ABN 25 009 069 005
ANNUAL REPORT
30 June 2018
TABLE OF CONTENTS
TABLE OF CONTENTS
Corporate Directory .......................................................................................................................................... 1
Directors’ Report ............................................................................................................................................... 2
Auditors’ Independence Declaration ............................................................................................................... 18
Corporate Governance Statement .................................................................................................................. 19
Consolidated Statement of Comprehensive Income ...................................................................................... 27
Consolidated Balance Sheet .......................................................................................................................... 29
Consolidated Statement of Cash Flows ......................................................................................................... 31
Consolidated Statement of Changes in Equity ............................................................................................... 32
Notes to the Consolidated Financial Statements ........................................................................................... 33
Directors’ Declaration ..................................................................................................................................... 81
Independent Auditor’s Report ......................................................................................................................... 82
Shareholder information .................................................................................................................................. 84
Samson Oil & Gas Limited
Annual Report – 30 June 2018
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:
Facsimile:
(08) 9315 2333
(08) 9315 2233
Bankers
National Australia Bank
Utility Bay 13.03
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
8
Samson Oil & Gas Limited
CORPORATE DIRECTORY
Stock Exchange
Australian Securities Exchange Limited
Code: SSN
OTC QB
Code: SSNYY
Australian Company Number
009 069 005
Australian Business Number
25 009 069 005
Presentation Currency
The financial statements are presented in
US Dollars (2017: US Dollars)
Annual Report – 30 June 2018
Page 1 of 84
DIRECTORS’ REPORT
30 June 2018
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 2018 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
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). 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 Chair of the Compensation Committee and a member of the Audit Committee.
Dr Hill was the Chief Executive Officer Triangle Petroleum Corporation, a NYSE listed company from 2010 to
2012. Dr Hill was Chairman from 2012 to 2016.
Dr Hill was a Director of Midstates Petroleum Inc. (NYSE: MPO). He resigned during 2016.
Dr Hill was Interim Chief Executive Office of Pardus Oil and Gas (formerly Energy and Exploration Partners (a
privately held company)) in 2016 and a Director from 2016 to November 2017, when the company was sold. He
became a Non-Executive Director of Nine Point Energy (a privately held company) in March 2017.
He has held no other directorships in the past three years.
Mr Greg Channon
Non Executive Director
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 Chief Executive Officer of Pathfinder Energy Pty Ltd.
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Annual Report – 30 June 2018
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DIRECTORS’ REPORT
30 June 2018
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 in Appalachia, Colorado, California and Texas.
Mr Channon is also a director of Ruby Lloyd Pty Ltd (a privately held company), New Standard Energy Limited
(ASX: NSE), Sirrocco Energy Limited (ASX: SCY) and Statesman Resources (TSX:SRR)
Mr Denis Rakich
Executive Director
Mr Rakich is the Company Secretary of Samson and has served in that capacity for 27 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
PRINCIPAL ACTIVITIES
24,840,966
5,561,200
5,105,000
1,717,400
60,000,000
30,000,000
24,000,000
24,000,000
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. In June 2018, the Consolidated Entity signed a
purchase and sale agreement for the sale of the majority of the Foreman Butte project for $40 million. The effective
date of the transaction was 1 January 2018. As part of the deal the Consolidated Entity retained a 15% working
interest in the Home Run field, a smaller field located within the Foreman Butte project area.
The transaction was due to close on October 15, 2018 however the buyer failed to close and the sale agreement
has lapsed. The Consolidated Entity is continuing to negotiate with the buyer and is also actively seeking
8
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Annual Report – 30 June 2018
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DIRECTORS’ REPORT
30 June 2018
alternative buyers for the project. The Consolidated Entity will preference deals where it retains a working interest
in the upside associated with the project.
The Consolidated Entity will continue to evaluate projects for a future transaction.
The Consolidated Entity’s focus in the future will continue to be on oil and gas exploration, development and
production in the USA. The Consolidated Entity will aim to develop existing retained acreage, whilst continuing to
identify potential project acquisitions.
OPERATING AND FINANCIAL REVIEW
Financial Results
The result for the financial year ended 30 June 2018 from continuing operations, after provision for income tax
was a loss attributable to members of the parent of $5.0 million (2017: loss $1.2 million). The result from
discontinued operations for the financial year ended 30 June 2018 was a loss of $0.78 million (2017: loss $1.3
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.
In June 2018, the Company signed a purchase and sale agreement for the sale of the majority of this project for
$40 million. The effective date was 1 January 2018. The Purchase and Sale agreement has currently lapsed due
to non performance by the buyer. The Company is continuing to work with the current buyer but is also actively
seeking an alternative buyer for the project.
Under the initial agreement, the Company would have retained a 15% working interest in the Home Run Field,
which 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.
Currently the field has 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. It is expected the
new operators of the project will develop these PUD locations during the course of 2019, the Company anticipates
participating in this development to the extent of its 15% working interest, assuming that the original sale
agreement closes or a similar agreement is reached with an alternative buyer.
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Annual Report – 30 June 2018
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DIRECTORS’ REPORT
30 June 2018
Exploration Activities
Cane Creek Project, Grand & San Juan Counties, Utah
Pennsylvanian Paradox Formation, Paradox Basin
100% working interest
On November 5, 2014, the Consolidated Entity entered into an Other Business Arrangement (“OBA”) with the Utah
School and Institutional Trust Lands Administration (“SITLA”) covering approximately 8,080 gross/net acres
located in Grand and San Juan Counties, Utah, all of which are administered by SITLA. The Consolidated Entity
was granted an option period for two years in order to enter into a Multiple Mineral Development Agreement
(“MMDA”) with another company who hold leases to extract potash in an an acreage position situated without
project area. The option expired in November 2017, unexercised. The Company wrote off $0.2 million of previously
capitalised exploration expenditure.
Financing Activities
The Company expects to repay its $23.9 million credit facility with Mutual of Omaha Bank, following the sale of the
Foreman Butte project.
Production Activities
Excluding discontinued operations, during the year the Consolidated Entity produced approximately 6,021 (2017:
61,516) barrels of oil and 7,284 (2017:434,998) Mcf of gas.
Reserves
PDP
PDNP
PUD
TOTAL PROVED
As at 30 June 2018
NET OIL
MBBLS
2,624
521
2,686
5,831
NET GAS
MMCF
612
394
1,090
2,096
NET BOE
MBBLS
2,726
587
2,868
6,181
NPV 10
$ MILLION
$39.13
$5.53
$47.71
$92.37
Notes to Reserves Estimates
BOE MBBBLS is thousand barrels of oil equivalent
BOE is calculated using a heating value of gas and converted as 1 BOE equals 6 MCF
PDP is Proved Developed Producing
PDNP is Proved Developed Non Producing
PUD is Proved Un-Developed
NPV 10 is Net Present Value at 10% discount rate
Oil prices are based on 30 June 2018, NYMEX West Texas Intermediate prices and are adjusted for quality,
transportation fees and market differentials. Gas prices are based on 30 June 2018 NYMEX Henry Hub prices and
are adjusted for energy content, transportation fees and market differentials. All prices, before adjustments, are
shown in the following table:
Period Ending
31 December 2018
31 December 2019
31 December 2020
31 December 2021
31 December 2022
Thereafter
Oil/BBL -$
70.57
65.97
61.40
58.29
54.78
53.03
Gas/MCF -$
2.96
2.81
2.68
2.73
2.64
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
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DIRECTORS’ REPORT
30 June 2018
decline curves are based on analogous wells. If a decline curve is established, this trend is used as the basis for
estimating future production rates.
The 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.
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 181 individual wells and have the following net revenue interest, reserve
volumes and value.
5
PDP
PDP
PDNP
PUD
Total
Well count
Avg. NRI
113
33
35
181
39.38%
72.46%
74.618%
53.15%
Net Oil
MBBLS
2,624
521
2,686
5,831
Net Gas
MMCF
612
394
1,090
2,096
Net BOE
MBBLS
2,726
587
2,868
6,181
NPV 10
$ MILLION
$39.13
$5.53
$47.71
$92.37
All PDP reserves are held by production.
DIVIDENDS
No dividend was paid or recommended for payment during the year (2017: $Nil).
SHARE OPTIONS
As at the date of this report, there were 314,500,000 (2017: 411,033,246) 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 cents per share and an expiry date of 15 November 2026. They vested
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 cents per share and an expiry date of 15 November 2026. The
remaining options vested on 17 November 2017. In August 2017, an employee resigned prior to the vesting date
therefore 5,500,000 options have been cancelled.
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Annual Report – 30 June 2018
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DIRECTORS’ REPORT
30 June 2018
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.
These options expired unexercised.
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. These options expired unexercised.
Shares issued as a result of the exercise of options
During the year, no options were exercised.
In the prior year, 140,143 ordinary shares were issued upon the exercise of 140,143 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:
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, resigned April 30, 2018
Vice President - Operations
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DIRECTORS’ REPORT
30 June 2018
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 2017 and
30 June 2018.
Effective 1 October 2017, all Executives took 25% pay cuts to their base salary in order to assist with cashflow for
the Company.
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.
Effective 1 October 2017, all Directors took 25% pay cuts to their Directors Fees in order to assist with cashflow
for the Company.
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
8
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Annual Report – 30 June 2018
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DIRECTORS’ REPORT
30 June 2018
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 2018 and 2017 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 2018
and 30 June 2017.
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.
Bonus plan for calendar year ended 31 December 2018
The Compensation Committee agreed not to put a bonus plan in place for the calendar year ended 31 December
2018.
Voting and comments made at the company's 2017 Annual General Meeting ('AGM')
At the 2017 AGM, 88.9% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2017.
C
Amounts of remuneration
Details 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.
