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Leucrotta Exploration Inc.Annual Report 2020
GAS FOR
AUSTRALIAN
INDUSTRY
About this report
This Annual Report is a summary of Senex’s operations, activities
and financial position for the year ended 30 June 2020. It
complies with Australian reporting requirements. Senex Energy
Limited (ABN 50 008 942 827) is a company limited by shares
and is incorporated and domiciled in Australia. Senex Energy
Limited is the parent company of the Senex consolidated
group of companies. Unless otherwise stated, in this report all
references to Senex, the Group, the company, we, us and our,
refer to Senex Energy Limited and its controlled entities as a
whole. References to 2020, the financial year or FY are to the
year ended 30 June unless stated otherwise. All dollar figures are
expressed in Australian currency unless otherwise stated.
An electronic version of this report is available at
www.senexenergy.com.au/investors/Company-reports. In
consideration of the environmental footprint associated with the
production of the Annual Report, printed copies will be posted
only to shareholders who have made this request.
Report objectives
This Annual Report is provided for the benefit of all Senex’s
stakeholders, as a clear and concise summary of our performance
during the 2020 financial year and outlook for the year ahead. It
meets our compliance and governance requirements. Through
this report, we aim to build awareness of our operations and
demonstrate how we delivered on our purpose and mission
while maintaining our values and commitment to sustainability.
Corporate governance statement
Senex’s Corporate Governance Statement discloses the
extent to which Senex has complied with the ASX Corporate
Governance Council’s ‘Corporate Governance Principles &
Recommendations – 3rd edition’. This statement is available at
www.senexenergy.com.au/about/corporate-governance.
Qualified reserves and resources evaluator statement
Information about Senex’s reserves and resources estimates are
as reported in our reserves statement release to the ASX dated
14 July 2020. This information, repeated in this document, has
been compiled in accordance with the definitions and guidelines
of the 2018 SPE PRMS. This information is based on, and
fairly represents, information and supporting documentation
prepared by, or under the supervision of, a qualified petroleum
reserves and resources evaluator, Peter Mills BEng (Electronics).
Mr Mills (Chief Operating Officer) is a member of the Society of
Petroleum Engineers and a full-time employee of Senex. Mr Mills
consents to the inclusion of the information in the form and
context in which it appears in this Annual Report. In compiling
this information, Senex engaged the services of Netherland
Sewell & Associates (NSAI) and DeGolyer and MacNaughton
(D&M) to assess the data and reserves and resources
independently prior to Senex reporting its reserves estimates.
Annual General Meeting: Thursday, 19 November 2020.
Cover photo: Tom Wimberly at CSR’s Oxley brick plant in
Brisbane, which uses natural gas supplied by Senex
Contents
Overview
About Senex and
where we operate
Purpose, mission and values
Strategy
Performance highlights
Year of production
outperformance
Message from the Chairman
and the Managing Director
and Chief Executive
Leadership team
Financial review
Operating review
Reserves and resources
1
2
3
4
6
8
10
12
16
24
Sustainability review
Safe and secure
Environmentally responsible
Capable people
Community partner
Board of Directors
Risk management
Directors' Report
Remuneration Report
Financial statements
Additional information
Tenement interests
Shareholder statistics
Voting rights
Five-year history
Glossary
Corporate directory
26
28
32
36
38
46
48
50
56
73
124
124
128
129
130
132
136
OVERVIEW 1
About Senex and
where we work
Senex is a growing
Australian oil and natural
gas explorer, developer
and producer.
We manage a strategically
positioned portfolio of oil and natural
gas assets in Australia’s leading
onshore energy regions: the Surat
and Cooper basins.
Through our foundational Surat
Basin natural gas projects, we are
helping to meet the energy challenge
on the east coast of Australia.
Senex is focused on creating
sustainable value for shareholders
by leveraging our capability as a
low-cost, efficient and safe explorer,
developer and producer.
GAS PRODUCTIONGemba field100% owner operatorGAS EXPLORATIONArtemisExploration start FY22-23100% owner operatorGAS PRODUCTIONAtlas100% owner operatorGAS PRODUCTIONRoma North100% owner operatorOIL APPRAISAL ANDPRODUCTIONCooper Basin western flank60% owner operatorSEISMICWesteros 3Dseismic survey100% owner operatorMOUNT ISABARCALDINEGLADSTONEBRISBANEHEAD OFFICEROMA OFFICEWANDOAN OFFICEGROWLERFIELD OFFICECOOPER BASINSURAT BASINADELAIDE OFFICEBLACKALLSYDNEYMELBOURNEWALLUMBILLA• Pelican Point Power StationMOOMBARefer to page 20 for a detailed map of Roma North and Project Atlas.Major facilitySenex officeTown/cityMajor pipelineSenex acreageCooper BasinSurat Basin 2 OVERVIEW
Purpose, mission and values
Our committed and capable people, and our strong values
and culture, form our foundation for success.
Our purpose
A growing and independent company, providing oil and gas to improve lives and support the energy needs of Australia and the world
Our mission
• we protect our people and the environment
• we build quality relationships with our customers, partners and stakeholders
• we deliver what we promise
• we attract and retain talented people with drive and energy
• we create value for our investors
Our values
Protecting our
people and the
environment
Integrity in
everything
we do
Striving for
excellence
Winning
together
ANNUAL REPORT 2020 OVERVIEW 3
Strategy
In 2020 Senex delivered on the promise to transform itself
into a diversified oil and gas producer and an important
supplier of natural gas to the east coast market.
We are successfully increasing the supply of natural
gas on the east coast and playing a vital role in the
broader economy.
We are, as the title of this Annual Report says, providing gas
for Australian industry, supporting manufacturing and jobs.
Our rapid increase in production means we are doing
this at scale. Our newly expanded Surat Basin operations
are capable of supplying more than 10 per cent of
Queensland’s domestic gas demand.
That is before growth from incremental investments that
will further leverage our “hub-and-spoke” infrastructure
model. The first expansion is already planned at Roma
North - an example of our high-return, low-cost and
long-life investment model.
Senex is developing further opportunities to expand
production, earnings and cashflow, and our track record
shows we have the capabilities to turn these into reality.
Safe, efficient,
low-cost
operations
• strong, stable free
cashflow
• balance sheet strength
• low-cost operations
Expand and
accelerate
• low-risk, high-return
growth from existing
portfolio
• leverage best-in-class
project execution and
operating capabilities
Grow and
diversify
• disciplined review and
capture of Australian
growth opportunities
• build diversified portfolio
of quality and scale
• focus on core
capabilities
Sustainability | Values and Culture
“Senex has a very exciting future. We are a
material new entrant in a strong domestic
market with high barriers to entry, we are
increasing the supply of natural gas on the
east coast to help our manufacturing sector,
and we are here for the long term.”
Senex Managing Director
Ian Davies
Focus on free cashflow
Senex reviewed its strategy to ensure our objectives remain
appropriate and are aligned with our capabilities.
We tested the strategy against a range of scenarios including the
prolonged impact of COVID-19 and a steep oil price decline. We
are confident that it remains valid.
Our strategy is to remain an oil and gas exploration and production
business, featuring a mix of products, basins and customers.
In the short-term, with our capital expenditure program complete,
we are focused on maximising the generation of free cashflow.
This will enable us to consider capital management and continue
pursuing growth opportunities with discipline.
We will continue to execute our strategy while being mindful
of the expectations of our stakeholders, particularly in safety,
environment, community and sustainability.
4 OVERVIEW
Performance highlights
Total Recordable Injury Frequency Rate
(per million hours worked)
Production
(mmboe)
Net 1P reserves
(mmboe)
Net 2P reserves
(mmboe)
8.66
7%
9.36
8.8
1.20
0.84
0.75
1.01
4.0
1.8
2.08
73%
38.6
100%
134.4
19%
19.3
20.2
16.7
12.1
111.6
113.2
83.9
83.4
Senex transformed itself
into an important producer
of natural gas to the east
coast market in 2020.
Outstanding project delivery
led to a major upgrade to
our Surat Basin reserves and
a step-change in production,
earnings and cashflow.
Senex’s overall safety performance
improved slightly following an
increased focus on safety culture,
hazard identification, personal risk
assessment and contractor safety
management. Six recordable injuries
occurred in the financial year,
contributing to a TRIFR of 8.66 based
on one million exposure hours.
Total production increased 73 per cent,
primarily due to strong production
performance across Senex’s Surat
Basin assets.
Senex delivered a major reserves
upgrade following outstanding
execution of our Surat Basin natural
gas developments. Our net 1P reserves
position increased 100%.
Senex’s 2P reserves position increased
19 per cent*, driven by excellent
appraisal and development drilling results
at Atlas and continued production
outperformance at Roma North.
Note: See Senex’s reserves statement released
to the ASX on 14 July 2020.
Note: See Senex’s reserves statement released
to the ASX on 14 July 2020.
