenses recognised with respect to the Mutual of Omaha credit facility and in the
prior year, the promissory note calculated using the effective interest rate method. Interest paid to Mutual of Omaha is
generally paid every 90 days. Interest of the promissory note was paid on the settlement of the note in April 2017.
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 2017
57
NOTE 13.
BORROWINGS
CURRENT
Credit facility with Mutual of Omaha (i)
Promissory note from Oasis Petroleum Inc (ii)
Less deferred borrowing costs
NON-CURRENT
Secured
Credit facility with Mutual of Omaha (i)
Less deferred borrowing costs
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
Consolidated Entity
2017
$
2016
$
23,419,749
-
(154,982)
23,264,767
11,500,000
4,046,428
-
15,546,428
Consolidated Entity
2017
$
2016
$
-
-
-
19,000,000
(334,773)
-
18,665,227
Notes:
(i)
(ii)
Fair values are not materially different to their carrying amounts
The promissory note was payable to Oasis Petroleum North America and has a face value of $4 million. It was repaid in
May 2017 through an increase in the credit facility from Mutual of Omaha Bank.
A portion of the credit facility owing to Mutual of Omaha was classified in the prior year as current as this
amount was required to be paid down following the sale closing of the sale of the North Stockyard properties.
This repayment was made on 31 October 2016.
In June 2017,the term of this loan was extended from October 2017 to October 2018.
As at 30 June 2017 the Consolidated Entity was in breach of its earnings and liquidity covenants. It has
requested a waiver from Mutual of Omaha Bank but one has yet to be received. The Consolidated Entity has
engaged an investment banker to refinance this facility to extend the value and term of the facility.
As at 30 June 2016 the Consolidated Entity was in compliance with all of these quarterly covenants.
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 credit facility was fully utilised as at the reporting date.
The Consolidated Entity incurred $0.4 million in borrowing costs which have been deferred and will be
amortized over the life of the facility using the effective interest rate method.
The maturity of the facility was extended on 30 June 2017 from October 2017 to 31 October 2018. The
interest rate is LIBOR plus 6.0% or approximately 6.8% for the year ended 30 June 2017 (2016: 6.8%).
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 14.
PROVISIONS
CURRENT
Consolidated Entity
2017
$
2016
$
Provision for restoration
-
300,000
NON-CURRENT
Consolidated Entity
2017
$
2016
$
Provision for restoration
3,362,204
3,311,150
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 1 July
Recognised upon acquisition or development of new assets
Work performed
Increase in liability due to change in estimated costs
Provision released upon disposition of assets
Provision released upon completion of plugging and abandonment
work
Unwinding of discount
Balance as at 30 June
Consolidated Entity
2017
$
2016
$
3,611,150
-
(300,949)
225,823
(368,197)
(92,743)
1,682,383
1,860,815
(46,322)
-
-
-
287,120
3,362,204
114,274
3,611,150
The increase during the year ended 30 June 2016 relates to the provision assumed with respect to the
Foreman Butte acquisition assets.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 15.
CONTRIBUTED EQUITY AND RESERVES
(a) Issued and paid up capital
Contributed Equity
3,283,000,444 ordinary fully paid shares including shares to be
issued (2016 – 3,215,854,701 ordinary fully paid shares
including shares to be issued)
Consolidated Entity
2017
$
2016
$
99,643,104
99,523,411
Movements in contributed equity
for the year
2017
2016
Opening balance
Capital Raising (i)
Shares issued upon exercise of
options (ii)
Shares issued as share based
payments (iii)
Transaction costs incurred
Shares on issue at balance date
Shares to be issued as part of
Kestrel acquisition (iv)
No. of shares
$
No. of shares
$
3,215,854,701
-
99,523,411
-
2,837,782,022
378,020,400
98,296,001
1,398,675
140,143
4,516
52,279
1,475
67,005,600
159,506
-
-
-
3,283,000,444
(44,329)
99,643,104
-
3,215,854,701
(172,740)
99,523,411
65,000
-
65,000
-
Closing Balance
3,283,065,444
99,643,104
3,215,919,701
99,523,411
(i)
(ii)
(iii)
(iv)
In April 2016, the Company issued 378,020,400 ordinary shares priced at 0.0036 cents each to raise
US$1,398,675 to investors in the United States
During the course of the year the Company issued 140,143 (2016: 52,279) ordinary shares upon the
exercise of 140,143 (2016: 52,279) 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$0.032 per share (2016: A$0.038 per share/US$0.028 per
share) to raise US$4,516 (2016: US$1,475).