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Annual Report – 30 June 2018
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DIRECTORS’ REPORT
30 June 2018
Table 1: Key Management Personnel compensation for the year ended 30 June 2018
Short Term
Post
Employment
Share-based Payments
Total
Total
Performance
Related
Salary &
Fees
Non-
monetary
Benefits
Super -
annuation
Options
Ordinary
Shares
$
$
$
$
$
$
%
Directors
T.Barr
P. Hill
G. Channon
D. Rakich
Executives
R. Lamont
D. Ninke
M. Ulmer
325,000
85,313
52,815
88,850
551,978
234,999
247,331
308,749
791,079
1,343,057
-
-
-
-
-
-
-
-
-
18,000
65,995
-
-
32,997
26,188
8,548
26,188
26,548
151,368
19,375
40,697
17,314
38,497
18,000
52,796
54,689
131,990
-
-
-
-
-
-
-
-
408,995
118,310
79,003
123,586
729,894
295,071
303,142
379,545
977,758
16%
28%
33%
21%
14%
13%
14%
81,237
283,358
-
1,707,652
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 10 of 84
DIRECTORS’ REPORT
30 June 2018
Table 2: Key Management Personnel compensation for the years 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
$
$
$
$
$
$
%
Directors
T.Barr
P. Hill
G. Channon
D. Rakich
Executives
R. Lamont
D. Ninke
M. Ulmer
390,000
5,982
18,000
103,640
96,078
52,815
81,408
-
-
-
620,301
5,982
275,945
14,267
269,798
15,237
370,500
18,519
916,243
48,023
1,536,544
54,005
-
-
7,864
25,864
18,821
18,000
18,000
54,821
80,685
51,820
41,127
41,127
56,903
30,865
19,864
5,602
574,525
178,763
113,806
136,001
237,714
113,234
1,003,095
63,911
60,456
82,912
207,279
444,993
27,463
31,402
17,968
76,833
400,407
394,893
507,899
1,303,199
190,067
2,306,294
18%
29%
36%
30%
16%
15%
16%
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 11 of 84
DIRECTORS’ REPORT
for the year ended 30 June 2018
Table 3 The proportion of remuneration linked to performance and the fixed proportion are as follows
Name
Directors
T.Barr
P. Hill
G. Channon
D. Rakich
Executives
R. Lamont
D. Ninke
M. Ulmer
Fixed remuneration
2017
2018
At risk - STI
At risk - LTI
2018
2017
2018
2017
84%
72%
67%
79%
86%
87%
86%
82%
71%
64%
70%
84%
85%
84%
16%
28%
33%
21%
14%
13%
14%
18%
29%
36%
30%
16%
15%
16%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
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 Barr’s contract was renewed for an additional
two years on 31 December 2017.
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 resigned
effective 30 April 2018.
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).
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
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 12 of 84
DIRECTORS’ REPORT
for the year ended 30 June 2018
(i)
Option holdings of key management personnel
30 June 2018
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 2018
1 July 2017
Directors
T. Barr
60,000,000
D. Rakich
24,000,000
P. Hill
30,000,000
G. Channon
24,000,000
Executives
R. Lamont
37,000,000
D. Ninke
35,000,000
M. Ulmer
48,000,000
Total
258,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30 June
2018
- 60,000,000 60,000,000
- 24,000,000 24,000,000
- 30,000,000 30,000,000
- 24,000,000 24,000,000
- 37,000,000 37,000,000
- 35,000,000 35,000,000
- 48,000,000 48,000,000
- 258,000,000 258,000,000
(ii)
Shares issued on exercise of options
No directors or executive options were exercised during the year ended 30 June 2018 (2017: nil)
(iii)
Shareholdings of key management personnel
30 June 2018
Balance at beginning
of period
Granted as
compensation
On exercise of
options
Net change
other
Balance at end
of period
1 July 2017
30 June 2018
Directors
T. Barr
D. Rakich
P. Hill
G. Channon
Executives
R. Lamont
D. Ninke
M. Ulmer
24,840,966
1,717,400
5,561,200
5,105,000
8,261,178
8,716,200
42,264,200
96,466,144
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,840,966
1,717,400
5,561,200
5,105,000
8,261,178
8,716,200
42,264,200
96,466,144
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 13 of 84
DIRECTORS’ REPORT
for the year ended 30 June 2018
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
Loans to key management personnel
No loans have been granted to key management personnel during the current or prior year.
G
Other transactions and balances with key management personnel
There were no transactions with key management personnel or their related parties during the current or prior
year other than those mentioned above.
Company Performance
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 all years presented have 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
Financial Statements – 30 June 2018
Page 14 of 84
DIRECTORS’ REPORT
for the year ended 30 June 2018
CORPORATE STRUCTURE
Samson Oil & Gas Limited is a Company limited by shares that is incorporated and domiciled in Australia.
EMPLOYEES
The Consolidated Entity employed 8 employees at 30 June 2018 (2017: 16 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 closing of the pending asset sale
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 2018.
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 2018, 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
G. Channon
20
20
20
20
No. of
Meetings
held while
in office
20
20
20
20
Meetings
attended
***
***
2
2
No. of
Meetings
held while
in office
***
***
2
2
Meetings
attended
***
-
-
-
No. of
Meetings
held while
in office
***
-
-
-
*** Not a member of the applicable committee
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 15 of 84
DIRECTORS’ REPORT
for the year ended 30 June 2018
INDEMNIFICATION AND INSURANCE OF DIRECTORS
During the financial year, the Consolidated Entity incurred a premium of $105,000 (2017: $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
The forbearance agreement between the Consolidated Entity and Mutual of Omaha Bank lapsed on 15
October 2018. Mutual of Omaha Bank have the right to issue a Notice of Default to the Consolidated Entity
and commence alternative actions to recovering the monies owed under the credit facility. To the date of this
report, they have not taken this action.
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.
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.
No non-audit services were provided by RSM Australia Partners (the Company’s auditors for the year ended
30 June 2018) during the current year.
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 16 of 84
DIRECTORS’ REPORT
for the year ended 30 June 2018
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 18.
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 October 2018
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 17 of 84
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 2018,
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 October 2018
J A KOMNINOS
Partner
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2018
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 implementation of the entity’s strategic objectives and its performance
generally;
• approving operating budgets and major capital expenditure;
• overseeing the integrity of the entity’s accounting and corporate reporting systems, including the
external audit
• overseeing the entity’s process for making timely and balanced disclosure of all material
information concerning the entity
• ensuring that the entity has in place an appropriate risk management framework
• approving the entity’s remuneration framework; and
• monitoring the effectiveness of the entity’s governance practices.
Management is responsible for implanting the Board’s strategy and objectives within the risk framework
established by the Board. Management is also responsible for providing the Board with accurate, timely and
clear information in order to enable the Board to perform its responsibilities as outlined above.
The Board Charter, available on the Company’s website, recognizes and acknowledges that the Board acts
on behalf of the shareholders and is accountable to the shareholders. The Board seeks to identify the
expectations of the shareholders, as well as other regulatory and ethical expectations and obligations. In
addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements
are in place to adequately manage those risks.
All members of the Board, and in particular non-executive Directors, are entitled to seek independent
professional advice, at expense to the entity, when such advice is necessary to allow the Directors to discharge
their responsibilities as Directors.
The Company Secretary of the Consolidated Entity plays an important role in supporting the effectiveness of
the Board and its Committees. The role of the Company Secretary includes:
• advising the Board and its committees on governance matters;
• monitoring that Board and committee policy and procedures are followed;
•
• ensuring that the business at Board and committee meetings is accurately captured in the minutes;
coordinating the timely completion and despatch of board and committee papers;
and
• helping to organise and facilitate the induction and professional development of the directors
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 19 of 84
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2018
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 8), 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
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 20 of 84
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2018
•
Is or has been employed in an executive capacity by the Company or any other Consolidated Entity
member within three years before commencing to serve on the board
• Within the last year has been a principal of a material professional adviser or material consultant to the
Company or any other Consolidated Entity member, or an employee materially associated with the service
provided
Is a material supplier or customer of the Company or any other Consolidated Entity member, or an officer
or otherwise associated directly or indirectly with a material supplier or customer
•
• Has a material contractual relationship with the Company or a controlled entity other than as director of
•
the Consolidated Entity
Is free from any business or other relationship which could, or could reasonably be perceived to, materially
interfere with the director’s independent exercise of their judgement.
“Materiality” for these purposes is determined on a qualitative basis. A transaction of any amount or a
relationship is deemed material if knowledge of it may impact the shareholders’ understanding of the director’s
performance.
Recent thinking on corporate governance has introduced the view that a director’s independence may be
perceived to be impacted by lengthy service on the board. To avoid any potential concerns, the board has
determined that a director will not be deemed independent if he or she has served on the board of the Company
for more than ten years. The board continues to monitor developments on this issue.
The board assess independence each year. To enable this process, the Directors must provide all information
to the Chief Financial Officer that may be relevant to the assessment.
Board members
Details of the members of the board, their experience, expertise, qualifications, term of office and their
independent status are set out in the Directors report under the heading “Directors”. At the date of signing the
Directors’ report, there are two executive Directors and two non-executive Directors. All non-executive
Directors are deemed to be independent.
The Board's skills matrix indicates the mix of skills, experience and expertise that are considered necessary
at Board level for optimal performance of the Board. The matrix reflects the Board's objective to have an
appropriate mix of industry and professional experience including skills such as leadership, governance,
strategy, finance, risk, IT, HR, policy development, international business and customer relationship. External
consultants may be brought it with specialist knowledge to address areas where this is an attribute deficiency
in the Board.
Although not formally documented, the Board feels that it has the appropriate mix of skills and diversity to
appropriately perform its duties and obligations.
New directors undertake an induction program coordinated by the Company Secretary that briefs and informs
the director on all relevant aspects of the company's operations and background. A director development
program is also available to ensure that directors can enhance their skills and remain abreast of important
developments.