*
In converting petajoules to million barrels of oil equivalent, Senex has applied the conversion rate of 1 mmboe = 5.815 PJ. In converting million barrels of oil equivalent to petajoule equivalent for oil and gas
liquids, Senex has applied the inverse conversion rate of 1 PJ = 0.172 mmboe, recognising that gas liquids contributions are immaterial. For the purpose of comparative assessment of FY20 and FY19 conversions,
a constant conversion factor of 1 mmboe = 5.815 PJ has been applied (previously 1 mmboe = 5.880 PJ in FY19), resulting in a minor movement in FY19 mmboe 2P reserves. Refer to the announcement of
20 August 2019 for the independent assessment of FY19 reserves and resources.
ANNUAL REPORT 202020192018201720162020 OVERVIEW 5
Sales revenue
($m)
Underlying EBITDA
($m)
Capital expenditure
($m)
Cash position
($m)
Statutory net (loss)/profit after tax
($m)
120.3
28%
52.5
51%
155.3
42%
94.1
34.8
109.3
43.6
70.3
69.3
(1.3)
23.0
24.9
80.1
62.3
27.8
27%
79.9
62.7
66.5
(94.0)
134.8
102.4
(51.4)
3.3
(22.7)
(33.2)
Sales revenue increased 28 per cent
due to a significant rise in production
at Roma North and the start of
production from Atlas and Gemba.
Underlying EBITDA increased
51 per cent due to a significant rise in
gas production and sales margins and a
continued focus on cost management
in the Cooper Basin.
Significant capital expenditure was
incurred during FY20 as Senex largely
completed its 80-well Surat Basin
drilling campaign. Further drilling
and exploration activity took place in
the Cooper Basin, mostly under the
free-carry work program agreed with
Beach Energy.
Senex's cash position of $79.9 million
is driven by continuing robust
operating cashflow and debt funding
to develop its Surat Basin assets. Senex
also had drawn debt of $125 million,
resulting in a net debt position of
$45.1 million.
Statutory NPAT1 was impacted by a
non-cash impairment of $52.1 million
in FY20. This impairment related
primarily to non-core producing assets
and capitalised exploration activity in
the Cooper Basin.
1 (Loss)/profit after tax reported
in the consolidated statement of
comprehensive income
20192018201720162020 6 OVERVIEW
A year of production outperformance
2020 was a year of production outperformance in the
Surat Basin. Outstanding execution of Senex’s flagship
natural gas developments drove a major reserves upgrade.
31 July
First Atlas
well spudded
1 July
Production
at ~8 TJ/day
3 September
Announced first wells
tied into Roma North
processing facility
3 October
Atlas pipeline
completed
8 October
Announced
first production
from Atlas wells
10 December
Atlas achieves first
gas sales ahead
of schedule
J U L 1 9
A U G 1 9
S E P 1 9
O C T 1 9
N O V 1 9
D E C 1 9
ANNUAL REPORT 2020 OVERVIEW 7
10 June
Transformational $400 million
Surat Basin natural gas
development project completed
30 June
Surat Basin
production reaches
35 TJ/day
22 January
Surat Basin
gas production
reaches 20 TJ/day
21 February
Three-quarters of
80-well campaign
completed
16 April
Surat Basin
production
reaches 30 TJ/day
17 April
Roma North gas
processing facility hits
maximum capacity
J A N 2 0
F E B 2 0
M A R 2 0
A P R 2 0
M A Y 2 0
J U N 2 0
8 OVERVIEW
Message from the Chairman and
the Managing Director and Chief Executive
Senex made its mark in the industry in 2020 with
outstanding project delivery, a major upgrade to
our reserves and a step-change in production
and material operating cashflow. Importantly,
we achieved our promised transformation
into an important producer of natural gas to
the east coast market, with our increasing gas
supplies supporting manufacturing and jobs and
contributing to Australia’s economic recovery.
Energy upheaval
The environment in which we operate has been subject to major
upheaval during 2020.
COVID-19 has dramatically changed the world, presenting
extraordinary health and economic challenges that have flowed
into energy markets. Demand for oil plummeted, a situation made
worse by the abandonment of oil production cuts at the OPEC+
meeting in early March. The price of Brent plummeted to below
US$20 a barrel in April and stabilised at above US$40 as demand
gradually rebounded and producers curtailed output.
The International Monetary Fund is predicting that the global
economy will rebound in 2021, putting upward pressure on oil
prices, but it is likely that we face a lengthy period of lower prices.
Domestically, spot prices in the east coast gas market, which are
influenced by regional LNG prices, have fallen from above A$6 a
gigajoule to around A$4.
The availability, affordability and sustainability of natural gas, and
energy more broadly, has maintained its high profile in federal
and state politics. The Federal Government started the year by
committing to facilitate the injection of more gas into the east
coast market, in line with its agreement with NSW as the first of
many with the states and territories. Gas subsequently became
front and centre of federal politics when the National COVID-19
Commission Advisory Body called for gas to power an economic
recovery led by manufacturing. Amid related debate about the
affordability of gas, energy companies including Senex stated
publicly that increased supplies rely on a stable regulatory regime
and reasonable prices that support capital investment.
We continue to welcome the policy in Queensland that facilitates
investments such as our Atlas development. The increase in the
royalty rate was surprising and government and industry have
now resolved this in a way that will support continued investment.
Performance
Despite the lower oil price environment, Senex performed well
in 2020 with a strong balance sheet, diversified revenue streams
and a low-cost business model that delivers material operating
cashflow. The resilience of our oil and gas portfolio is underlined
by our generation of revenue from fixed-price domestic gas
contracts, oil-linked gas contracts and oil production with
significant downside hedging.
Senex also has strong liquidity, with cash reserves of
$79.9 million, drawn debt of $125 million and with our Surat
Basin capital expenditure program complete.
Senex and our contractor partners had an outstanding year of
project delivery, primarily through execution of our $400 million
Surat Basin gas developments. We delivered these projects
ahead of schedule and below budget. Our outstanding project
execution resulted in a 30-well reduction from the original design
of the drilling campaign and a major reserves upgrade.
We also achieved full-year production growth of 73 per cent,
underpinned by a 278 per cent increase in Surat Basin gas
production, with Roma North and Atlas producing a combined
35 terajoules (TJ) a day by the end of the financial year as we
track towards initial nameplate capacity of 48 TJ a day.
ANNUAL REPORT 2020 OVERVIEW 9
Excellent drilling results and continued production
outperformance contributed to a 108 per cent increase in
1P Surat Basin gas reserves and a 21 per cent increase in
2P reserves.
In the Cooper Basin, we achieved initial production from the
Gemba field, completed the free-carry drilling campaign and
interpreted the Westeros 3D survey, providing a large inventory of
exploration and appraisal leads to pursue.
Domestic gas market
The success of our Atlas gas marketing activities – with gas sales
agreements now in place for up to 37 petajoules – demonstrate
that the east coast market is working. We are also contributing
to local manufacturing, jobs and investment and providing gas
security to Australian commercial and industrial customers.
Senex’s Surat Basin gas production is fully contracted for the
2020 calendar year and about 80 per cent is under contract
through to the end of calendar year 2021 to high-quality local
customers. In December 2019 we expanded our gas sales
agreement with the packaging manufacturer Orora, agreeing to
supply up to 13.2 petajoules until 2027. In May we signed a new
one-year sales agreement with CleanCo for 2.55 petajoules to
fuel gas-fired power generation in south-east Queensland.
We continue to negotiate new gas sales agreements with
potential customers.
Safety, sustainability and community
Despite the logistical challenges presented by COVID-19, Senex’s
overall safety performance improved in 2020. We increased our
focus on culture, hazard identification, personal risk assessment and
contractor management and these efforts will continue. However, it
is regrettable that we had six recordable injuries in 2020.
Throughout the pandemic, we focused on meeting or exceeding
government, World Health Organisation and industry guidelines,
and introduced a range of precautions and strict protocols to
support communities and our people. Safety was foremost as
our office-based employees transitioned to working from home,
and then back to the office, with a keen focus on frequent
communication and health, wellbeing and social connection
enabled by technology.
Senex maintained its strong environmental management, with
no serious reportable environmental incidents, and we advanced
climate change priorities as part of our commitment to be part of
a low-carbon future. With the completion of the Atlas and Roma
North gas developments, and our growing focus on natural gas,
Senex is increasingly positioned to help achieve that goal.
It is essential that we remain good neighbours in the communities
we are part of. In 2020, we continued to contribute to those
communities, creating local jobs, spending about $37 million
directly with 56 businesses, and working with more than 30
community organisations. This important work included direct
support during COVID-19.
Outlook
With gas processing infrastructure established at Atlas and Roma
North, and a growing reserves base, Senex has successfully
delivered on the foundations to achieve continued growth in
production, earnings and cashflow from its valuable east coast
Surat Basin natural gas position.
In the 2021 financial year we will begin to reap rewards from our
investment in the Surat Basin, with production forecast to triple
from 2019 levels to more than 3.6 millions barrels of oil equivalent
in 2022 without any further investment in growth projects.
Further growth can be expected as we continue to capitalise on
our strategic strengths within a strict capital allocation framework.
At Roma North, contracts have been agreed to procure long-lead
items for a 50 per cent expansion of processing capacity to
24 terajoules a day.
We are rapidly becoming more resilient to oil price volatility. In
2017 oil accounted for all of Senex’s output: in 2022 we expect
gas to make up more than 80 per cent of our production.
Thank you
We would like to thank sincerely our wide range of partners:
landholders and the communities we work with; contractors;
suppliers; customers and commercial partners; joint venturers;
government stakeholders at all levels; and our shareholders, for
your continued support.
Special thanks to our employees, who have demonstrated time and
again their capacity to overcome in challenging circumstances and
who continue to deliver for our shareholders.
Together, we have transformed Senex into an important natural gas
producer, a supporter of the manufacturing industry, jobs and the
broader economy.