In November 2016, the Company issued 67,005,600 ordinary shares to Directors and employees in
lieu of cash salary not paid during the period from 1 September 2016 to 31 August 2017. The value of
the shares issued was US$0.0023 per share.
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
(b) Share Options
All references to exercise price and deemed value of options are in Australian Dollars.
As at the date of this report, there were 411,033,246 (2016: 320,615,486) unissued ordinary shares under
option. All option exercise prices are denominated in Australian Dollars unless noted otherwise.
In November 2016, the Company issued 48,000,000 options to Directors and employees of the Company.
These options have an exercise price of $0.007 per share and an expiry date of 15 November 2026. They
vest on 17 November 2017.
In November 2016, the company issued 272,000,000 options to Directors and employees of the Company.
These options have an exercise price of $0.0055 per share and an expiry date of 15 November 2026. They
vest on 17 November 2017. In August 2017, an employee resigned prior to the vesting date therefore
5,500,000 options have been cancelled.
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. These options expired unexercised during the prior year.
During the year ended June 30, 2013, the Company 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 140,143 (2016: 52,279) were exercised. The remaining 97,090,015
expired on 31 March 2017.
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. These
options were not exercised and expired on 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.
(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.
There is no current on-market share buy-backs
(d) Reserves
Reserves
Foreign currency translation reserve
Equity reserve
Share based payments reserve
Total Reserves
Consolidated Entity
2017
$
2016
$
1,989,799
(1,097,780)
5,828,859
6,720,878
2,025,500
(1,097,780)
5,276,872
6,204,592
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
Nature and purpose of reserves
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.
Movement in Reserves
Foreign currency translation reserve
Balance 1 July
Currency translation differences
Balance at 30 June
Share based payments reserve
Balance 1 July
Share based payments expense
Balance at 30 June
NOTE 16.
ACCUMULATED LOSSES
Balance previously reported at the beginning of the year
Net Loss attributable to members, after income tax
Balance at the end of the year
NOTE 17.
COMMITMENTS
(a) Exploration commitments
Consolidated Entity
2017
$
2016
$
2,025,500
(35,701)
1,989,799
2,094,038
(68,538)
2,025,500
5,276,872
551,987
5,828,859
5,276,872
-
5,276,872
Consolidated Entity
2017
$
2016
$
(100,070,306)
(2,538,696)
(88,703,374)
(11,366,932)
(102,609,002)
(100,070,306)
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 2017 is $Nil (2016: $nil),
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
(b) Capital Commitments
The Consolidated Entity had no capital commitments as at 30 June 2017 and 30 June 2016.
(c) Operating lease commitments
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:
Consolidated Entity
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
2017
$
2016
$
109,927
323,059
432,986
68,253
415,995
484,248
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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 CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the
CODM are consistent with those adopted in the financial statements.
The following table presents revenue and loss information regarding geographic segments for the year ended 30 June 2017 and 30 June 2016 as presented
to the Board of Directors.