Term of office
The Company’s Constitution specifies that all non-executive Directors appointed during the year, automatically
retire at the next annual general meeting (“AGM”) and are eligible for re-election at that general meeting. Any
director that has been appointed during the year and is subject to automatic retirement at the AGM is not taken
into account in the automatic retirement of one third of the Directors as detail below.
At each AGM:
(a) one third (or if that is not a whole number, the whole number nearest to one third) of the Directors who
are not:
(i)
(ii)
(iii)
appointed, and required to retire, as detailed above; or
the Managing Director; or
Directors only because they are Alternates; and
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 21 of 84
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2018
(b) any Director who would, if that Director remained in office until the next AGM, have held that office for
more than 3 years must retire from office and is eligible for re-election.
Chair and Chief Executive Officer
The Chair is responsible for leading the board, ensuring Directors are properly briefed in all matters relevant
to their role and responsibilities, facilitating board discussions and managing the board’s relationship with the
Company’s senior executives. In accepting the position, the Chair has acknowledged that it will require a
significant time commitment and has confirmed that other positions would not hinder his effective performance
in the role of Chair.
The CEO is responsible for implementing the Consolidated Entity’s strategies and policies. The board charter
specifies that these are separate roles to be undertaken by separate people. The CEO role is performed by
the Managing Director.
Commitment
The board held 22 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 2018, and the number of meetings attended by each director is disclosed on page 15.
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
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 22 of 84
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2018
confidence in the Consolidated Entity’s integrity and to take into account legal obligations and reasonable
expectations of the Company’s stakeholders.
In summary, the Code requires that at all times all Company employees will:
• Act in the best interests of the Consolidated Entity
• Act honestly and with high standards or personal integrity
• Comply with the laws and regulations that apply to the Consolidated Entity and its operations
• Not knowingly participate in any illegal or unethical activity
• Not enter into any arrangement or participate in any activity that would conflict with the entity’s best
interests or that would be likely to negatively affect the entity’s reputation
• Not take advantage of the property or information of the Consolidated Entity or its customers for
personal gain or to cause detriment to the Consolidated Entity or its customers; and
• Not take advantage of their position or the opportunities arising therefrom for personal gain.
The Consolidated Entity also has an Insider Trading Policy which outlines the appropriate times for the
purchase and sale of the Company’s securities by Directors and employees. The purchase and sale of
Company securities by Directors and employees is only permitted during non-black out periods. Black out
periods are defined in the Company’s Insider Trading Policy. Any transactions undertaken must be notified to
the CEO or CFO prior to being entered into.
The Code and the Company’s trading policy is discussed with each new employee. Further training is
periodically provided and all employees are asked to sign an annual declaration confirming their compliance
with the Code and trading policy.
The Code requires employees who are aware of unethical practices with the Consolidated Entity or breaches
of the Company’s trading policy to report these using the Company’s whistleblower program.
The Directors are satisfied that the Consolidated Entity has complied with its policies on ethical standards,
including trading in securities.
A copy of the Code and the Insider Trading Policy are available on the Company’s website.
Principle 4 – Safeguard integrity in corporate reporting
Audit Committee
The Audit Committee consists 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 15.
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;
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 23 of 84
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2018
• Any proposal for the external auditor to provide non-audit services and whether it might compromise
the independence of the external auditor
Prior to approving the Consolidated Entity’s financial statements for a financial period, the Audit Committee
receives a declaration from the CEO and CFO that, in their opinion, the financial records of the Consolidated
Entity have been properly maintained and that the financial statements comply with the appropriate accounting
standards and give a true and fair view of the financial position and performance of the entity. The CEO and
CFO also certify that the opinion has been formed on the basis of sounds system of risk management and
internal control which is operating effectively.
In fulfilling its responsibilities, the Audit Committee:
receives regular reports from management and the external auditors;
•
• meets with external auditors at least twice a year, or more frequently if necessary;
•
•
reviews the processes the CEO and CFO have in place to support their certifications to the board;
reviews any significant disagreements between the auditors and management, irrespective of whether
they have been resolved;
is given the opportunity to meet with external auditors without the presence of management if required;
and
•
• provides the external auditors with a clear line of communication at any time to the either the audit
committee or the Chair of the board.
The Audit Committee has authority, within the scope of its responsibilities, to seek any information it requires
from any employee or external party.
External auditors
The Company’s and Audit Committee’s policy is to appoint external auditors who clearly demonstrate quality
and independence. The performance of the external auditor is reviewed annually and applications for tender
of external audit services are requested as deemed appropriate, taking into consideration assessment of
performance, existing value and tender costs. The external audit was put to tender in 2008 with
PricewaterhouseCoopers being appointed external auditors in October 2008.
The external audit was put to tender again in 2014 and RSM 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
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 24 of 84
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2018
ensure that announcements made are factual, complete, balanced and expressed in a clear and objective
manner that allows investors to assess the impact of the information when making investment decisions.
Principle 6 – Respect the rights of security holders
The Consolidated Entity actively seeks to provide its security holder appropriate information and facilities to
allow them to exercise their rights as security holders effectively. This includes:
• giving security holders ready access to information about the Consolidated Entity and its governance;
•
• encouraging and facilitating their participation in meetings of security holders.
communicating openly and honestly with security holders; and
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.
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 25 of 84
CORPORATE GOVERNANCE STATEMENT
for the year ended 30 June 2018
Considerable importance is placed on maintaining a strong control environment. There is an organisation
structure with clearly drawn lines of accountability and delegation of authority. Adherence to the Code of
Conduct is required at all times and the board actively promotes a culture of quality and integrity.
The Consolidated Entity has outsourced its internal audit function to an accounting firm in the United States
unrelated to its external auditors. This internal audit function assists the Consolidated Entity with its internal
controls by bringing a systematic, disciplined approach to evaluating and continually improving the
effectiveness of its risk management and internal control processes.
Environmental Risk System
The Company recognises the importance of environmental risk management and is committed to the highest
level of sound environmental management. The Company has established best practice environmental
policies for those fields that it operates and seeks to ensure the operators of its non-operated properties
operate in an environmentally sound manner.
Principle 8 – Remunerate fairly and responsibly
A Compensation Committee was formed on 28 July 2011. The Compensation Committee Charter can be found
on the Consolidated Entity’s website. The Compensation Committee is chaired by an independent director.
The Compensation Committee is responsible for determining and reviewing compensation arrangements for
the Directors. Further detail in relation to the Company’s remuneration policies can be found in the
Remuneration Report included within the Directors’ Report.
Members of the senior executive team sign a formal employment contract at the time of their appointment
covering a range of matters including their duties, rights, responsibilities and any entitlements on termination.
The standard contract refers to a specific formal job description.
Further information on Directors’ and executives’ remuneration, including principles used to determine
remuneration, is set out in the Directors’ report under the heading “Remuneration report”.
The board also assumes responsibility for overseeing management succession planning.
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 26 of 84
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note
3 (a)
3 (a)
3 (b)
3 (c)
3 (e)
3 (f)
4
30
Revenue
Sale of oil and gas
Total revenue
Cost of sales
Gross profit
Other Income
Expenses
General and administrative expenses
Finance costs
Exploration and evaluation expense
Derivative instruments
Abandonment cost
Provision for doubtful debts
Impairment expense
Loss before income tax from continuing operations
Income tax benefit
Loss after income tax from continuing operations
Loss from discontinued operations
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
Consolidated Entity
2018
$
2017
$
279,237
2,554,483
279,237
2,554,483
(501,940)
(3,109,425)
(222,703)
(554,942)
186,518
2,183,643
(4,226,038)
(5,153,912)
(24,185)
(325,304)
(23,156)
(78,391)
(946,438)
2,640,373
(128,862)
(75,000)
(3,055)
-
-
(244,480)
(5,762,012)
(1,233,920)
732,056
-
(5,029,956)
(1,233,920)
(788,127)
(1,304,776)
(5,818,083)
(2,538,696)
(45,461)
(35,701)
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 27 of 84
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2018
Total comprehensive loss for the year attributable
to the owners of Samson Oil & Gas Limited
Basic loss per share (cents) from continuing operations
attributable to ordinary equity holds of the Company
Diluted loss per share (cents)
Basic loss per share (cents) from discontinuing
operations attributable to ordinary equity holds of the
Company
Diluted loss per share (cents)
22
22
22
22
(5,863,544)
(2,574,397)
(0.15)
(0.15)
(0.02)
(0.02)
(0.04)
(0.04)
(0.04)
(0.04)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying
notes.