TREVOR BOURNE
Chairman
IAN DAVIES
Managing Director and
Chief Executive Officer
10 OVERVIEW
Leadership
team
Ian Davies
Managing Director and Chief Executive Officer
BBus (Acct), CA, Cert SII (UK), MAICD, F Fin
As Managing Director and Chief Executive
Officer, Ian is responsible for maximising the
value of Senex through day-to-day leadership,
management, decision making and execution
of activities. Ian has led Senex since 2010,
navigating the business through significant
growth and transformation. Under Ian’s
leadership, the Company is pursuing a long-held
strategy to capture emerging opportunities in
Australia’s dynamic energy sector.
In 2017, Ian was elected to the Board of the
Australian Petroleum Production and Exploration
Association (APPEA) and in November 2019
was appointed Vice Chairman.
Before joining Senex, Ian was influential in
the growth of the CSG-to-LNG industry in
Queensland as Chief Financial Officer of
Queensland Gas Company Limited (QGC). Ian
led the negotiation of the LNG joint venture
transaction with BG Group and the takeover
offer for QGC by BG Group, the largest
on-market takeover in Australian corporate
history at that time.
He also served as General Manager Business
Development and General Manager Ports and
Infrastructure, under BG Group ownership. Ian
spent the early part of his career in corporate
tax advisory within mining and energy with PwC
in Brisbane and as an investment banker with
Barclays Capital in London.
Mark McCabe
Chief Financial Officer
BCom (Economics), CA, MBus (AppFin and Inv)
Mark is accountable for corporate finance,
business planning, governance, risk and
technology.
He has considerable finance and leadership
experience in Queensland’s natural gas industry.
Mark has held senior roles in the utilities and oil
and gas sectors spanning finance, commercial
management, retail operations, strategy and
mergers and acquisitions. He joined Senex in
December 2019.
Before joining Senex, Mark was Chief Financial
Officer and Deputy Chief Executive Officer of
Australia Pacific LNG (APLNG) for 11 years.
As APLNG’s inaugural Chief Financial Officer,
Mark played a vital role in achieving the project’s
Final Investment Decision, a US$8.5 billion
finance facility, an investment-grade credit rating
and a US$4.5 billion refinancing.
Mark started his career in taxation and corporate
finance with PwC.
ANNUAL REPORT 2020 OVERVIEW 11
Suzanne Hockey
Peter Mills
David Pegg
Executive General Manager People and Performance
PgD Strategic Mgmt (Distinction), ADip AppSc
Chief Operating Officer
BEng (Electronics)
Company Secretary and General Counsel
BCom, LLB, MSc
Suzanne’s area of responsibility includes
human resources, talent management and
organisational development.
Suzanne joined Senex in January 2016, bringing
over 20 years of experience in organisational
development and human resources strategies
and processes to the role. Her career has
predominantly involved senior roles in resources
companies including General Manager of Human
Resources at Oil Search Limited.
In that role, Suzanne’s portfolio included human
resources consulting services, governance and
performance management of a global workforce
of more than 1,600 staff and contractors.
Prior to Oil Search, Suzanne held roles at Nautilus
Minerals, Barrick Gold Corporation, CEC Group
Limited and Placer Dome Gold.
As Chief Operating Officer, Peter has
accountability for operations in the Cooper and
Surat basins, subsurface developments, field
development planning, exploration, production
engineering, drilling and completions, and joint
venture relationships. Peter is also responsible for
overseeing the company’s digital transformation.
Peter joined Senex as Executive General Manager
Operations and Growth in July 2018 and was
appointed Chief Operating Officer on 13 February
2019. Peter brings over 38 years of experience
from domestic and international environments,
having worked in Australia and globally across
Asia, Europe, the United Kingdom and North
America. He has held roles with Woodside, BHP
Petroleum, Hess, Premier Oil and InterOil.
Peter is a petroleum engineer by training and
has worked extensively across the upstream
value chain including exploration, development,
production and commercial in conventional and
unconventional oil and gas.
David is responsible for planning, coordinating and
advising the Board and Executive Committee on
all Senex-related legal and governance matters.
David is an experienced senior executive in the
energy and resources sector with a background
in law, corporate governance, commercial
transactions and business development.
Before joining Senex in 2013, David served as
General Counsel and Company Secretary at
energy companies and prior to that, David was
with a national law firm for 10 years.
12 FINANCIAL REVIEW
Financial review
Results for the financial year
Sales revenue
EBITDA
Exploration expense
Non-cash impairment
Reported NPAT
Underlying NPAT
$ million
$ million
$ million
$ million
$ million
$ million
Oil field operating costs1
$ per barrel
Operating cashflow
Capital expenditure
Cash balance
Net (debt)/cash balance
Effective income tax rate
Earnings per share
$ million
$ million
$ million
$ million
%
cps
1. Field operating costs excluding tariffs and royalties
Numbers may not add precisely due to rounding
2020
120.3
49.5
(2.8)
(52.1)
(51.4)
3.8
13.0
51.5
155.3
79.9
(45.1)
0%
(3.5)
2019
94.1
30.9
(11.3)
-
3.3
7.2
14.0
44.5
109.4
62.7
12.7
0%
0.2
26.2
18.5
8.5
(52.1)
(54.7)
(3.4)
(1.0)
7.0
45.9
17.2
(57.8)
-
(3.8)
28
60
75
n/a
n/a
(47)
(7)
16
42
27
n/a
-
n/a
Production volumes
2020
2019
Oil
Gas and gas liquids
Total
Gas and gas liquids
mmbbl
mmboe
mmboe
PJ
0.68
1.41
2.08
8.22
0.78
0.43
1.20
2.43
Numbers may not add precisely due to rounding
Change in
volume
(0.10)
0.98
0.88
5.79
Change $
Change %
Comparison in production volumes (mmboe)
0.01
1.00
2016
-
0.75
2017
0.09
0.75
2018
Oil production
Gas production
0.43
0.78
2019
Underlying net profit can be reconciled to statutory net (loss)/profit as follows:
FY20
(51.4)
52.1
2.6
1.3
(0.2)
(0.8)
3.8
$ million
Statutory net (loss)/profit after tax
Add/(less):
Non-cash impairment
Restructuring
Net impact of the Beach Energy transaction
Gain on sale of Senex Pipeline & Processing Pty Ltd
Change %
COVID-19 government relief
Underlying net profit after tax
(13)
228
73
238
Numbers may not add precisely due to rounding
EBITDA can be reconciled to statutory net (loss)/profit as follows:
$ million
Statutory net (loss)/profit after tax
Add/(less):
Net interest
Amortisation and depreciation
Non-cash impairment
EBITDA (non IFRS)
Numbers may not add precisely due to rounding
FY20
(51.4)
9.5
39.2
52.1
49.5
1.41
0.68
2020
FY19
3.3
-
2.1
1.8
-
-
7.2
FY19
3.3
0.9
26.8
-
30.9
ANNUAL REPORT 2020 FINANCIAL REVIEW 13
14 FINANCIAL REVIEW
Key movements
Sales revenue
Senex’s full-year sales revenue of $120.3 million (FY19: $94.1 million) was 28 per cent higher than the
previous year. A substantial increase in gas production in the Surat Basin more than offset lower oil
production and prices. In summary:
• realised oil prices decreased to A$90 per barrel sold, including the impact of hedging
(FY19: A$101 per barrel) following a steep decline in the Brent price in March 2020
• oil production volumes decreased to 0.68 mmbbl (FY19: 0.78 mmbbl), with new production from
drilling success in FY19 and FY20 on the western flank offset by natural field decline and the shut-in
of smaller, high-cost fields nearing the end of their life, prompted by the Brent price decline
• realised gas prices were $7.8 per GJ sold (FY19: $7.6 per GJ sold)
• gas production volumes were 8.2 PJ (1.41 mmboe) (FY19: 2.4 PJ or 0.43 mmboe) following the
ramp-up at Roma North and the start of sales from the Atlas and Gemba fields
Operating costs
Senex has continued its excellent track record as a low-cost oil and gas producer.
Oil field unit operating cost was $13.0 per barrel (FY19: $14.0 per barrel), a decrease of 7 per cent
from 2019, despite reduced oil production. The decline in operating cost per barrel is primarily due to
strong cost control, particularly following the decline in in Brent price from March.
Gas unit operating cost was $2.9 per GJ (FY19: $4.6 per GJ), a decrease of 37 per cent. The decline in
operating costs per GJ is largely due to a significant increase in production from Roma North and Atlas
and strong cost control.
Earnings (EBITDA)
The EBITDA result of $49.5 million reflected increased gross profit from higher gas production across
the Surat and Cooper basins, partially offset by lower oil production and pricing. EBITDA was further
supported by a continued focus on cost control in the Cooper Basin and a transfer of $6.5 million in
costs to interest and depreciation on the adoption of the new accounting standard, AASB 16 Leases on
1 July 2019.
Exploration expense
The Company’s exploration expense of $2.8 million (FY19: $11.3 million) primarily reflected the
write-off of non-commercial wells in the Cooper Basin that were drilled as part of the Beach Energy
free-carry agreement.
Income tax expense
No income tax expense was recognised in FY20 due to carry-forward tax losses largely from our
ongoing exploration and development program. Further details can be found in our Tax Transparency
Report and in Note 16 to the Financial Statements.