United States of America
Other segments
Consolidated
Segment revenue from external
customers
Segment result before amortisation and
impairment
Impairment
Depreciation and amortisation
Total segment result
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
13,056,009
9,002,355
-
-
13,056,009
9,002,355
(296,127)
3,565,591
(341,654)
(392,307)
(637,781)
3,173,284
(244,480)
(9,940,045)
(1,656,435)
(2,197,042)
(4,600,171)
(10,974,625)
-
-
(341,654)
-
(244,480)
(9,940,045)
-
(392,307)
(1,656,435)
(2,538,696)
(4,600,171)
(11,366,932)
Total segment assets
35,704,042
51,935,597
108,353
107,921
35,812,395
Additions to non-current assets
2,458,275
31,940,103
-
-
2,458,275
52,043,518
31,940,103
Total segment liabilities
(31,998,225)
(45,206,460)
(59,190)
(104,430)
(32,057,415)
(45,310,890)
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
Segment result
Total segment result
Income tax expense
Loss attributable to members, after income tax
Consolidated Entity
2017
$
2016
$
(2,538,696)
-
(2,538,696)
(11,366,932)
-
(11,366,932)
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.
During the year ended 30 June 2017 approximately $6.7 million (2016: $11.0 million) of the consolidated
entity’s external revenue was derived from sales by independent oil and gas companies operating wells on
behalf of the consolidated entity.
NOTE 19.
OPERATING ACTIVITIES
RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH FLOW FROM
Consolidated Entity
2017
$
2016
$
(a) Reconciliation of the net loss after tax to the net cash flows from operations
Net loss after tax
Depreciation
Net gain on bargain purchase
Profit on sale of assets
Amortisation of borrowing costs
Share based payments
Non cash piece of other income recognised
Unwinding of discount associated with restoration obligation
Exploration expenditure expensed
(2,538,696)
(11,366,932)
1,656,435
4,600,171
-
(10,775,231)
(2,150,047)
219,810
711,493
(92,743)
287,120
78,391
-
185,138
-
-
114,274
4,216,077
Net (gain)/loss on fair value movement of fixed forward swaps
(2,640,373)
3,165,215
Impairment losses of oil and gas properties
244,480
9,940,045
Changes in assets and liabilities:
Changes in receivables
Changes in employee benefits
Changes in payables
806,356
54,563
752,251
886,867
(24,917)
541,270
Net cash flows used in operating activities
(2,610,960)
1,481,977
(a) Non-cash investing and financing activities
There were no non-cash investing and financing activities during the current and previous reporting date.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 20.
RELATED PARTY DISCLOSURES
(a) Ultimate parent
Samson Oil & Gas Limited is the ultimate parent company.
(b) Subsidiaries
The consolidated financial statements include the financial statements of Samson Oil & Gas Limited and the
following subsidiaries:
Name
Country of
Incorporation
% Equity
Interest
Investment
2017 2016
2017
2016
$
$
Samson Oil & Gas USA Inc
United States
100
100
44,533,991 43,377,199
Samson Oil and Gas Montana USA, Inc (100%
owned subsidiary of Samson Oil & Gas USA Inc)
United States
100
100
34,207,123 34,176,231
(c) Key management personnel compensation
Short term
Post-employment
78,741,114 77,553,430
Consolidated Entity
2017
$
2,225,609
80,685
2,306,294
2016
$
1,169,215
59,636
1,228,851
(d) Transactions with related parties
There were no related party transactions during the current and previous reporting date.
(e) Receivable from and payable to related parties
There were no receivables or payables due to related parties during the current and previous reporting date.
(f) Loans to/from related parties
There were no loans to/from related parties during the current and previous reporting date
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
66
NOTE 21.
AUDITORS’ REMUNERATION
Amounts paid or payable to RSM Australia Partners for:
audit or review of the financial report
Amounts paid or payable to Hein & Associates:
an audit or review of the reporting
NOTE 22.