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 28 of 84
CONSOLIDATED BALANCE SHEET
As at 30 June 2018
CONSOLIDATED BALANCE SHEET
Consolidated Entity
Note
2018
$
2017
$
6
7
8
1,376,676
628,778
1,759,390
1,550,366
-
219,288
137,341
54,518
Current assets
Cash and cash equivalents
Trade and other receivables
Oil inventory
Prepayments
Assets classified as held for sale
30
29,600,456
-
Total current assets
Non-current assets
Other receivables
Restricted cash
Derivative instruments
Plant and equipment
Exploration and evaluation assets
Oil and gas properties
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions associated with assets held for sale
Derivative instruments
Borrowings
Total current liabilities
Non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
32,873,863
2,452,950
134,645
450,000
-
242,821
-
136,198
450,000
99,583
296,078
271,078
1,932,336
32,106,508
732,056
-
3,491,858
33,359,445
36,365,721
35,812,395
9,730,906
5,066,504
2,509,891
-
1,210,795
363,940
23,867,558
23,264,767
37,319,150
28,695,211
7
6
23
9
10
11
4
12
14
23
13
14
802,832
3,362,204
802,832
3,362,204
38,121,982
32,057,415
Net (liabilities)/assets
(1,756,261)
3,754,980
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 29 of 84
Equity
Contributed equity
Accumulated losses
Reserves
Total equity
CONSOLIDATED BALANCE SHEET
As at 30 June 2018
15
16
15
99,643,104
99,643,104
(108,427,085)
7,027,720
(102,609,002)
6,720,878
(1,756,261)
3,754,980
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 30 of 84
CONSOLIDATED STATEMENT OF CASHFLOWS
for the year ended 30 June 2018
CONSOLIDATED STATEMENT OF CASHFLOWS
Consolidated Entity
Note
2018
$
2017
$
Cash flows from operating activities
Receipts from customers
Cash paid for commodity derivative instruments
Payments to suppliers and employees
Interest received
Cash interest payments
Payments of abandonment costs
Net cash flows from/(used) in operating activities
19
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 (used)/from 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
11,938,297
13,953,796
(1,625,866)
(1,342,901)
(8,003,096)
(13,042,935)
229
411
(1,350,391)
(1,878,382)
(216,884)
(300,949)
742,289
(2,610,960)
105,396
15,150,000
(31,379)
(106,726)
54,226
(138,715)
(522,918)
(3,198,083)
(394,675)
11,706,476
-
450,000
3,198
-
(35,000)
(11,047,443)
-
-
(40,000)
(3,771)
Net cash flows from/(used) in financing activities
415,000
(11,088,016)
Net increase/(decrease) in cash and cash equivalents
762,614
(1,992,500)
Cash and cash equivalents at the beginning of the financial year
628,778
2,654,812
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
(14,716)
1,376,676
(33,534)
628,778
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Samson Oil & Gas Limited
Financial Statements – 30 June 2018
Page 31 of 84
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2018
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
$
$
$
$
$
$
99,523,411
(100,070,306)
2,025,500
(1,097,780)
5,276,872
5,657,697
CONSOLIDATED
Balance at 1 July 2016
Loss after income tax
Other comprehensive loss, net of tax
Total comprehensive expense for the year
-
-
-
(2,538,696)
-
-
(35,701)
(2,538,696)
(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
Balance at 1 July 2017
Loss after income tax
Other comprehensive loss, net of tax
Total comprehensive expense for the year
Transactions with owners in their capacity as owners:
Share based payment
99,643,104
(102,609,002)
1,989,799
(1,097,780)
5,828,859
3,754,980
-
-
-
-
(5,818,083)
-
-
(45,461)
(5,818,083)
(45,461)
-
-
-
-
-
-
(5,818,083)
(45,461)
(5,863,544)
-
-
-
352,303
352,303
Balance at 30 June 2018
99,643,104
(108,427,085)
1,944,338
(1,097,780)
6,181,162
(1,756,261)
The above statement of Consolidated Changes in Equity should be read in conjunction with the accompanying notes.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 32 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
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 2018 were authorised for issue
in accordance with a resolution of the Directors on 29 October 2018. 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
OTC QB under the symbol "SSNYY".
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.
Discontinued Operations
These financial statements have been prepared based on the terms of the Purchase and Agreement signed
on 28th June 2018. This involved the sale of a significant portion of the Foreman Butte asset but with the
Consolidated Entity retaining a 15% working interest in certain wells located in the Home Run field, a field
located within the Foreman Butte project. The Financial Statements have been prepared as if this sale had of
occurred on 1 July 2017 with the revenue and expense associated with the interest being sold disclosed as
discontinued operations.
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 $5,818,083 for the year
ended 30 June 2018. As at that date, the Consolidated Entity had net current liabilities of $34,045,743,
excluding assets held for sale and net liabilities of $1,756,261. The Consolidated Entity’s ability to continue as
a going concern is dependent on the divestment of assets resulting in proceeds not less than the Consolidated
Entity’s obligation to Mutual of Omaha Bank or re-negotiation of its finance facilities.
These factors indicate a material uncertainty which may cast significant doubt as to whether the Consolidated
Entity will 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 that it is reasonably foreseeable that the Consolidated Entity will continue as a going
concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report.
The Directors are currently negotiating with a number of prospective parties to divest its Oil & gas assets held
for sale resulting in proceeds not less than the Consolidated Entity’s obligation to Mutual of Omaha Bank. The
Directors are confident they will be able to successfully recognise amounts in excess of the carrying value of
Oil & gas assets held for sale, as a result of their ultimate divestment, or alternatively through the successful
development of the Foreman Butte project should the Directors successfully re-negotiate the Consolidated
Entity’s debt and receive additional working capital.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 33 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
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 2018 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.
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
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 34 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
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 2018 and the results of all subsidiaries
for the year then ended.
Subsidiaries are all those entities over which the Consolidated Entity has the power to govern the
financial and operating policies, generally accompanying a shareholding of more than one-half of the
voting rights. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Consolidated Entity controls another entity.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 35 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
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
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
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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
legislation, and the extent of reclamation activities required 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% (2017:13.43%).
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.
The impairment expense, relating to oil and gas properties recognized in the Consolidated Statement of
Comprehensive Income is $nil (2017: $nil).
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 2018 were prepared internally by a practitioner with 22 years of industry experience in
geologic and engineering review and analysis and a Bachelor of Science in Geological Engineering from
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Colorado School of Mines. Additionally, the Chief Executive Officer, Terry Barr, is responsible for
overseeing the preparation of the Company’s reserves report. The CEO is a petroleum geologist who
holds an Associateship in Applied Geology and has over 45 years of relevant experience in the oil and
gas industry. The reserve estimates as at 30 June 2017 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.
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
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
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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.
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.
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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.
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
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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 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.
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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.
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
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Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and
Measurement are categorised as either financial assets at fair value through profit or loss, loans and
receivables, or available-for-sale financial assets. The classification depends on the purpose for which
the investments were acquired. Designation is re-evaluated at each financial year end, but there are
restrictions on reclassifying to other categories.
When financial assets are recognised initially, they are measured at fair value, plus in the case of assets
not at fair value through profit or loss, directly attributable transaction costs.
Recognition and Derecognition
Regular purchases and sales of financial assets are recognised on trade-date – the date on which the
group commits to purchase or sell the asset. Financial assets are derecognised when the rights to
receive cash flows from the financial assets have expired or have been transferred and the group has
transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments
recognised in other comprehensive income are reclassified to profit or loss as gains and losses from
investment securities.
Measurement
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit
or loss are expensed in profit or loss.
Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at fair value through profit or loss are
subsequently carried at fair value. Gains or losses arising from changes in the fair value of the ‘financial
assets at fair value through profit or loss’ category are presented in profit or loss within other income or
other expenses in the period in which they arise. Dividend income from financial assets at fair value
through profit or loss is recognised in profit or loss as part of revenue from when the Consolidated Entity’s
right to receive payments is established. Interest income from these financial assets is included in the
net gains/(losses).
Changes in the fair value of monetary securities denominated in a foreign currency and classified as
available-for-sale are analysed between translation differences resulting from changes in amortised cost
of the security and other changes in the carrying amount of the security. The translation differences
related to changes in the amortised costs are recognised in profit or loss, and other changes in carrying
amount are recognised in other comprehensive income. Changes in the fair value of other monetary
and non-monetary securities classified as available-for-sale are recognised in the other comprehensive
income.
Financial assets at fair value through profit or loss
(i)
Financial assets classified as held for trading are included in the category ‘financial assets at fair value
through profit or loss’. Financial assets are classified as held for trading in that they are acquired for the
purpose of selling in the near term with the intention of making a profit. Derivatives are also classified
as held for trading unless they are designated as effective hedging instruments. Gains or losses on
financial assets held for trading are recognised in profit or loss and the related assets are classified as
current assets in the balance sheet.
Loans and receivables
(ii)
Loans and receivables are non-derivative financial assets with fixed determinable payments that are not
quoted in an active market. Such assets are carried at amortised cost using the effective interest rate
method. Gains and losses are recognised in the profit and loss when the loans and receivables are
derecognised or impaired. These are included in current assets, except for those with maturities greater
than 12 months after the balance date, which are classified as non-current.
(iii)
The Consolidated Entity assesses at each reporting period whether there is objective evidence that a
Impairment
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financial asset or group of financial assets is impaired. A financial asset or group of financial assets is
impaired and impairment losses are incurred only if there is objective evidence of impairment as result
of one more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss
event (or events) has an impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliability estimated. In the case of equity investments classified as available-
for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered
an indicator that the assets are impaired. Impairment losses are recognised through the profit and loss.
Assets carried at amortised cost
For loans and receivables, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit losses that
have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying
amount of the asset is reduced and the amount of the loss is recognised in the consolidated profit and
loss. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the
current effective interest rate determined under the contract. As a practical expedient, the Consolidated
Entity may measure impairment on the basis of an instrument’s fair value using an observable market
price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as an improvement in a
debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the
consolidated profit and loss.
Assets classified as available-for-sale
If there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss –
measured as the difference between the acquisition cost and the current fair value, less any impairment
loss on that financial asset previously recognised in profit or loss – is removed from equity and
recognised in profit or loss.
Impairment losses on equity instruments that were recognised in profit or loss are not reversed through
profit or loss in a subsequent period.
If the fair value of a debt instrument classified as available-for-sale increases in a subsequent period
and the increase can be objectively related to an event occurring after the impairment loss was
recognised in profit or loss, the impairment loss is reversed through profit or loss.
t) Impairment of non-financial assets
The Consolidated Entity assesses at each reporting date whether there is an indication that an asset
may be impaired. If any such indication exists, or when annual impairment testing for an asset is
required, the Consolidated Entity makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined
for an individual asset, unless the asset does not generate cash inflows that are largely independent of
those from other assets or groups of assets and the asset’s value in use cannot be estimated to be close
to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to
which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable
amount. Impairment losses relating to continuing operations are recognised in profit and loss.
An assessment is also made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such an indication exists,
the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case the carrying amount of the 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.