Adoption of AASB 16 Leases
Senex adopted AASB 16 Leases on 1 July 2019. The impact of the first year of this new standard on
the profit and loss statement was an increase in EBITDA of $6.5 million and an increase in depreciation
and finance expenses of $11.9 million. This reduced underlying and statutory net profit after tax by
$5.3 million.
Financing
Senex has now fully drawn down the $125 million senior secured Reserve Based Lending (RBL)
facility that forms part of the $150 million senior secured debt facility completed in October 2018.
Funds were used for the 80-well drilling campaign in Roma North and Atlas completed in June 2020.
The RBL has a seven-year tenor, with repayment over the remaining term post completion of Atlas
and Roma North. The facility has competitive margins, with starting interest cost of less than 6 per
cent a year, stepping down on completion of development projects. There is no penalty for early
repayment or refinance.
In September 2019 Senex also agreed a further $10 million working capital facility to be used for
letters of credit and bank guarantees. This is in addition to the existing $25 million working capital limit
agreed with the initial senior secured debt facility.
ANNUAL REPORT 2020 FINANCIAL REVIEW 15
Underlying net profit reconciling items
Underlying net profit after tax is a non-IFRS measure. Items removed from underlying net profit after
tax follow.
Non-cash impairment
In accordance with relevant accounting standards, Senex has conducted a detailed review of asset
carrying values at 30 June 2020, resulting in a non-cash impairment charge of $52.1 million (pre and
post-tax).
The non-cash impairment charge is in respect of Senex’s Cooper Basin oil assets and is due to a
material downward revision in oil price assumptions resulting from the effects of the COVID-19
pandemic on energy market fundamentals. Senex has reduced its long-term Brent oil price assumption
to US$62.5/bbl from FY25 (real 1 July 2020) and is forecasting a slower recovery to these levels over
the short to medium-term.
About two-thirds of the non-cash impairment charge relates to small, late-life non-western flank oil
fields in the Cooper Basin, with a lack of oil transportation infrastructure and materially lower near-term
oil price assumptions disproportionately affecting these fields’ carrying values, notwithstanding their
cashflow positive operations. The balance of the non-cash impairment charge relates to capitalised
Cooper Basin exploration and obsolete oil field inventory.
A breakdown of the impairment is shown below:
$ million
Oil and gas properties
Exploration assets
Property, plant and equipment, and inventory
Total
See Note 7 to the Financial Statements for additional detail.
FY20
31.4
13.0
7.7
52.1
Net impact of the Beach Energy transaction
In April 2018 Senex entered into an agreement with Beach Energy to terminate the Senex-Beach
Energy unconventional gas project with consideration of up to $43 million transferred as a free-carry
commitment to the mutually owned, Senex-operated, Cooper Basin western flank oil assets.
The net expense of $1.3 million relates to unsuccessful free-carried wells. This has been removed from
underlying net profit to consistently present the gains and losses from the Beach Energy transaction
period on period.
Restructuring
Following a comprehensive organisational review as a result of the COVID-19 pandemic and the
changed economic outlook, Senex booked a restructuring cost provision of $2.6 million in FY20. The
restructure is expected to be completed during Q1 FY21 and deliver material and ongoing cost savings
and efficiencies across the business.
Sale of Senex Pipeline & Processing Pty Ltd
In September 2019, Senex completed the sale of its Roma North gas processing facility and pipeline to
major energy infrastructure operator Jemena for $50 million cash. The gain on disposal of this facility
has been removed from underlying profit.
COVID-19 government relief
State and federal governments have announced measures to help businesses during the COVID-19
pandemic. Senex received relief in the form of JobKeeper payments and payroll tax rebates. These
have been removed from underlying profit as they are abnormal and are not expected to be
long-term arrangements.
16 OPERATING REVIEW
Operating review
Our high-quality, low-cost operating model and
best-in-class execution capability enabled us to deliver
robust oil production and transform our business into
an important domestic natural gas supplier.
2020 operational highlights
$400 million Surat Basin project completed
Best-in-class Surat Basin
drilling performance
Gas production
outperformance
Capital expenditure
reduced
Major gas
reserves upgrade
Gemba gas
online early
Performance highlights
Total production volume
(mmboe)
2.08
73% increase on 2019
Oil field operating cost
(per barrel excluding tariffs and royalties)
$13
7% reduction on 2019
1P reserves
(mmboe)
38.6
100% increase on 2019
2P reserves
(mmboe)
134.4
19% increase on 2019
ANNUAL REPORT 2020 OPERATING REVIEW 17
Transformation delivered
2020 drilling summary
Senex achieved outstanding operational performance and
completed key project milestones to deliver transformational growth.
We completed our $400 million Surat Basin capital works program
less than two years after the final investment decision. Production
has outperformed expectations, with Roma North exceeding
nameplate capacity and Atlas ramping up ahead of target to
achieve 35 terajoules (TJ) a day of combined production by the end
of the financial year. Production outperformance and outstanding
project execution has also led to material upgrades in booked
natural gas reserves. Oil assets continued their strong delivery with
excellent results from the 2019 development program leading to
100 per cent reserves replacement being achieved.
Senex responded swiftly to COVID-19 with protocols that allowed
operations and work programs to continue safely with minimal
disruption. Our robust balance sheet and active hedging strategy
provided resilient cashflows in the lower oil price environment and
we continue to monitor the impact on our business while focusing
on the safety of staff, contractors and communities.
Production summary
In 2020, Senex delivered total production of 2.1 mmboe, compared
with 1.2 mmboe the year before, increasing production 73 per cent.
This is an increase from full-year production guidance of 1.8-2.0
mmboe for the year. This increase was primarily due to strong
production performance across Senex’s Surat Basin assets.
Reserve summary
Senex delivered a major Surat Basin gas reserves upgrade during the
year reporting a 108 per cent increase in 1P reserves (from 101 PJ to
210 PJ) and a 21 per cent increase in 2P gas reserves (from 612 PJ
to 739 PJ) following outstanding execution of its Surat Basin natural
gas developments, excellent appraisal and, with continued Roma
North production outperformance, driving a 10 per cent increase.
Cooper Basin 2P reserves remained steady at 7.3 mmboe.
Total Senex 2P oil and gas reserves increased 19 per cent on last
year to 134 mmboe (781 PJe).
Basin
Cooper
Cooper
Well type
Well name
Oil production
Snatcher North 2
Water injection
Snatcher 12 DW1
Cooper
Water injection
Snatcher North 3
Cooper
Oil production
Growler Northeast 2
Surat
Surat
Surat
Surat
Gas development
Glenora 25-34, 43-50, 59, 61 (20 wells)
Gas development
Eos 16-19, 21-27, 29-30, 34-35 (15 wells)
Gas development
Atlas 1-22, 24-31, 33-43, 61-63 (44 wells)
Appraisal
Atlas 60
Tenement
Senex ownership % Result
PPL 240
PPL 240
PPL 240
PPL 242 /
PRL 15
PL 1022
PL 1022
PL 1037
PL 1037
60%
60%
60%
60%
100%
100%
100%
100%
Plugged and abandoned
Cased and suspended
and completed
Cased and suspended.
Awaiting completion
Producing
Producing
Producing
Producing
Cased and suspended
Surat Basin gas reserves (net to Senex) (PJ)
Surat Basin 2P gas reserves as at 30 June 2020 (PJ)
649
438
81
FY17
892
890
615
103
FY18
1P
2P
612
101
FY19
3P
995
222
283
739 PJ
Roma North
Atlas
Other Western Surat
739
210
FY20
234
18 OPERATING REVIEW
Natural gas
With completion of our Surat Basin $400 million capital
works program, Senex’s natural gas is powering industry and
supporting manufacturing and jobs in the east coast market.
Delivering in the Surat Basin
$400 million
total investment
428km2
total natural gas acreage
80
wells drilled
2
gas processing
facilities
48 TJ/day
initial production target by
end of FY21 (18 PJ/year)
~250 jobs
created during
project construction
65km
of gas pipelines
2.8 days
best drill and complete cycle time
30-year
project lifespan
Domestic gas sales powering Queensland homes and
manufacturing – from bricks and plasterboard to cardboard,
glass and aluminium packaging, and electricity generation
Gas processing capacity able
to meet more than 10% of
Queensland’s gas demand
ANNUAL REPORT 2020 OPERATING REVIEW 19
Atlas
Atlas achieved domestic gas supply ahead of schedule in
December 2019. Queensland’s new state-owned power generator
CleanCo became the first customer to use natural gas from Atlas to
generate electricity, joined by domestic customers CSR and Orora
in January 2020. Atlas is the first natural gas acreage in Australia
dedicated to supplying domestic customers, who use gas to make
products and support manufacturing jobs in Queensland.
With development of the processing facility completed by our
infrastructure partner Jemena, we focused on completing our
80-well Surat Basin drilling campaign by mid-2020 with drilling
contractor Easternwell. Since the end of financial year, daily
production exceeded 17 TJ a day. Production continues to perform
strongly as it tracks towards nameplate capacity of 32 TJ a day.
Construction of the Senex-owned water treatment facilities at
Atlas is expected to be completed in the second quarter of the
2021 financial year.
Australian manufacturer
CSR uses the gas supplied
via Wallumbilla Gas Hub
in its three south-east
Queensland manufacturing
plants that employ 260
people at Brendale, Coopers
Plains and Oxley.
Senex and CSR: building Australia together
Natural gas from Senex’s Atlas acreage is powering the
kilns that make building products found in 90 per cent of
Australian homes.