LOSS PER SHARE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
Consolidated Entity
2017
$
2016
$
72,000
72,000
63,208
63,208
225,550
225,550
180,800
180,800
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
2017
$
2016
$
Net loss for the year attributable to owners of Samson Oil & Gas Limited
(used in calculating basic and diluted loss per share)
(2,538,696)
(11,366,932)
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
2017
2016
3,257,378,424
2,919,426,154
-
-
-
-
3,257,378,424
2,919,426,154
At the end of the current year there were 411,033,246 (2016:320,615,486) potential ordinary shares on
issue. These potential ordinary shares are not dilutive for 30 June 2017 or 2016 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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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. (2016: 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 have an inter-creditor agreement with Mutual of Omaha Bank. 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.
At 30 June 2016, 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.
c)
Fair value measurement
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).
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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 2017 and 2016, the fair value of the Consolidated Entity’s derivative instruments was as
follows:
Consolidated Fair Value at 30 June 2017
Current Assets
Derivative instruments
Non-Current Assets
Derivative instruments
Current Liability
Derivative instruments
Non-Current Liability
Derivative instruments
Current Assets
Derivative instruments
Non-Current Assets
Derivative instruments
Current Liability
Derivative instruments
Non-Current Liability
Derivative instruments
Level 1
Level 2
Level 3
Netting (i)
Total
-
167,307
-
(167,307)
-
-
370,474
-
(270,891)
99,583
-
531,247
-
(167,307)
363,940
-
270,891
-
(270,891)
Consolidated Fair Value at 30 June 2016
Level 1
Level 2
Level 3
Netting (1)
Total
-
136,726
-
(136,726)
-
220,316
-
(220,316)
-
-
-
-
1,808,380
-
1,453,393
-
-
(136,726)
1,671,654
(220,316)
1,233,077
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
Note:
(i) 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.
d)
Valuation techniques for fair value measurements categorised as level 2
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.
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to
approximate their fair values due to their short-term nature.
NOTE 24. CONTINGENCIES
There are no unrecorded contingent assets or liabilities in place for the Consolidated Entity at balance
date (2016: $Nil).
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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.
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
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
Powder River Basin
United States of America
San Simon
Scribner
Wagensen
North Stockyard
Sabretooth
Foreman Butte
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
%
2017
10.00
25-100
50.00
25.00
66.00
4.00
16.00
9.00
60.00
2.00
15.00
3.00
13.00
18.00
0.00
28.00
8.00
0.00
12.50
1-100
%
2016
10.00
25-100
50.00
25.00
66.00
4.00
16.00
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
0.00
Oil and gas properties held as jointly controlled assets total $32,106,508 (2016: $45,628,959).
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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
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 $23.5 million in borrowings which is subject to a floating interest rate. $19.5
million has an interest rate of 5.25%, being the prime rate plus 1% and $4 million has an interest of 6.75%,
being prime rate plus 2.5%. 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 moved in a range from around 3.5% to 4.25% in the past twelve months.
At 30 June 2017 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)
2017
$
2016
$
Other Equity
Higher/(Lower)
2017
$
2016
$
Borrowings
+ 3.5% (350 basis points)
- 1.0% (100 basis points)
819,691
(234,197)
47,500
(43,700)
-
-
-
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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
2017
$
9,369
619,409
628,778
2016
$
25,237
2,629,575
2,654,812
The average floating interest rate for the Consolidated Entity in the United States was 0.00% per annum
(2016: 0.023%).
The average fixed interest rate for the Consolidated Entity in the United States was 0.00% (2016: 0.00%).
The average floating interest rate for the Consolidated Entity in Australia was per annum 0.0% (2016:
0.528%)
The average fixed interest rate for the Consolidated Entity in Australia was 0.0% per annum (2016:0.00%).
At year end, the Consolidated Entity has $nil (2016: $nil) in short term deposits that have fixed interest rates.
These term deposits have terms no longer than 90 days.