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u) Trade and other payables
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to
the end of the financial year which are unpaid. These amounts are unsecured and are usually paid
within 30 days of recognition. Trade and other payables are presented as current liabilities unless
payment is not due within 12 months from the reporting date. They are recognised initially at their fair
value and subsequently measured at amortised cost using the effective interest method.
v) Provisions
Provisions for legal claims and make good obligations are recognised when the Consolidated Entity has
a present legal or constructive obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation and the amount has been reliably estimated. Provisions
are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised
even if the likelihood of an outflow with respect to any one item including in the same class of obligations
may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the end of the reporting period. The discount rate used to
determine the present value is a pre-tax rate that reflects current market assessments of the time value
of money and the risks specific to the liability. The increase in the provision due to the passage of time
is recognised as interest expense.
w) Restoration costs
The Consolidated Entity records the present value of the estimated cost of legal and constructive
obligations to restore operating locations in the period in which the obligation arises. The nature of
restoration activities includes the removal of facilities, abandonment of wells and rehabilitation of
affected areas.
Typically, the obligation arises when the asset is installed at the production location. When the liability
is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related oil
and gas properties. Over time, the liability is increased for the change in present value based on a risk
adjusted pre-tax discount rate appropriate to the risks inherent in the liability. The unwinding of the
discount is recorded as an accretion charge within finance costs. The carrying amount capitalised in oil
and gas properties is depreciated over the useful life of the related asset.
Each year, the Consolidated Entity reviews the estimated restoration costs and the estimated period in
which the obligation is likely to occur to ensure that they are appropriate. The Consolidated Entity also
reviews the discount rate to ensure it is still appropriate. If changing any of these variables results in a
decrease in the liability the difference is recorded against the corresponding asset, which is included in
oil and gas properties in the balance sheet.
Costs incurred that relate to an existing condition caused by past operations, and that do not have a
future economic benefit, are expensed.
x) Employee leave benefits
Wages, salaries 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
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Annual Report – 30 June 2018
Page 45 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
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
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
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 46 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
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 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
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 47 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
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 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.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 48 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
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
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 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.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 49 of 84
NOTE 3.
REVENUE AND EXPENSES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
Revenue and expenses
a Revenue
Sale of oil and gas
Oil sales
Gas sales
Other liquids
Total revenue
Other Income
Interest income
Sale of oil and gas assets
Other
Total other income
Consolidated Entity
2018
$
2017
$
252,188
2,246,725
27,042
7
274,730
33,028
279,237
2,554,483
Consolidated Entity
2018
$
2017
$
229
411
105,396
2,150,047
80,893
33,185
186,518
2,183,643
Sale of oil and gas assets during the year ended 30 June 2018 relates to the sale of small non operated
interests in properties in Wyoming. The carrying value of the Wyoming properties as at 30 June 2018 was nil.
Sale of oil and gas assets during the year ended 30 June 2017 relates to the sale of two properties. $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.
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
6
Samson Oil & Gas Limited
Consolidated Entity
2018
$
2017
$
(2,171,854)
(2,970,910)
(123,797)
(336,605)
(214,650)
(153,375)
(384,596)
(176,599)
(441,243)
(447,431)
Annual Report – 30 June 2018
Page 50 of 84
Travel and accommodation
Filing and listing fees
Insurance
Investor and public relations
Printing, postage and stationery
Other
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
(56,166)
(15,433)
(144,846)
(119,346)
(230,220)
(287,969)
(108,602)
(71,675)
(67,246)
(98,725)
(407,802)
(350,860)
Total other general and administration expenses
(2,054,184)
(2,183,002)
Total general and administration expenses
(4,226,038)
(5,153,912)
c) Finance costs
Interest expense
Amortisation of borrowing costs
Unwinding of discount associated with restoration obligation
Total finance costs
d) Depreciation and amortisation
Included in cost of sales:
Depreciation on lease and well equipment
Depletion of oil and gas properties
Subtotal included in cost of sales
Included in general and administrative
Depreciation of furniture and fittings
Total depreciation and amortisation
e) Exploration and evaluation expense
General exploration expense
Deferred exploration expenditure written off
Total exploration and evaluation expense
6
Samson Oil & Gas Limited
Consolidated Entity
2018
$
2017
$
-
-
-
-
(24,185)
(24,185)
(23,156)
(23,156)
Consolidated Entity
2018
$
2017
$
(37,246)
(95,974)
(4,580)
(805,683)
(41,826)
(901,657)
(84,636)
(119,165)
(126,462)
(1,020,822)
Consolidated Entity
2018
$
2017
$
(54,226)
(78,391)
(271,078)
(325,304)
-
(78,391)
Annual Report – 30 June 2018
Page 51 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
Consolidated Entity
2018
$
2017
$
f) Derivative instruments
Realised income recognised in relation to derivative instruments
-
-
Unrealised income/(expense) recognised in relation to the movement
in the fair value of derivative instruments
(946,438)
2,640,373
Total derivative instruments (expense)/income
(946,438)
2,640,373
NOTE 4. INCOME TAX
The major components of income tax benefit are:
Profit and Loss
Current income tax
Deferred income tax
Aggregate income tax expense
Consolidated Entity
2018
$
2017
$
732,056
-
732,056
-
-
-
Numerical reconciliation of income tax expense and tax at statutory
rate
Loss before income tax
(6,550,139)
(2,538,696)
At the Australian statutory income tax rate of 27.5% (2017: 27.5%)
1,801,288
698,141
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
(190,616)
(177,922)
(11,069,839)
109,559
980
197,926
10,365,026
(901,225)
-
-
(174,783)
73,521
732,056
-
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Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 52 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
Consolidated
Balance Sheet
Profit and Loss
2018
$
2017
$
2018
$
2017
$
Deferred Income Tax
Deferred income tax at 30 June relates to
the following:
Deferred tax liabilities
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
Net deferred tax recognised in the
balance sheet and profit and loss
Balance Sheet
Profit and Loss
2018
$
2017
$
2018
$
2017
$
23,674,591
34,613,898
(10,939,307)
1,068,021
(1,474,976)
(2,653,708)
1,178,732
664,314
922,778
795,172
127,605
(831,110)
780,444
780,444
-
-
(23,170,781) (33,535,806)
10,365,026
(901,225)
732,056
-
732,056
-
The Consolidated Entity has tax losses carried forward arising in Australia of $15,509,399 (2017:
$13,539,160). The benefit of these losses of $4,265,085 (2017: $4,386,190) 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
$84,932,620 (2017: $82,320,781). Future years are limited to an estimated $403,194 per year as a result of
a change in ownership of the one of the subsidiaries which occurred in January 2005. Net operating losses
generated after this ownership change are not limited due to any known ownership changes. If not utilised,
the tax net operating losses will expire during the period from 2020 to 2035.
In addition to the above mentioned Federal carried forward losses in the United States, the Company also has
approximately $49,189,362 (2017: $47,567,266) of State carried forward tax losses, with expiry dates between
June 2017 and June 2034. A deferred income tax asset in relation to these losses has not been recognised
as realisation of the benefit is not regarded as probable.
The deferred tax benefit the Consolidated Entity will ultimately realise is dependent both upon the loss
recoupment legislation in the United States and taxable income at the time recoupment.
The Consolidated Entity does not meet the definition of a group for the purposes of applying tax consolidation.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 53 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
NOTE 5.
DIVIDENDS
No dividends have been declared during the year (2017: $Nil).
The balance of the franking account at the end of the year was nil (2017:$Nil).
NOTE 6.
CASH AND CASH EQUIVALENTS
CURRENT
Consolidated Entity
2018
$
2017
$
Cash at bank and on hand (i)
1,376,676
628,778
NON CURRENT
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)
Provision for doubtful debts
Receivable – joint operation partners (ii)
Consolidated Entity
2018
$
2017
$
1,002,796
914,370
(75,000)
831,594
1,759,390
-
635,996
1,550,366
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.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 54 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
b)
Fair value and credit risk – current receivables
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their
fair value.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables
mentioned above. All receivables are unsecured. Refer to Note 27 for more information on the risk
management policy of the Consolidated Entity and the credit quality of trade receivables.
A provision for doubtful debts of $75,000 (2017: $nil) has been raised in relation to receivables that may not
be received. In some instances revenue has been withheld from working interest partners to cover receivables
owed. No write of offset exists however according to the joint operating agreements, which govern the joint
operations.
NON CURRENT
Other receivables (iii)
Consolidated Entity
2018
$
2017
$
134,645
134,645
136,198
136,198
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
Consolidated Entity
2018
$
2017
$
-
219,288
Notes:
(i)
This balance was acquired through the Foreman Butte acquisition and is included in the assets sold in the discontinued
operations.
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Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 55 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
NOTE 9.
PLANT & EQUIPMENT
NON-CURRENT
Office Equipment
Cost
Accumulated depreciation
Balance as at 1 July
Additions
Depreciation charge for the year
Balance as at 30 June
NOTE 10.
EXPLORATION AND EVALUATION ASSETS
NON-CURRENT
Balance as at 1 July
Expenditure capitalised
Expenditure written off
Balance as at 30 June
Consolidated Entity
2018
$
2017
$
1,017,878
990,022
(775,057)
(693,944)
242,821
296,078
296,078
31,379
308,474
106,769
(84,636)
(119,165)
242,821
296,078
Consolidated Entity
2018
$
271,078
54,226
(325,304)
2017
$
220,703
50,375
-
-
271,078
The expenditure written off during the current year relate to the previously capitalised costs associated with
the Cane Creek project in Utah. The option previously held over this property expired in November 2017,
unexercised and as such, was expensed in the current year.
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.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 56 of 84
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
Held for sale
Depreciation charge
Balance at 30 June
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
Consolidated Entity
2018
$
2017
$
13,377,071
45,040,425
(3,921,328)
(5,410,510)
(7,523,407)
(7,523,407)
1,932,336
32,106,508
32,106,508
45,626,560
76,921
2,458,275
-
(14,441,057)
(29,381,168)
-
(869,925)
(1,537,270)
1,932,336
32,106,508
Less assets held for sale
29,381,168
-
Total oil and gas properties
31,313,504
32,106,508
Assets held for sale
On June 14, 2018, the Consolidated Entity signed a purchase and sale agreement for the sale of the majority
of the Consolidated Entity’s interest in the Foreman Butte project for $40 million, prior to customary
adjustments. The sale was due to close on 15 October 2018, however, it has not and the purchase and sale
agreement has expired. Under the initial agreement, the Consolidated Entity was to retain a 15% working
interest in certain wells within the project area. The value associated with these wells have not been included
in assets held for sale. The Consolidated Entity is in ongoing negotiations with the current buyer and also
seeking alternative buyers for the project area.