Australian manufacturer CSR uses the gas supplied via
Wallumbilla Gas Hub in its three south-east Queensland
manufacturing plants that employ 260 people at Brendale,
Coopers Plains and Oxley.
Gas from Atlas is helping to build over 150,000 Australian
homes a year using CSR products – including PGH™ bricks,
Gyprock™ plasterboard and Bradford™ insulation.
Senex is proud to support local manufacturing, jobs
and investment through its partnership with CSR
Building Products.
Senex and CleanCo: partners in Queensland’s cleaner
energy future
Atlas gas is supporting Queensland’s cleaner energy future
by fuelling the Swanbank E power station near Ipswich
in south-east Queensland. The highly efficient 385 MW
combined cycle gas-fired power station is owned by CleanCo,
Queensland’s publicly-owned clean energy company.
Since signing the first agreement for gas sales from Atlas in
December 2019, Senex and CleanCo signed a new gas sales
agreement in May 2020 to supply a further 2.55 PJ of natural
gas from Atlas starting on 1 January 2021.
CleanCo will rely on the flexible gas-fired Swanbank E power
station along with its Wivenhoe, Barron Gorge, Kareeya and
Koombooloomba Hydro power stations to support variable
renewable energy sources including Karara and MacIntyre
Wind Farms and the Western Downs Green Power Hub.
The 2.55 PJ a year from Atlas will be supplied to the
Wallumbilla hub, joining other gas supplies via the Roma to
Brisbane pipeline.
Senex is pleased to be helping power Queensland business
with cleaner energy.
20 OPERATING REVIEW
Roma North
Strong performance continued at Roma North, with the $50 million
sale of our gas processing facility and pipeline to Jemena completed
in September 2019. By March, Roma North production had
reached above nameplate capacity of 16 TJ a day (around 6 PJ a
year) – more than 12 months ahead of schedule – and continues to
provide important natural gas supplies to our customer, GLNG, and
the domestic market.
Continued performance above nameplate capacity enabled us
to reduce the number of wells needed to reach initial production
targets, down from 50 to 35 wells, bringing significant capital
savings. Initial production de-bottlenecking of the processing
facility has allowed consistent production above 18 TJ/d.
To capitalise on better than expected reservoir performance we
have started early works on the low-cost 8 TJ/day expansion of the
processing facility at Roma North to 24 TJ/day, or around
9 PJ/year. This includes an agreement for Jemena to procure
long-lead items, such as compression equipment.
ROMA NORTH
35 wells drilled FY20
(283 PJ 2P reserves)
WESTERN SURAT
GAS PROJECT
(222 PJ 2P reserves)
Senex and Easternwell: industry-leading collaboration
In partnership with our drilling contractor, Toowoomba-based
Easternwell, Senex made a 45 per cent improvement in cycle
times and best-in-class drilling performance to achieve a
spud-to-spud drill and complete time of 2.8 days. This reduced
the time required to drill wells by at least two days on average.
Reduced drilling times contributed to delivery of gas to
Queensland industrial customers from Atlas ahead of schedule.
Applied learning and different geology at Roma North enabled
even better performance, with drill times averaging three days or
less. By the end of the campaign, Senex achieved a 30 per cent
improvement in cost, saving about $200,000 per well.
Improved drill cycle times benefit landholders by reducing
the number of drilling days and truck movements on their
property. The broader gas industry has had similar success with
drilling times thanks to a commitment to share learnings and
process improvements.
Senex and Easternwell share a commitment to doing things
smarter and safer, working to maximise the benefits and
minimise the impacts of our work.
How we achieved best-in-class performance:
• Safety: exceptional safety culture focused on incremental
performance improvement
• Innovation: working with suppliers on new technology and
equipment improvements; using time-lapse photography to
find ways of rigging up and down more efficiently
• Partnership: selecting the right people and focusing on
win-win outcomes
• Planning: relentless pursuit of efficiency through detailed
surveys, modelling and planning
• Uncompromising: on safety, environment, compliance
and quality
Easternwell is part of Ventia Pty Ltd, one of Australia and New
Zealand’s largest infrastructure services providers.
ATLAS
45 wells drilled FY20
(234 PJ 2P reserves)
ARTEMIS
Exploration FY22-23
ANNUAL REPORT 2020MoombaBrisbane~1500 kmAdelaide~900 kmINNAMINCKANAPPA MERRIEGROWLERFIELD OFFICE02040KMProcessing facilityGas successMajor pipelineSenex acreageINJUNEWALLUMBILLAWANDOANROMAOFFICECondabri NorthCondabri CentralCondabri SouthRoma HubWallumbilla HubAtlas facilityRoma North facility02040KMWandoanProcessing hubOther processing facilityJemena/Senex processing facilityMajor pipelineSenex pipelineRoma North project areaSenex officeTown/citySenex acreageSenex officeTown/city OPERATING REVIEW 21
GAS PRODUCTION
Vanessa
Artemis
Exploration studies at Senex’s second domestic gas block in the
Surat Basin are set to go ahead following the grant of an Authority
to Prospect (ATP), expected in the 2021 financial year. Activity
planned for 2021 includes a cooperative study in applied research
into low-permeability coals with The University of Queensland’s
Centre for Natural Gas; and a distributed energy study including
upstream capability, market review, upstream and downstream
execution. The four-year committed work program will start when
the ATP is granted.
Cooper Basin gas
The Gemba gas field in the Cooper Basin (see map, right) started
production in December 2019 following a successful tie-in to the
Santos-operated gathering network. Gas is being sold to Pelican
Point Power Station in South Australia under a fixed-price gas sales
agreement, with further evaluation of development opportunities
and operational efficiencies underway.
GAS PRODUCTION
Gemba
MoombaBrisbane~1500 kmAdelaide~900 kmINNAMINCKANAPPA MERRIEGROWLERFIELD OFFICE02040KMProcessing facilityGas successMajor pipelineSenex acreageINJUNEWALLUMBILLAWANDOANROMAOFFICECondabri NorthCondabri CentralCondabri SouthRoma HubWallumbilla HubAtlas facilityRoma North facility02040KMWandoanProcessing hubOther processing facilityJemena/Senex processing facilityMajor pipelineSenex pipelineRoma North project areaSenex officeTown/citySenex acreageSenex officeTown/city 22 OPERATING REVIEW
Oil
Completing the free-carry drilling campaign and interpreting the
Westeros 3D seismic survey provided a large inventory of material
exploration and appraisal leads to pursue in the Cooper Basin.
2020 highlights
2.9km
well drilled at Growler Northeast 2 –
longest horizontal well in Cooper Basin
Free-carry drilling program
successfully completed
Current development focus on
further horizontal well potential
in Growler and Spitfire fields
Growler 17 has produced over
330 kboe of oil since coming
online in January 2019
Prospects identified
from Westeros 3D
seismic survey
ANNUAL REPORT 2020 OPERATING REVIEW 23
Cooper Basin developments
The Cooper Basin free-carry drilling program was successfully
completed in 2020, with three of four wells achieving objectives.
Two Snatcher water injector wells were drilled as part of the
Snatcher waterflood project. Waterflood facility commissioning
was completed in July 2020, signalling the first phase of water
injection for the Senex western flank assets.
The Growler Northeast 2 appraisal well was the longest along-hole
departure well (horizontal distance from wellhead to end of well)
drilled to date in the Cooper Basin at 2.883km. The well is online
and producing in line with expectations.
At Snatcher North 2, activity at the appraisal well showed positive
geological indicators for exploration prospects along the Snatcher
chain. Results are under review with the current development
focus on further horizontal well potential in the Growler and
Spitfire fields.
Results from the ~600km2 Westeros 3D seismic survey were
processed in 2020 and identified a southern extension of the
western flank as the primary objective. Numerous prospects have
been mapped with material exploration targets identified.
OIL APPRAISAL P&A*
Snatcher North 2
WATER INJECTOR
Snatcher 12 DW1
WATER INJECTOR
Snatcher North 3
OIL PRODUCTION
Growler Northeast 2
The Growler Northeast 2
appraisal well was the longest
along-hole departure well
(horizontal distance from
wellhead to end of well)
drilled to date in the Cooper
Basin at 2.883km.
* P&A - plugged and abandoned
MoombaBrisbane~1500 kmWesteros3D seismicAdelaide~900 kmINNAMINCKANAPPA MERRIEGROWLERFIELD OFFICE02040KMProcessing facilityHorizontal appraisal wellWater injector wellAppraisal P&ASenex officeMajor pipelineSenex permitWesteros 3D seismicINJUNEWALLUMBILLAWANDOANROMAOFFICECondabri NorthCondabri CentralCondabri SouthRoma HubWallumbilla HubAtlas FacilityRoma North facility02040KMWandoanProcessing hubOther processing facilityJemena/Senex processing facilityMajor pipelineSenex pipelineRoma North Project AreaSenex acreageMoombaBrisbane~1500 kmWesteros3D seismicAdelaide~900 kmINNAMINCKANAPPA MERRIEGROWLERFIELD OFFICE02040KMProcessing facilityHorizontal appraisal wellWater injector wellAppraisal P&ASenex officeMajor pipelineSenex permitWesteros 3D seismicINJUNEWALLUMBILLAWANDOANROMAOFFICECondabri NorthCondabri CentralCondabri SouthRoma HubWallumbilla HubAtlas FacilityRoma North facility02040KMWandoanProcessing hubOther processing facilityJemena/Senex processing facilityMajor pipelineSenex pipelineRoma North Project AreaSenex acreage 24 OPERATING REVIEW
Reserves and resources
Senex delivered a major Surat Basin reserves upgrade following outstanding execution of our Surat
Basin natural gas developments. Independently assessed estimates of reserves and contingent
resources reported a 108 per cent increase in 1P Surat Basin gas reserves to 210 PJ and a 21 per cent
increase in Surat Basin 2P gas reserves to 739 PJ. Excellent appraisal and development drilling results
at Atlas drove a 62 per cent (90 PJ) increase in 2P gas reserves to 234 PJ, with continued Roma North
production outperformance driving a 10 per cent (25 PJ) increase in 2P gas reserves to 283 PJ.