At 30 June 2017 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)
2017
$
2016
$
Other Equity
Higher/(Lower)
2017
$
2016
$
23
(47)
63
(126)
-
-
Pre tax result
Higher/(Lower)
2017
$
2016
$
Other Equity
Higher/(Lower)
2017
$
2016
$
Cash exposed to US interest
rates
+ 0.10% (10 basis points)
- 0.25% (25 basis points)
619
(1,549)
2,630
(6,574)
-
-
-
-
-
-
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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
Consolidated Entity
2017
$
2016
$
9,369
97,423
1,105,573
102,184
59,738
155,762
47,054
1,051,995
At 30 June 2017 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)
2017
$
2016
$
Other Equity
Higher/(lower)
2017
$
2016
$
-
-
-
-
3,782
(3,782)
259
(259)
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:
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
Product
WTI
WTI
Henry Hub
Henry Hub
Henry Hub
Start Date
1-Jul-17
1-May-18
1-Aug-17
1-Nov-17
1-May-18
End Date
30-Apr-18
31-Dec-18
31-Oct-17
30-Apr-18
31-Dec-18
Volume (BO/Mmbtu)
34,073
107,800
30,728
129,548
161,700
Floor
41.50
45.00
2.40
2.80
2.65
Ceiling
63.00
56.00
2.91
3.60
2.90
Costless Swaps
Product
WTI
WTI
Start
1-Jul-17
1-Jan-18
End
31-Dec-17
30-Apr-18
Volume (BO)
82,818
39,720
Swap
44.09
45.55
At 30 June 2017 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:
Consolidated
Oil
Oil price + 10%
Oil price – 20%
Pre tax result
Higher/(lower)
2017
$
2016
$
Other Equity (pre tax)
Higher/(lower)
2017
$
2016
$
340,797
(1,018,243)
(743,233)
1,935,209
-
-
-
-
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.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
The table below reflects all contractual repayments and interest resulting from recognised financial liabilities,
including derivative instruments as of 30 June 2017. 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 2017.
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument
liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based
on the earliest date on which the financial liabilities are required to be paid. The tables include both interest
and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ
from their carrying amount in the statement of financial position.
The Consolidated Entity monitors rolling forecasts of liquidity reserve on the basis of expected cash flow.
Weighted
average
interest rate
1 year or less
Between 1
and 2 years
Between
2 and 5
years
Over 5
years
Remaining
contractual
maturities
Consolidated - 2017
%
$
$
$
$
$
Non-derivatives
Non-interest bearing
Trade and other payables
-
5,066,504
Interest-bearing - variable rate
Bank loans
5.51%
23,419,749
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,486,253
363,940
363,940
$
$
$
$
$
%
-
5,958,285
10%
4,400,000
-
-
Total non-derivatives
Derivatives
Collars, swaps and option
contracts net settled
Total derivatives
Consolidated - 2016
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing - fixed rate
Promissory note
Interest-bearing - variable rate
Bank loans
6.80%
11,500,000 19,000,000
Total non-derivatives
Derivatives
Collars, swaps and option
contracts net settled
Total derivatives
21,858,285 19,000,000
1,671,654
1,233,077
1,671,654
1,233,077
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The cash flows in the maturity analysis above are not expected to occur significantly earlier than
contractually disclosed above.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
At balance date, the Consolidated Entity has $0.5 million in unused credit facility available for draw down
(2016: $nil 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 2015, 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.
Options issued to Directors and Employees
During the year ended 30 June 2017 48,000,000 options were issued to Directors and employees with a
value of $0.0037 per option. The options have an exercise price of $0.007 and an expiry date of 15
November 2026. A Black-Scholes option pricing model was used to value the options.
The following table sets out other information on the options issued to Directors and employees
Grant Date
Vesting period
Time to expiry
Total cost (USD)
Share based payment expense recognised for the
year ended 30 June 2017 (USD)
17 November 2016
1 year
10 years
$134,902
$84,246
During the year ended 30 June 2017 272,000,000 options were issued to Directors and employees with a
value of $0.0038 per option. The options have an exercise price of $0.0055 and an expiry date of 15
November 2026. A Black-Scholes option pricing model was used to value the options.