Impairment of oil and gas properties
At 30 June 2018, the Consolidated Entity reviewed the carrying value of its oil and gas properties for
impairment. A review by the Consolidated Entity’s internal reserve engineer 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 reserve report was prepared by an employee of the Consolidated Entity with 22
years’ experience and reviewed by the Chief Executive Office, who has over 40 years’ experience. 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%
(2017: 12%). The fair value less cost of disposal has been based on the expected useful lives of the respective
fields.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 57 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
NOTE 12.
TRADE AND OTHER PAYABLES
CURRENT
Trade payables (i)
Revenue payable (ii)
Interest payable (iii)
Other payables (iv)
Consolidated Entity
2018
$
6,027,148
3,341,833
111,097
250,828
2017
$
3,248,548
1,382,366
186,530
249,060
Total Trade and Other Payables
9,730,906
5,066,504
Notes:
i)
ii)
iii)
iv)
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. These payables will be paid in full following the closing of the Foreman Butte sale.
Interest payable is interest and other expenses recognised with respect to the Mutual of Omaha credit facility Interest paid
to Mutual of Omaha is generally paid every month.
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.
NOTE 13.
BORROWINGS
Current
Consolidated Entity
2018
$
2017
$
Credit facility with Mutual of Omaha (i)
23,867,558
23,419,749
Less deferred borrowing costs
-
(154,982)
23,867,558
23,264,767
Notes:
(i)
Fair values are not materially different to their carrying amounts
This facility is expected to be paid in full following the closing of the Foreman Butte sale.
As at 30 June 2018 the Consolidated Entity was in breach of its earnings and liquidity covenants. A forbearance
agreement lapsed on 15 October 2018. Mutual of Omaha Bank have the right to issue a Notice of Default to
the Consolidated Entity and commence alternative actions to recovering the monies owed under the credit
facility. To the date of this report, they have not taken this action.
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 were deferred and were amortized over
the life of the facility using the effective interest rate method. The remaining balance at 31 December 2017 of
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 58 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
$0.2 million was expensed during the year, following the entering into forbearance agreement by the
Consolidated Entity with Mutual of Omaha Bank.
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 7.0% for the year ended 30 June 2018 (2017: 6.8%).
NOTE 14.
PROVISIONS
CURRENT
Consolidated Entity
2018
$
2017
$
Provision for restoration related to assets held for sale
2,509,891
-
This balance relates to the restoration obligation related to the assets held for sale
NON CURRENT
Consolidated Entity
2018
$
2017
$
Provision for restoration
802,832
3,362,204
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
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
Disposition of properties
Liabilities held for sale
Unwinding of discount – continuing
Unwinding of discount – discontinued
Balance as at 30 June
6
Samson Oil & Gas Limited
Consolidated Entity
2018
$
2017
$
3,362,204
(216,884)
-
-
-
(73,011)
(2,509,891)
24,185
216,229
802,832
3,611,150
(300,949)
225,823
(368,197)
(92,743)
-
-
23,156
263,964
3,362,204
Annual Report – 30 June 2018
Page 59 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
NOTE 15.
(a) Issued and paid up capital
CONTRIBUTED EQUITY AND RESERVES
Contributed Equity
3,283,000,444 ordinary fully paid shares including shares to be
issued (2017 – 3,283,000,444 ordinary fully paid shares
including shares to be issued)
Consolidated Entity
2018
$
2017
$
99,643,104
99,643,104
Movements in contributed equity
for the year
2018
2017
Opening balance
Capital Raising
Shares issued upon exercise of
options (i)
Shares issued as share based
payments (ii)
Transaction costs incurred
No. of shares
$
No. of shares
$
3,283,000,444
99,643,104
3,215,854,701
99,523,411
-
-
-
-
-
-
-
-
-
-
140,143
4,516
67,005,600
159,506
-
(44,329)
Shares on issue at balance date
3,283,000,444
99,643,104
3,283,000,444
99,643,104
Shares to be issued as part of
Kestrel acquisition (iii)
65,000
-
65,000
-
Closing Balance
3,283,065,444
99,643,104
3,283,065,444
99,643,104
(i)
(ii)
(iii)
During the course of the prior year the Company issued 140,143 ordinary shares upon the exercise of
140,143 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 to raise US$4,516.
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 (2017:65,000) 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.
6
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Annual Report – 30 June 2018
Page 60 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
(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 314,500,000 (2017: 411,033,246) 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 cents 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 cents 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 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. These options expired unexercised.
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. These options expired
unexercised.
(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
Nature and purpose of reserves
Consolidated Entity
2018
$
1,944,338
(1,097,780)
6,181,162
7,027,720
2017
$
1,989,799
(1,097,780)
5,828,859
6,720,878
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.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 61 of 84
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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
Consolidated Entity
2018
$
2017
$
1,989,799
(45,461)
1,944,338
2,025,500
(35,701)
1,989,799
5,828,859
352,303
6,181,162
5,276,872
551,987
5,828,859
Consolidated Entity
2018
$
2017
$
Balance previously reported at the beginning of the year
(102,609,002)
(100,070,306)
Net Loss attributable to members, after income tax from
continuing operations
Net Loss attributable to members, after income tax from
discontinued operations
(5,029,956)
(1,233,920)
(788,127)
(1,304,776)
Balance at the end of the year
(108,427,085)
(102,609,002)
NOTE 17.
COMMITMENTS
(a) Exploration commitments
Due to the nature of the Consolidated Entity’s operations in exploring and evaluating areas of interest, it is
very difficult to accurately forecast the nature or amount of future expenditure, although it will be necessary to
incur expenditure in order to retain present interests. Expenditure commitments on mineral tenure for the
Consolidated Entity can be reduced by selective relinquishment of exploration tenure or by the renegotiation
of expenditure commitments.
The minimum level of exploration commitments expected as at year ended 30 June 2018 is $Nil (2017: $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.
(b) Capital Commitments
The Consolidated Entity had no capital commitments as at 30 June 2018 and 30 June 2017.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 62 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
(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:
Minimum lease payments
- not later than one year
- later than one year and not later than five years
Consolidated Entity
2018
$
2017
$
123,873
268,102
109,927
323,059
Aggregate lease expenditure contracted for at balance date
391,975
432,986
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 63 of 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2018
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 2018 and 30 June 2017 as presented
to the Board of Directors.
United States of America -
Continuing Operations
United States of America -
Discontinued Operations
Other segments
Consolidated
Segment revenue from
external customers
Segment result before
amortisation and impairment
2018
$
2017
$
2018
$
2017
$
2018
$
2017
$
2018
$
2017
$
279,237
2,554,483
9,779,438
10,501,526
-
-
10,058,675
13,056,009
(5,134,079)
373,036
39,972
(669,023)
(501,471)
(341,654)
(5,595,578)
(637,641)
Impairment
Depreciation
-
(244,480)
-
-
(126,462)
(1,020,822)
(828,099)
(635,753)
-
-
-
-
-
(244,480)
(954,561)
(1,656,575)
Total segment result
(5,260,541)
(892,266)
(788,127)
(1,304,776)
(501,471)
(341,654)
(6,550,139)
(2,538,696)
Total segment assets
6,697,566
35,704,042
29,600,456
-
67,699
108,353
36,365,721
35,812,395
Total segment liabilities
(35,493,429)
(31,998,225)
(2,509,891)
-
(118,662)
(59,190)
(38,121,982)
(32,057,415)
6
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Annual Report – 30 June 2018
Page 64 of 84
NOTE 18.
SEGMENT REPORTING (CONT)
Segment result
DIRECTORS’DECLARATION
30 June 2018
Consolidated Entity
2018
$
2017
$
Total segment result
(6,550,139)
(2,538,696)
Loss attributable to members, after income tax
(5,818,083)
(2,538,696)
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.
Excluding discontinued operations, during the year ended 30 June 2018 less than $200,000 (2017: $6.7
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
2018
$
2017
$
(a) Reconciliation of the net loss after tax to the net cash flows from operations
Net loss after tax
Depreciation
Income tax benefit
Profit on sale of assets
Amortisation of borrowing costs
Share based payments
(5,818,083)
(2,538,696)
954,561
(732,056)
1,656,435
-
(105,396)
(2,150,047)
440,434
352,303
219,810
711,493
Non-cash piece of other income recognised
-
(92,743)
Provision for doubtful debts
75,000
-
Unwinding of discount associated with restoration
obligation
240,414
287,120
Exploration expenditure expensed
325,304
78,391
Net (gain)/loss on fair value movement of fixed forward
swaps
946,438
(2,640,373)
Impairment losses of oil and gas properties
-
244,480
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 65 of 84
Changes in assets and liabilities:
Changes in receivables
Changes in employee benefits
Changes in payables
DIRECTORS’DECLARATION
30 June 2018
(290,294)
1,766
4,351,898
806,356
54,563
752,251
Net cash flows used in operating activities
742,289
(2,610,960)
(b) Non-cash investing and financing activities
There were no non-cash investing and financing activities during the current and previous reporting date.
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
2018 2017
2018
2017
Samson Oil & Gas USA Inc
United States
100
100
Samson Oil and Gas Montana USA, Inc (100%
owned subsidiary of Samson Oil & Gas USA Inc) United States
100
100
(c) Key management personnel compensation
$
$
42,409,616 44,533,991
34,451,454 34,207,123
76,861,070 78,741,114
Short term
Post-employment
Consolidated Entity
2018
$
1,626,415
81,237
1,707,652
2017
$
2,225,609
80,685
2,306,294
(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
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 66 of 84
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 Moss Adams:
an audit or review of the reporting
NOTE 22.