Surat Basin 2P gas reserves of 739 PJ represent over 40 years of natural gas production at the
initial target rate of 48 TJ/day, providing material opportunities for gas production acceleration and
expansion. With Senex’s greenfield gas processing capacity of more than 20 PJ/year, these assets will
deliver natural gas to the domestic market for decades to come.
Senex’s annual estimate of reserves and contingent resources is independently certified by Netherland
Sewell & Associates and DeGolyer and MacNaughton. Senex released a reserves upgrade statement to
the ASX on 14 July 2020.
Net reserves and contingent resources
Proved reserves (1P)
mmboe
Surat Basin
Cooper Basin
Total 1P reserves
Oil
-
2.3
2.3
Gas and
gas liquids
36.1
0.3
36.4
Proportion of total Proved Reserves that are unconventional (coal seam gas): 93%
Proved and probable reserves (2P)
mmboe
Surat Basin
Cooper Basin
Total 2P reserves
Oil
-
5.9
5.9
Gas and
gas liquids
127.1
1.4
128.5
Total
Developed Undeveloped
Total
127.1
7.3
134.4
19.9
3.9
23.8
107.2
3.4
110.6
127.1
7.3
134.4
Proportion of total Proved and Probable Reserves that are unconventional (coal seam gas): 95%
Proved, probable and possible reserves (3P)
mmboe
Surat Basin
Cooper Basin
Total 3P reserves
Oil
-
9.0
9.0
Gas and
gas liquids
171.1
2.0
173.1
Total
Developed Undeveloped
Total
171.1
11.0
182.1
19.9
5.8
25.7
151.2
5.2
156.4
171.1
11.0
182.1
Proportion of total Proved, Probable and Possible Reserves that are unconventional (coal seam gas): 94%
Contingent Resources (2C)
mmboe
Surat Basin
Cooper Basin
Total 2C contingent resources
Oil
-
6.0
6.0
Gas and
gas liquids
-
4.0
4.0
Total
-
10.0
10.0
Total
Developed Undeveloped
Total
Note: Reserves or contingent resources are not currently reported for the recently awarded Artemis domestic gas tenure
36.1
2.5
38.6
19.9
2.1
22.0
16.2
0.4
16.6
36.1
2.5
38.6
Net reserves and contingent resources movement
mmboe
1P reserves
2P reserves
3P reserves
2C resources
FY19
19.3
112.6
163.8
8.3
Production
Revisions
(2.1)
(2.1)
(2.1)
-
21.4
23.9
20.4
1.7
FY20
38.6
134.4
182.1
10.0
Change
100%
19%
11%
20%
ANNUAL REPORT 2020 OPERATING REVIEW 25
26 SUSTAINABILITY REVIEW
Sustainability
review
Senex worked with a wide range of stakeholders
to ensure all parties benefited from our
purpose – to provide vital energy that sustains
and improves people’s lives. Our approach is to
treat people well, support local organisations
that make life better for communities and
minimise impacts on the environment. We
strive continuously to improve and adapt to
changing circumstances and attitudes.
ANNUAL REPORT 2020 SUSTAINABILITY REVIEW 27
Highlights in 2020
Safe and secure
Capable people
24/7 aeromedical
coverage for the
Cooper Basin
Increased
focus on
safety culture
Improved
safety
performance
COVID-19 Pandemic
Management Plan
and COVIDSafe
Office Plan in
operation
Supported
employees through
the COVID-19
pandemic
Increased focus
on health,
wellbeing and
social connection
Advanced
leadership
capability
Created
local jobs
Environmentally responsible
Community partner
10-year water
supply and irrigation
agreement to
drought-proof a
landholder’s property
0 serious
incidents
Strong
environmental
management
Advanced
climate change
priorities
More than 30
community
partnerships
$37 million
direct spend
with 56 regional
businesses
Shortened
payment terms
to support 400
small businesses
124 rooms
booked in local
accommodation
each week
28 SUSTAINABILITY REVIEW
Safe and Secure
Senex continued to put the safety and wellbeing of our
staff, contractors and communities first during 2020. We
enhanced our focus on risk assessment and safety culture
to ensure a safe workplace. The introduction of stringent
COVID-19 protocols and effective business continuity
measures enabled Senex to continue operating safely
during the pandemic.
Safety at a glance
73
health and safety inspections and audits
completed (3 per cent increase from 2019)
6
recordable
injuries
0
serious
injuries
692,948
exposure hours worked
22 months
without a lost time injury in the
Cooper Basin before April 2020
COVID-19 Pandemic
Management Plan and COVIDSafe
Office Plan in operation
80-well drilling campaign
completed without a lost
time injury
“This year Senex’s continued
safety performance
improvement was driven by
our focus on safety culture,
hazard reporting and contractor
management with a major
emphasis on high-consequence
and high potential events”
Senex Chief Operating Officer
Peter Mills
Performance Highlights
Total recordable injury frequency rate
(TRIFR)
8.66
0.7 on 2019 (9.36)
Lost time injury frequency rate
(LTIFR)
2.89
0.23 on 2019 (3.12)
Contractor exposure hours worked
('000)
388.9
69.2 on 2019 (319.7)
ANNUAL REPORT 2020 SUSTAINABILITY REVIEW 29
“The hard work, commitment and
collaborative effort both by Senex staff
and with colleagues across the industry
to safely navigate the challenges from
the pandemic has been outstanding”
Senex Managing Director
Ian Davies
Safety review
Six recordable injuries occurred in the financial year. These
incidents included two lost time injuries, two alternative duties
injuries and two medical treatment injuries.
The injured workers included two drilling contractors, one
transport contractor, one construction contractor and two Senex
operators. Four injuries were the result of a slip, trip or fall; one was
due to being struck (laceration); and another was attributed to poor
body positioning.
Every recordable incident was comprehensively investigated.
A cross-functional team developed a targeted response to prevent
recurrences and reverse the trend, which included an increase in
site leadership visits and safety stand-downs.
Improving safety performance
This year we increased our focus on safety culture and contractor
safety performance, with leadership field visits, contractor safety
audits and inspections. Senex also worked closely with many of our
contractors through the industry safety organisation Safer Together
and the industry body APPEA to improve industry performance.
This collaboration increased during the initial response to
COVID-19 between March and June.
The Three Whats personal risk assessment framework introduced
last year was further embedded as part of toolbox and pre-start
meetings. We also used safety stand-downs to provide
opportunities to reflect on lessons learned and underscore
personal responsibility.
With the help of stakeholders throughout the business, Senex
conducted a thorough investigation of spills and incidents
to identify trends and outliers. In addition, health, safety and
environment forums provided opportunities to collaborate on
hazard identification and management teams sharpened their
focus on safety governance.
Senex has improved its safety strategy by adopting an approach
that focuses on better understanding high-consequence and
high-potential events to eliminate life-altering or fatal injuries.
We conducted our annual major crisis and emergency exercise in
November, simulating the impacts of a bushfire in the Surat Basin.
COVID-19 response
Senex’s focus on safety and wellbeing positioned the company
well to respond to the unprecedented travel and health challenges
posed by COVID-19. We acted early to protect our workers,
operations and communities and ensure continuity of operations
by implementing initiatives to prevent the spread of the virus.
This included working with APPEA, QRC, SACOME and industry
colleagues to ensure consistency in our practical responses and in
working with stakeholders such as governments.
Our comprehensive COVID-19 response included development of
a Pandemic Management Plan and a COVIDSafe office plan that
incorporate the following measures:
• introduction of a declaration system for Senex personnel,
contractors and visitors to our field sites and offices
• development of processes to ensure compliance with
government requirements and World Health Organisation
and industry guidelines, including temperature testing, social
distancing and hygiene measures
• implementation of business continuity measures, including
activation of the Crisis Management Team and Business
Continuity Management Team
• introduction of travel and field access restrictions, requiring
relocation of staff from their home state and changes to rosters
and procedures
• the transition of our office-based employees initially to working
safely and productively from home and then to a combination of
office and home on a rostered basis
Importantly, Senex maintained its safety performance during the
COVID-19 pandemic despite distractions and forced changes on
work practices.
30 SUSTAINABILITY REVIEW
30 SUSTAINABILITY REVIEW
Keeping remote communities safe
Royal Flying Doctor Service
Senex’s sponsorship of the Royal Flying Doctor Service (RFDS) in
South Australia continued in 2020. From 2021, the sponsorship
will extend into Queensland with a focus on supporting activities
through its Roma base in the Surat Basin.
Our support helped to keep the service operating as it responded
to a catastrophic bushfire season immediately followed by
COVID-19. Suspected and confirmed cases of COVID-19 have
accounted for 10 per cent of RFDS’s workload nationwide. The
service has also made preparations to provide mobile respiratory
clinics in communities that may need emergency testing.