The following table sets out other information on the options issued to Directors and employees:
Grant Date
Vesting period
Time to expiry
Total cost (USD)
Share based payment expense recognised for the
year ended 30 June 2017 (USD)
17 November 2016
1 year
10 years
$754,366
$467,741
There were no options issued to Directors, Executives and other employees or other share based payments
during the year ended 30 June 2016.
Share issued to Directors and Employees
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
In November 2017, the Company issued 67,005,600 ordinary shares to Directors and employees in lieu of
cash salary not paid during the period from 1 September 2015 to 31 August 2016. From this share issue
15,256,600 shares were withheld in order to pay the tax liability in the United Sates for the United States
based employees and Directors. The share based payment expense after accounting for the shares withheld
was $159,506.
At year end there were 324,000,000 (2016: 4,000,000) options outstanding that had been granted to
employees, Directors and other service providers. The weighted average exercise price was 0.61 cents
(2016: 3.9 cents) per option.
The weighted average remaining contractual life for the share options outstanding as at 30 June 2017 is
between 4 months and 9.5 years (2016: between 1.5 years and 2.0 years).
The range of exercise prices for options outstanding at the end of the year was 0.5 and 3.9 cents (2016: 3.3
– 15.5 cents).
Total expenses arising
recognised during the period were as follows:
from share based payment
transactions
Share options - Directors
Share options - Employees
Total share options expense
Shares – Directors
Shares – Employees
Shares withheld *
Total shares expense
2017
$
2016
$
237,714
314,273
551,987
113,234
76,833
(30,561)
159,506
711,493
-
-
-
-
-
-
-
-
* Shares were withheld in order to pay the tax liability in the United States for the United States based
employees and Directors.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
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
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share based payments reserve
Foreign currency translation reserve
Accumulated losses
Total equity
Profit after income tax
Total comprehensive income
(b) Guarantees
2017
$
2016
$
53,622
3,760,548
3,814,170
55,825
18,347,856
18,403,681
59,190
-
59,190
104,430
-
104,430
3,754,980
18,299,251
99,643,104
99,523,411
5,828,859
5,276,872
(5,392,146)
(6,936,742)
(96,324,837)
3,754,980
(79,564,290)
18,299,251
(16,760,547)
(24,974,169)
(18,305,143)
(23,773,582)
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. (2016: Mutual of Omaha Facility). This does not constitute a cross
guarantee.
(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities at 30 June 2017 or 30 June 2016.
(d) Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2017 and
30 June 2016.
(e) Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as
disclosed in note 2.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2017
BUSINESS COMBINATION
NOTE 30.
On March 31, 2016, the Company closed on the acquisition of producing and non-producing wells in the
Madison and Ratcliffe formations in North Dakota and Montana. The acquisition had an effective date of
October 31, 2015 and closed on March 31, 2016.
Amount Settled in Cash
Extension of credit facility
Fair value of promissory note provided
Fair value of consideration transferred
Recognised amounts of identifiable assets and liabilities:
Oil and gas properties
Oil inventory acquired
Trade receivables
Revenue in suspense assumed
Asset retirement obligation assumed
Net identifiable assets and liabilities
Gain on bargain purchase
USD
$
1,391,874
11,500,000
3,928,571
16,820,445
29,350,256
463,768
53,540
(403,612)
(1,868,276)
27,595,676
10,775,231
Consideration Transferred
The acquisition was settled in cash (including post-closing settlement payments) of $16.6 million. $1.2 million
was settled from the Company’s cash reserves, $11.5 million came from an extension of the Company’s
credit facility with Mutual of Omaha Bank and $3.9 million was provided by a promissory note provided by
the seller of the assets. The fair value of the promissory note was determined to be $3.9 million on
acquisition date based on an effective interest rate of 12%. The face value of the note is $4 million. The
note accrues 10% interest per annum, and was due for repayment on 1 April 2017. The interest is payable
in a balloon payment at maturity. The note is secured by a second lien over all the assets acquired.