LOSS PER SHARE
DIRECTORS’DECLARATION
30 June 2018
Consolidated Entity
2018
$
2017
$
72,500
72,500
72,000
72,000
160,050
225,550
160,050
225,550
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:
Net loss for the year attributable to owners of Samson Oil & Gas
Limited from continuing operations (used in calculating basic and
diluted loss per share)
Consolidated Entity
2018
$
2017
$
(5,029,956)
(1,233,920)
Net loss for the year attributable to discontinued operations
(788,127)
(1,304,776)
Total Net Loss
(5,818,083)
(2,538,696)
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
Number of Shares
2018
2017
3,283,000,444 3,257,378,424
-
-
-
-
Weighted average number of ordinary shares and potential ordinary
shares used as the denominator in calculating diluted earnings per
share
3,283,000,444 3,257,378,424
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 67 of 84
DIRECTORS’DECLARATION
30 June 2018
At the end of the current year there were 314,500,000 (2017:411,033,246) potential ordinary shares on issue.
These potential ordinary shares are not dilutive for 30 June 2018 or 2017 as applicable.
There have been no transactions involving ordinary shares that would significantly change the number of
ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion
of these financial statements.
NOTE 23.
FINANCIAL INSTRUMENTS
a)
Guarantees
The parent entity has provided a guarantee to Mutual of Omaha Bank with respect to the credit facility provided
to Samson Oil and Gas USA, Inc. for the entire outstanding balance. (2017: the Mutual of Omaha Bank facility).
Derivative Instruments
b)
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 2018, 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).
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.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 68 of 84
DIRECTORS’DECLARATION
30 June 2018
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 2018 and 2017, the fair value of the Consolidated Entity’s derivative instruments was as
follows:
Consolidated Fair Value at 30 June 2018
Level 1
Level 2
Level 3
Netting (i)
Total
-
-
-
Current Assets
Derivative instruments
Non-Current Assets
Derivative instruments
Current Liability
-
-
4,218
-
(4,218)
-
-
-
-
Derivative instruments
-
1,215,013
Non-Current Liability
Derivative instruments
-
-
(4,218)
1,210,795
-
-
Consolidated Fair Value at 30 June 2017
Level 1
Level 2
Level 3
Netting (1)
Total
Current Assets
Derivative instruments
-
167,307
-
(167,307)
-
Non-Current Assets
Derivative instruments
-
370,474
Current Liability
Derivative instruments
-
531,247
Non-Current Liability
6
Samson Oil & Gas Limited
-
-
(270,891)
99,583
(167,307)
363,940
Annual Report – 30 June 2018
Page 69 of 84
Derivative instruments
-
270,891
-
(270,891)
-
DIRECTORS’DECLARATION
30 June 2018
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
(2017: $Nil).
NOTE 25.
INTEREST IN JOINTLY CONTROLLED OPERATIONS
The Consolidated Entity has an interest in the following joint operations whose principal activities are oil and
gas exploration and production.
Working Interest Held
Project/Property Name
Location
Exploration
Baxter Shale*
Hawk Springs*
United States of America
United States of America
Gold Coast Unit CBM*
United States of America
South Goose Lake*
United States of America
Roosevelt
United States of America
* leases expired or wells plugged and abandoned
Production
6
Samson Oil & Gas Limited
%
2018
0.00
0.00
0.00
0.00
66
%
2017
10.00
25-100
50.00
25.00
66.00
Annual Report – 30 June 2018
Page 70 of 84
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
Scribner
Wagensen
Sabretooth*
United States of America
United States of America
United States of America
Foreman Butte**
United States of America
DIRECTORS’DECLARATION
30 June 2018
4.00
16.00
0.00
60.00
0.00
0.00
3.00
13.00
18.00
28.00
8.00
0.00
1-100
4.00
16.00
9.00
60.00
2.00
15.00
3.00
13.00
18.00
28.00
8.00
12.50
1-100
Oil and gas properties held as jointly controlled assets total $31,313,504 (2017: $32,106,508).
^ Assets sold during the year ended 30 June 2018
** Relates to assets held for sale.
NOTE 26.
EVENTS SUBSEQUENT TO BALANCE DATE
The forbearance agreement between the Consolidated Entity and Mutual of Omaha Bank lapsed on 15
October 2018. Mutual of Omaha Bank have the right to issue a Notice of Default to the Consolidated Entity
and commence alternative actions to recovering the monies owed under the credit facility. To the date of this
report, they have not taken this action.
The Directors are not aware of any matters or circumstances not otherwise dealt with in this report that have
significantly or may significantly affect the operations of the Consolidated Entity, the results of those operations
or the state of affairs of the Consolidated Entity in the subsequent financial years.
NOTE 27.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Consolidated Entity’s principal financial assets and financial liabilities comprise receivables, payables,
derivative instruments and cash.
The Consolidated Entity manages its exposure to key financial risk in accordance with the Board’s financial
risk management strategy. The objective of the strategy is to support the delivery of the Consolidated Entity’s
financial targets whilst protecting future financial security.
The Consolidated Entity may enter into derivative transactions, principally oil and gas price fixed forward
swaps, to manage the price risk arising from the Consolidated Entity’s operations. These derivatives have not
previously qualified for hedge accounting.
The main risks arising from the Consolidated Entity’s financial instruments are interest rate risk, foreign
currency risk, credit risk, price risk and liquidity risk. The Consolidated Entity uses different methods to
measure and manage the different types of risks to which it is exposed. These include monitoring levels of
exposure to foreign currency and price risk and assessments of market forecasts for foreign exchange and
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.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 71 of 84
DIRECTORS’DECLARATION
30 June 2018
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. $20 million
has an interest rate of approximately 6.00%, being the prime rate plus 1% and $4 million has an interest of
7.5%, 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 4.25% to 5.00% in the past twelve months.
At 30 June 2018 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)
Other Equity
Higher/(Lower)
2018
$
2017
$
2018
$
2017
$
Borrowings
+ 3.5% (350 basis points)
835,364
819,691
- 1.0% (100 basis points)
(238,676)
(234,197)
-
-
-
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.
Consolidated Entity
2018
$
2017
$
Cash exposed to Australian interest rates
3,147
9,369
Cash exposed to United States of America interest rates
1,373,529
619,409
1,376,676
628,778
The average floating interest rate for the Consolidated Entity in the United States was 0.00% per annum (2017:
0.00%).
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 72 of 84
DIRECTORS’DECLARATION
30 June 2018
The average fixed interest rate for the Consolidated Entity in the United States was 0.00% (2017: 0.00%).
The average floating interest rate for the Consolidated Entity in Australia was per annum 0.0% (2017: 0.00%)
The average fixed interest rate for the Consolidated Entity in Australia was 0.0% per annum (2017:0.00%).
At year end, the Consolidated Entity has $nil (2017: $nil) in short term deposits that have fixed interest rates.
At 30 June 2018 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)
Other Equity
Higher/(Lower)
2018
$
2017
$
2018
$
2017
$
8
(16)
23
(47)
-
-
Pre tax result
Higher/(Lower)
Other Equity
Higher/(Lower)
2018
$
2017
$
2018
$
2017
$
Cash exposed to US interest
rates
+ 0.10% (10 basis points)
- 0.25% (25 basis points)
1,374
(3,434)
619
(1,549)
-
-
-
-
-
-
Foreign Currency Risk
As a result of significant operations in the United States, the Consolidated Entity’s financial statements can
be affected significantly by movements in the US$/A$ exchange rates.
The majority of the transactions (both revenue and expenses) of the United States subsidiaries are
denominated in US dollars.
The Consolidated Entity does not have any foreign currency cash flow hedges.
At balance date, the Consolidated Entity had the following exposure to A$ foreign currency that is not
designated in cash flow hedges:
Financial Assets
Cash and cash equivalents
6
Samson Oil & Gas Limited
Consolidated Entity
2018
$
2017
$
3,147
9,369
Annual Report – 30 June 2018
Page 73 of 84
DIRECTORS’DECLARATION
30 June 2018
Trade and other receivables
63,052
97,423
Financial Liabilities
Trade and other payables
119,188
59,738
Net Exposure
(52,989)
47,054
At 30 June 2018 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:
Pre tax result
Higher/(lower)
Other Equity
Higher/(lower)
2018
$
2017
$
2018
$
2017
$
-
-
-
-
(3,767)
3,767
3,782
(3,782)
Consolidated
A$:US$ +10%
A$:US$ -10%
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:
Product
Start Date
End Date
Volume (BO/Mmbtu)
Floor
Ceiling
WTI
1-Jul-18
31-Dec-18
Henry Hub
1-May-18
31-Dec-18
80,960
50,590
45.00
2.65
56.00
2.90
At 30 June 2018 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:
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 74 of 84
DIRECTORS’DECLARATION
30 June 2018
Consolidated
Oil
Oil price + 10%
Oil price – 20%
Pre tax result
Higher/(lower)
2018
$
2017
$
Other Equity (pre tax)
Higher/(lower)
2018
$
2017
$
993,107
340,797
(1,986,213)
(743,233)
-
-
-
-
Credit Risk
The Consolidated Entity manages its credit risk through constantly monitoring its credit exposure, to ensure it
is acceptable.
Credit risk arises from the financial assets of the Consolidated Entity, which comprise cash and cash
equivalents and trade and other receivables. The Consolidated Entity’s exposure to credit risk arises from
potential default of the counter party, with a maximum exposure equal to the carrying amount of these
instruments. Exposure at balance date is addressed in each applicable note.
The Consolidated Entity trades only with recognised, creditworthy third parties, and as such collateral is not
requested nor is it the Consolidated Entity’s policy to securitise its trade and other receivables.