In 2020, the Senex-badged aircraft’s activity included:
• 420,000km flown throughout South Australia and beyond
• 912 patients transported to major hospitals for specialist care or
life-saving treatment
• 17 COVID-19 transfers requiring comprehensive PPE protocols
and aircraft cleaning
• 52 country towns and outback locations serviced throughout
South Australia
• Three interstate transfers of critically ill infants for life-saving
cardiac surgery
• 11 fly-in GP health clinics and one dental health clinic to remote
communities in South Australia
Cooper Medivac 24
Senex maintained its commitment to the Cooper Medivac 24
helicopter, the only aeromedical service operating at night in the
Cooper Basin. This service can access the most remote locations,
where fixed-wing planes are unable to land, to transfer patients
to an RFDS aircraft. Started by Senex and Drillsearch in 2014, the
service is funded jointly with Beach Energy.
In 2020, Senex created or restored safe helicopter landing pads
on landholder properties in remote areas of the Cooper Basin to
provide vital emergency medical evacuation support to the RFDS.
The project has completed 25 helicopter landing sites: seven for
Senex; five for landholders; and 13 for Beach Energy.
“We can’t get the RFDS plane out here because the runway costs
too much to upkeep and it’s on a flood bank, so is not reliable. But
knowing we can get a helicopter here in nine minutes gives us
huge comfort” – Jane Marie Barnes of Gidgealpa, 780km north-
east of Adelaide
A normal day in the field
Senex employee Mick Francis experienced first-hand how the
Cooper Basin’s 24-hour flying intensive-care unit keeps our people
safe in remote areas.
Mr Francis was working at a Growler field oil well – a 12-hour drive
to Adelaide – when he injured his leg. The Production Operator was
helped by colleagues back to camp, where he was retrieved by the
Cooper Medivac 24 helicopter and taken to Moomba. An RFDS
plane flew Mr Francis to Adelaide, where he had surgery.
Mr Francis spent five weeks recovering before returning to work.
“Injuries can happen at any time to anyone,” he said. “It’s easy to
get focused on the job you’re about to do and forget other things
around you but we all need to take a minute to focus on what can
go wrong and figure out a safe way to go about it.”
“If it wasn’t for the RFDS, it would have
been a very long drive to get help. I’m
very grateful those guys are out here”
Growler field Production Operator
Mick Francis
ANNUAL REPORT 2020 SUSTAINABILITY REVIEW 31
How our support helps save lives in the remote Cooper Basin
1
2
3
4
Cooper Medivac
24 helicopter can
access the most
remote locations
Patients are
transferred by
helicopter to
awaiting RFDS plane
RFDS ‘flying
intensive care unit’
airlifts patient to
major hospital
Major hospital
continues life-saving
and specialist care
"Knowing we can
get a helicopter
here in nine
minutes gives us
huge comfort”
Jane Marie Barnes
of Gidgealpa, 780km
north-east of Adelaide
32 SUSTAINABILITY REVIEW
Environmentally
responsible
At Senex we hold ourselves to the highest environmental
standards and operate to stringent government conditions.
Senex continued its strong environmental management in
2020 and advanced climate change priorities as part of our
commitment to a low-carbon future.
Environmental management in action
68
inspections and
audits completed
0
infringement
notices issued
0
serious
incidents
Approval secured
for Project Artemis –
153km2 exploration
block in the Surat Basin
Approval granted for
waterflood project in the
Cooper Basin to improve
efficiency of oil assets
Long-term partnership
to drought-proof
landholder property with
water from Roma North
“Having water during dry times
will be huge for us. Being able
to grow crops means we can
improve the quality of our cattle
to sell at feedlots for a higher
price than at auction. We’re
very appreciative to Senex
for choosing the little guy to
work with”
Maranoa grazier Trevor Kehl, pictured
Performance Highlights
Water produced
(ML)
2,337.5
471.5 on 2019
Water used
(ML)
350
227 on 2019
Water reused from
Senex production water
(ML)
290
88 on 2019
ANNUAL REPORT 2020 Performance in 2020
Our team’s focus on continual improvement helped prevent any
serious reportable environmental incidents in 2020. As Senex’s
gasfield projects at Roma North and Atlas shifted into operations,
our environmental management system guided assurance through
structured audits and inspections.
In the Surat Basin, we received environmental approval for
Artemis, our new 153km2 exploration block. In the Cooper Basin,
we achieved environmental approval for a waterflood project to
improve efficiency and production of oil assets. This has enabled oil
production without the need to build additional infrastructure such
as wells and supporting equipment.
Senex conducted a greater number of site-specific ecology
surveys in the Surat Basin, in line with our increased activity. No
infringement notices were issued. There were eight minor spills
in 2020, all within operational areas. All spills were contained and
immediately remediated as part of our standard response.
Enhancement projects
Senex continued to support the innovative Wild Deserts project,
which is focused on restoring desert ecosystems in the Sturt
National Park bordering South Australia and New South Wales.
The project reached a milestone in January with erection of a
10km fence that completes a 10,400ha enclosure. The survival
rates of native mammals inside the fence are being improved
by controlling numbers of feral predators. In the broader project
area, monitoring has already recorded far higher numbers of small
mammals, including the first Short-tailed Mouse in the area. The
habitat has been further improved in 2020 by a dramatic increase
in vegetation groundcover.
Habitat for threatened Koalas and Yakka Skinks is improving at
the Apple Tree Creek environmental offset site, about 100km
north-west of Roma. Local landholders manage the 168ha
woodland area, which is linked to the Merivale River – a recognised
riparian biodiversity corridor – and Oakvale State Forest. The
offset will continue to contribute to improving biodiversity values
in Queensland.
Senex also contributed $96,319 to the Nature Foundation of
South Australia to offset vegetation clearing for our projects in
South Australia. The foundation invests in conserving, restoring and
protecting South Australian landscapes, flora and fauna to ensure
their survival.
Drought-proofing in the Maranoa
In an innovative partnership, a landholder family in the Maranoa
will benefit from drought-proofed grazing thanks to a long-term
water supply and irrigation agreement with Senex. The irrigation
scheme uses water produced from Senex natural gas wells at Roma
North to irrigate 100ha of pasture used by Trevor Kehl to feed
around 300 cattle.
Under a 10-year agreement, Senex has installed modern irrigation
to provide up to one megalitre a day to the property. The project
uses data from ground probes to add treatments to the soil
at appropriate rates to maintain soil structure. The agreement
includes ongoing advice from an irrigation and agricultural
specialist to ensure the program’s long-term sustainability.
Senex’s water supply agreement will effectively drought-proof Mr
Kehl’s grazing operations for 10 years. And while there has been
some rain in 2020, Mr Kehl said the drought was far from over.
SUSTAINABILITY REVIEW 33
“Providing free water from Roma
North to drought-proof the Kehl family
property for 10 years is a first-rate
example of the gas industry working
alongside our agriculture partners with
extremely positive outcomes”
Senex Environmental Manager
John Earley
34 SUSTAINABILITY REVIEW
34 SUSTAINABILITY REVIEW
Climate change
Senex’s position on climate change reflects its significance as a social, environmental and
business challenge. We recognise that the world needs access to reliable, affordable and
sustainable energy delivered in cleaner ways. We seek to minimise our emissions footprint
and consider climate change risk when we make decisions.
Our strategic approach is to enhance value and mitigate risk by reducing our own emissions footprint and growing a resilient
long-term portfolio that contributes to a low-carbon future.
The completion of our Atlas and Roma North natural gas developments and continued production outperformance in the
Surat Basin mean we are increasingly positioned to be part of a low-carbon future.
Our climate change priorities
In 2020, Senex advanced its climate change priorities as part of our commitment to a low-carbon future.
2020 progress
2021 priorities
Senex undertook a gap analysis against the G20 Task Force on Climate-Related Financial Disclosures
(TCFD) framework and identified actions for implementation in 2021 and beyond
Start to implement actions identified from the TCFD self-assessment
Senex reviewed its governance documents during the year. All were deemed to sufficiently address the
oversight of the risk management framework, including how climate risk is managed
Continued review of how climate change risk is managed
Management responsibilities and accountabilities for climate change matters were reviewed and deemed
to be clear and well embedded in Senex’s business management systems
Ongoing improvements will continue as the actions from the TCFD framework gap
analysis are implemented
Senex undertook a detailed assessment of the risk from climate change to capture opportunities and
identify key risks
Complete an annual risk assessment of climate change where key risks are regularly reviewed by
management and the Board’s Audit and Risk Committee
Start modelling Senex against the International Energy Agency's widely accepted climate change scenarios
ANNUAL REPORT 2020 SUSTAINABILITY REVIEW 35
SUSTAINABILITY REVIEW 35
Our strategic approach is to enhance
value and mitigate risk by reducing our
own emissions footprint and growing
a resilient long-term portfolio that
contributes to a low-carbon future
Cooper Basin initiatives
Water consumption
Produced water increased 25 per cent between 2019 and 2020,
from 1,866ML to 2,337.5ML, as wells were brought online at
Roma North and Atlas.
Senex’s water use increased from 123ML in 2018 to 350ML,
reflecting increased construction and drilling activity at Roma
North and Atlas. However, 83 per cent of this total was recycled
from our water storage ponds, reducing the take from other
sources. We also implemented the Roma North landholder
irrigation scheme to reuse the groundwater produced as a result of
our activities, described earlier in this section.