Identifiable net assets
The assets, collectively known as the Foreman Butte acquisition, consist of interests in 177 wells, both
operated and non-operated in the Madison and Ratcliffe formations in Montana and North Dakota. The fair
value of the assets acquired was determined with reference to the reserve value of those assets at
acquisition date, the Company’s cost of capital and other comparable transactions. The working interest of
the operated wells acquired averages 87% and the working interest of the non-operated assets acquired
averages 15%.
The trade receivables, oil inventory and revenue in suspense were recognized at face value as this
approximates fair value.
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
80
DIRECTORS’ DECLARATION
For the year ended 30 June 2017
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 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 2017
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
29 September 2017
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
81
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
SAMSON OIL & GAS LIMITED
Opinion
We have audited the financial report of Samson Oil & Gas Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated balance sheet as at 30 June 2017, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, and notes to the financial statements, including a summary of significant accounting
policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group's financial position as at 30 June 2017 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Pty Ltd is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Pty Ltd ACN 009 321 377 atf Birdanco Practice Trust ABN 65 319 382 479 trading as RSM
Liability limited by a scheme approved under Professional Standards Legislation
Material Uncertainty Related to Going Concern
We draw attention to Note 2 in the financial report, which indicates that the Group incurred a net loss of $2,538,696
and had net cash outflows from operating activities of $2,610,960 for the year ended 30 June 2017. As at that
date, the Group’s current liabilities exceeded its current assets by $26,242,261. These conditions, along with the
other matters as set forth in Note 2, indicate the existence of a material uncertainty which may cast significant
doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Except for the matter described in the Material Uncertainty Related to Going Concern section of our report, there
are no other key audit matters to communicate.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2017, but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporation Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2017.
In our opinion, the Remuneration Report of Samson Oil & Gas Limited, for the year ended 30 June 2017, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 29 September 2017
J A KOMNINOS
Partner
SHAREHOLDER INFORMATION
For the year ended 30 June 2017
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 28 September 2017.
DISTRIBUTION OF EQUITY SECURITIES
Spread of Holdings
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
Over 100,000
TOTAL ON REGISTER
Number of Holders
930
459
336
1,259
875
3,859
Number of Shares
258,585
1,465,130
2,743,461
51,880,670
3,226,652,598
3,283,000,444
3,198 shareholders held less than a marketable parcel (<$500) of ordinary fully paid shares.
TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest holders of quoted shares are:
Rank Shareholders
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nom Aust Ltd
Cooke Derek
Hussein Jamil Mahomed
El-Bayed Yvonne
Vogliotti Peter Anthony
Samson Oil & Gas Ltd Treasury Account
Mirkazemi Pedram
Leet Inv PL
Smart Inv Ltd
MacLachlan Neil Thacker
Doswell Julie
Baxter Michael
HSBC Custody Nom Aust Lim
Gerendasi Holdings PL
Kampar PL
Monna Mirkazemi Super PL
Barr Super PL
O’Brien John Walter G
Stratford Linda
Armdig PL
TOTAL
Number of Shares Percentage of total shares
%
70.14
1.12
0.85
0.75
0.58
0.57
0.55
0.49
0.42
0.41
0.36
0.36
0.35
0.33
0.25
0.24
0.24
0.22
0.22
0.21
78.66%
2,302,680,548
36,747,171
28,000,000
24,478,401
19,000,009
18,784,200
18,000,000
16,000,000
13,725,000
13,340,289
11,936,010
11,671,576
11,523,911
10,898,775
8,046,312
8,000,000
7,834,621
7,129,012
7,124,999
7,000,000
2,581,920,834
VOTING RIGHTS
All ordinary shares (whether fully paid of not) carry one vote per share without restriction
SUBSTANTIAL HOLDERS
Substantial holders in the Company are set out below:
Shareholders
Nil
Number of Shares
Percentage of total shares %
SAMSON OIL & GAS LIMITED – ANNUAL REPORT 2017
85