The Consolidated Entity holds its cash with large well respected banks, with no history of default and therefore
its credit exposure to cash is minimal. The minimum credit rating of the Consolidated Entity’s bank is Prime-1
as determined by Moody’s Rating Agency.
Receivables balances are monitored on an ongoing basis with the result that the Consolidated Entity’s
exposure to bad debts is not significant.
Whilst a small number of debtors account for a large percentage of the Consolidated Entity’s receivable
balance, the Board does not consider this a significant risk to the Consolidated Entity as the debtors are all
creditworthy with no history of default. As at the date of this report, the Consolidated Entity does not have
any receivables which are past their due date and the Consolidated Entity has not recorded any impairment
in relation to its receivables.
Liquidity Risk
The Consolidated Entity’s objective is to fund future development through cash flow from operations, equity
and debt, where appropriate. It is the Consolidated Entity’s policy to review the cash flow forecasts regularly
to ensure that the Consolidated Entity can meet its obligations when they fall due.
The table below reflects all contractual repayments and interest resulting from recognised financial liabilities,
including derivative instruments as of 30 June 2018. 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 2018.
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.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 75 of 84
DIRECTORS’DECLARATION
30 June 2018
Weighte
d
average
interest
rate
1 year or less
Between 1
and 2 years
Between
2 and 5
years
Over 5
years
Remaining
contractual
maturities
Consolidated - 2018
%
$
$
$
$
$
.
Non-derivatives
Non-interest bearing
Trade and other payables
-
9,730,906
-
-
-
Interest-bearing - variable
rate
Bank loans
Total non-derivatives
Derivatives
Collars, swaps and option
contracts net settled
Total derivatives
6.25%
23,867,558
33,598,463
1,210,795
1,210,795
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Weighte
d
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
Total non-derivatives
28,486,253
Derivatives
Collars, swaps and option
contracts net settled
Total derivatives
363,940
363,940
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The cash flows in the maturity analysis above are not expected to occur significantly earlier than
contractually disclosed above.
At balance date, the Consolidated Entity has $nil in unused credit facility available for draw down (2017: $0.5
million).
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 76 of 84
DIRECTORS’DECLARATION
30 June 2018
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 cents 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
Share based payment expense required for the year
ended 30 June 2018
17 November 2016
1 year
10 years
$134,902
$52,378
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 cents and an expiry date of 15
November 2026. 5,500,000 options were cancelled after the employee resigned prior to the vesting date of
the options. 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
Share based payment expense required for the
year ended 30 June 2018
17 November 2016
1 year
10 years
$754,366
$299,925
There were no options issued to Directors, Executives or other employees or other share based payments
during the year ended 30 June 2018.
Share issued to Directors and Employees
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
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 77 of 84
DIRECTORS’DECLARATION
30 June 2018
employees and Directors. The share based payment expense after accounting for the shares withheld was
$159,506.
At year end there were 314,500,000 (2017: 324,000,000) options outstanding that had been granted to
employees, Directors and other service providers. The weighted average exercise price was 0.57 cents
(2017: 0.61 cents) per option.
The weighted average remaining contractual life for the share options outstanding as at 30 June 2018 is 8.5
years (2017: between 4 months and 9.5 years).
The range of exercise prices for options outstanding at the end of the year was 0.5 and 0.7 cents (2017: 0.5 –
3.9 cents).
Total expenses arising from share based payment transactions recognised
during the period were as follows:
Share options - Directors
Share options - Employees
Total share options expense
Shares – Directors
Shares – Employees
Shares withheld *
Total shares expense
2018
$
2017
$
151,368
200,935
352,303
-
-
-
-
352,303
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.
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
2018
$
2017
$
15,110
52,589
67,699
53,622
3,760,548
3,814,170
1,823,960
-
1,823,960
59,190
-
59,190
Net assets
(1,756,261)
3,754,980
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 78 of 84
DIRECTORS’DECLARATION
30 June 2018
Equity
Issued capital
Share based payments reserve
99,643,104
6,181,162
99,643,104
5,828,859
Foreign currency translation reserve
(7,115,174)
(5,392,146)
Accumulated losses
Total equity
Profit after income tax
Total comprehensive income
(b) Guarantees
(100,465,353)
(96,324,837)
(1,756,261)
3,754,980
(4,140,516)
(5,863,544)
(16,760,547)
(18,305,143)
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. (2017: 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 2018 or 30 June 2017.
(d) Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2018 and
30 June 2017.
(e) Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as
disclosed in note 1.
NOTE 30.
DISCONTINUED OPERATIONS
Financial Performance Information
Revenue
Sale of oil and gas
Oil sales
Gas sales
Other
Total Revenue
Expenses
Lease operating expense
Depreciation
Interest
Amortisation of borrowing costs
6
Samson Oil & Gas Limited
Consolidated Entity
2018
$
2017
$
9,678,832
10,334,633
91,742
8,864
161,632
5,261
9,779,438
10,501,526
6,031,938
828,099
1,275,137
440,434
7,751,072
635,753
1,592,802
219,810
Annual Report – 30 June 2018
Page 79 of 84
DIRECTORS’DECLARATION
30 June 2018
Accretion of asset retirement obligation
Realised hedge expense
216,229
1,775,728
263,964
1,342,901
Total Expenses
10,567,565
11,806,302
Loss before income tax
(788,127)
(1,304,776)
Income tax expense
-
-
Loss after income tax expense from discontinuing
operations
(788,127)
(1,304,776)
Basic earnings/(loss) per share from discontinuing
operations - cents
Diluted earnings/(loss) per share from discontinuing
operations - cents
Cash Flow Information
Net cash flows from operating activities
Net cash flows used in investing activities
Net cash flows from financing activities
(0.02)
(0.02)
4,992,999
(445,997)
-
Carrying Amount of Assets and Liabilities Held for Sale
Oil Inventory
Oil and gas properties
Total Assets
Provisions
Total Liabilities
Net Assets
(0.04)
(0.04)
893,719
(2,718,371)
-
2018
$
219,288
29,381,168
29,600,456
2,509,891
2,509,891
27,090,565
On June 14, 2018, the Consolidated Entity signed a purchase and sale agreement for the sale of the majority
of the Consolidated Entity’s interest in the Foreman Butte project for $40 million, prior to customary
adjustments. The sale was due to close on 15 October 2018, however, it has not and the purchase and sale
agreement has expired. Under the initial agreement, the Consolidated Entity was to retain a 15% working
interest in certain wells within the project area. The value associated with these wells have not been included
in assets held for sale. The Consolidated Entity is in ongoing negotiations with the current buyer and also
seeking alternative buyers for the project area.
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 80 of 84
DIRECTORS’DECLARATION
30 June 2018
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 2018
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 October 2018
6
Samson Oil & Gas Limited
Annual Report – 30 June 2018
Page 81 of 84
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
SAMSON OIL & GAS LIMITED
Disclaimer of Opinion
We were engaged to audit 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 2018, 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.
We do not express an opinion on the accompanying financial report of the Group. Because of the significance of
the matter described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain
sufficient appropriate audit evidence to provide a basis for an audit opinion on this financial report.
Basis for Disclaimer of Opinion
As disclosed in (Note 2 and Note 13) to the financial statements, the forbearance agreement with the Group’s
lender expired on 15 October 2018. As a result of specified defaults of the credit agreement between the Group
and its lender, the lender has the discretion to exercise its respective rights and remedies to recover the debt. The
Group is currently in the process of divesting assets classified as held for sale and believe the proceeds will result
in an amount not less than the amount necessary to repay the Group’s obligation in full to its current lender.
However, we have been unable to obtain sufficient appropriate audit evidence as to whether the Group will be
able to complete the divestment, resulting in proceeds of an amount not less than the amount necessary to repay
the Group’s obligation in full to its current lender. As a result, we have been unable to determine whether the
going concern basis of preparation is appropriate, and therefore whether the assets and liabilities of the Group
can be realised at the amounts stated in the financial report.
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 responsibility is to conduct an audit of the financial report in accordance with Australian Auditing Standards
and to issue an auditor's report. However, because of the matter described in the Basis for Disclaimer of Opinion
section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an
audit opinion on the financial report.
We are independent of the Group in accordance with the ethical requirements of the Corporations Act 2001 and
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.
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 2018.
In our opinion, the Remuneration Report of Samson Oil & Gas Limited, for the year ended 30 June 2018, 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 October 2018
JAMES KOMNINOS
Partner
SHAREHOLDER INFORMATION
for the year ended 30 June 2018
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 30 September 2018.
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
929
458
332
1,229
875
3,823
Number of Shares
258,433
1,462,730
2,708,061
50,636,633
3,227,934,587
3,283,000,444
3,343 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
El-Bayed Andrew
Cooke Derek
El-Bayed Yvonne
BNP Paribas Nom PL
Hussein Jamil Mahomed
HSBC Custody Nom Aust Limited
Vogliotti Peter Anthony
Samson Oil & Gas Limited Treasury
Mirkazemi Pedram
Leet Inv PL
Liu Jisi
Chua Pheng Hong
MacLachlan Neil Thacker
Jin Jiajun
Baxter Michael
Margadh Stoc PL
Gerendasi Holdings PL
Carter Richard John
Kampar PL
TOTAL
Number of Shares Percentage of total shares
%
65.39
1.54
1.18
1.01
0.95
0.91
0.66
0.58
0.57
0.55
0.49
0.46
0.44
0.41
0.37
0.36
0.34
0.33
0.28
0.25
77.07%
2,146,866,924
50,662,528
38,762,171
33,016,190
31,313,882
30,000,000
21,515,074
19,000,009
18,784,200
18,000,000
16,000,000
15,000,000
14,387,000
13,340,289
12,000,000
11,671,576
11,319,389
10,898,775
9,131,783
8,046,312
2,529,716,102
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
6
Samson Oil & Gas Limited
Number of Shares
Percentage of total shares
%
Annual Report – 30 June 2018
Page 84 of 84