In 2020 Senex reviewed opportunities to reduce emissions in our
Cooper Basin operations by using renewable energy. The review
favoured solar power because of the high number of sunshine
days and available land for solar farming. We started a project to
install solar power at our Snatcher facility field offices, due to be
completed in 2021.
Converting to solar power at Snatcher, pictured at right, will
reduce the use of generators up to 90 per cent, improving fuel
efficiency and reducing greenhouse gas emissions. We will
continue to investigate the potential for more Cooper Basin
renewable projects in 2021.
Greenhouse gas emissions
Senex has recorded its emissions under the National Greenhouse
and Energy Reporting Act 2007 (NGER) since 2011. This scheme
measures energy produced, energy consumed and greenhouse
gas emissions. Since 2013, we have also reported to the National
Pollution Inventory (NPI) on emissions to air, land and water.
This Annual Report provides emissions calculations for the 2019
financial year as the 2020 calculations are completed later in the
calendar year.
In 2019 Senex reported:
• a decrease in energy consumption with 335,982 GJ recorded
(2018: 343,472 GJ)
• a decrease in greenhouse gas emissions, with 21,745 tonnes of
CO2 equivalent recorded (2018: 22,513 tonnes CO2 equivalent)
• a 3.4 per cent reduction in Scope 1 CO2-e emissions
• a 40 per cent increase in energy production versus the
previous year.
36 SUSTAINABILITY REVIEW
Capable people
We have continued our focus on building leadership
capability through dedicated programs, training and
employee engagement. The COVID-19 pandemic
presented challenges to the way we work but our
people responded quickly, adapting to remote working
and maintaining productivity and engagement.
Workforce at a glance
158
direct employees
32% 6%
women in workforce
more women than Australian
hydrocarbon average
28% 29% 22%
women in leadership
positions
women on Board
of Directors
people of
international origin
“Our employees have impressed
me with their flexibility,
resilience and ability to cope
with changing circumstances”
Senex Managing Director
Ian Davies
ANNUAL REPORT 2020 SUSTAINABILITY REVIEW 37
“The leadership program helped me
stop and think about how we do things,
not just what we do, and offered
different approaches to take back to
the team”
Senex Drilling and Completions Manager
Matthew Ruttley
Keeping connected during COVID-19
Senex leadership programs
Three tiers of Senex leadership development programs advanced
in 2020. The programs for executives, advanced leaders, managers
and high-potential employees are designed to support alignment
with our strategy, lift performance and unlock potential.
Senex Drilling and Completions Manager Matthew Ruttley took
part in the advanced leadership program and says it helped him to
take a more strategic approach.
“The leadership program helped me take a step back and look at
my team from a different view,” Mr Ruttley said.
“I learnt different management approaches and was able to explore
and practise these in the workshops before applying them with
the team.”
The programs were disrupted by COVID-19 and will resume in the
2021 financial year.
During the COVID-19 pandemic, Senex’s focus has been to
protect the safety, health and wellbeing of our people.
We introduced a range of precautions across our business
including strict protocols on travel, field access, hygiene,
temperature checks and social distancing.
Senex also moved quickly to establish frequent, formal
communications, health and safety updates and line manager
information sessions to keep our people informed and connected.
An employee support working group was established to coordinate
activities focused on four main areas to help employees adjust to
working from home:
• mental wellbeing – mindfulness sessions, sleep tips,
gratitude sharing
• physical wellbeing – physical challenges, recipes, exercise tips
• social connectedness – virtual trivia, fundraising pyjama party
• management and team practices – accelerated introduction
of remote-working technology, virtual meeting tips,
technology support
Staff were positive in their feedback and particularly appreciative of
the support provided in equipping them to stay healthy, connected
and productive while working from home.
What our employees said
“The Technology Team have gone
above and beyond to help me with
any issues and regularly check in to
ensure everything is working for me”
“Apart from missing everyone
in the office environment, my
work-from-home experience has
been very positive”
“The communication provided in
the weekly updates is very clear,
informative and also very calming in
the current situation”
38 SUSTAINABILITY REVIEW
Community
partner
Senex strives to be a good neighbour and an active member
of the communities where we work. We create local jobs
and business opportunities, and work with community
organisations, arts and education providers to support vibrant
regional communities. In 2020, this included direct support
during COVID-19.
2020 highlights
56
regional businesses engaged
to provide goods and services
124
rooms booked in local
accommodation each week
30
community
partnerships
Royal Flying Doctor Service
partnership continued
in South Australia and
extended into Queensland
COVID-19
support fund
for community
organisations
Shorter payment
terms to support
400 small
business suppliers
“As a Queensland-based
business, we have a
strong commitment to
hiring and buying locally
wherever possible”
Senex Managing Director
Ian Davies
ANNUAL REPORT 2020 SUSTAINABILITY REVIEW 39
Investing in our communities
We are proud to work with community organisations and
other local partners to support and build sustainable, thriving
communities. Our sponsorships and partnerships are focused
on initiatives that help support liveability, boost economic
development, deliver quality education and improve access to
health services. Such initiatives include the Queensland Minerals
and Energy Academy (QMEA) STEM program for regional schools
and our ongoing partnership with the Royal Flying Doctor Service.
Our approach is to focus on long-term partnerships that build
sustainability and resilience.
Support during the pandemic
While, fortunately, there were no cases of residents or Senex
employees in the Surat or Cooper basins contracting COVID-19,
every community has had to contend with travel restrictions and
flow-on economic impacts. Senex has responded, and will continue
to respond, to community needs during the COVID-19 pandemic
wherever possible.
Senex maintained its support of important local community
organisations and initiatives during 2020, despite the cancellation
of many sponsored events. While the Senex-sponsored
ColourXplosion fun run didn’t go ahead, we continued to support
its organiser Maranoa PCYC to deliver youth development and
domestic violence prevention programs that help at-risk children.
We also launched initiatives to support communities during
COVID-19. We shortened payment terms to 14 days or sooner
for more than 400 smaller business in Queensland and South
Australia, speeding up the payment of millions of dollars. We
also established a fund to support communities in our areas of
operation and bought five new laptops for Wandoan State School
to support online learning for students in need.
Pictured: a popular Wandoan Photo Challenge entry by Tania Baker. See page 43
40 SUSTAINABILITY REVIEW
Supporting local business
Thriving local economies are good for rural and
regional towns and our business, providing jobs
for local people and a broader range of suppliers
for Senex. We buy goods and services locally
wherever possible and we strongly encourage
our contractors to do the same.
Responsible procurement
Senex is committed to identifying, assessing and mitigating modern
slavery risks in our operations and supply chain.
Since the Commonwealth Modern Slavery Act 2018 took effect
in January 2019, Senex has developed a roadmap for activity to
ensure we are appropriately managing these risks. This includes
incorporating modern slavery matters into existing policies,
procedures and frameworks. We have also investigated the risk of
modern slavery in relation to our business-critical and higher-risk
direct suppliers, with no remediation actions required.
Senex’s first statement under this legislation will be published
in 2021.
Civil works contract for Roma business
Easternwell returns $3m to local economies
Roma-based Flower Earthmoving delivered a $3.9 million contract
for Senex as part of its Atlas domestic gas project.
The family-owned business constructed a 500 ML dam to hold
produced water for beneficial use.
Flower Earthmoving Operations Manager Byron Flower said he
was proud to win the company’s second major contract with
Senex, which followed civil works on Senex’s Roma North project.
“We have proven our experience and capability through our work
to date, and it’s a real compliment to have been awarded more
work,” Mr Flower said.
“This contract has meant ongoing employment for
approximately 15 locals and more income flowing
into the community.”
Flower Earthmoving Operations Manager
Byron Flower
Senex’s $2.6 million, 80-well contract with Toowoomba-based
drilling contractor Easternwell provided broad support to the
local economy.
The contract provided the majority of Easternwell’s broader local
spending of $3 million with 80 suppliers. These suppliers included
local accommodation providers at a time when the pandemic had
stalled broader community travel to Roma and Wandoan. Other
small businesses provided a range of goods and services from crew
lunches to site transport.
About half of Easternwell drill contractors live locally, with a
combined $1.6 million paid annually to crew members living in the
local and surrounding areas.
Senex has since awarded Easternwell another 12-month contract
for well workover and completion operations. Read more about our
industry-leading collaboration on page 20.
“Easternwell is proud to work with Senex to continue
to support local Queensland communities”
Easternwell General Manager
Kyle Koziol
ANNUAL REPORT 2020 SUSTAINABILITY REVIEW 41
Keeping rooms full during COVID-19
Long-term partner supports drilling program
Uniforms keep Senex looking the part
Senex has a firmly established practice of using family-run and
locally owned accommodation providers to house employees
and contractors. Our people enjoy warm local hospitality while
supporting local jobs and businesses.
In total, we spent 6,466 nights and more than $1 million on local
accommodation across the Surat Basin during 2020.
The decision to maintain local accommodation bookings during the
pandemic, when many tourism operators were affected by travel
restrictions, ensured continuity for our operations and supported
local businesses through difficult times.
“Senex’s support is truly a massive part of our business”
Wandoan’s Bushlander Motel proprietor
Denella James
Thargomindah energy construction contractor Ago Vires has been
a long-term partner of Senex in oil and gas drilling programs in the
Cooper and Surat basins.
Senex crews in the Surat Basin wear their uniforms with pride,
knowing much of their workwear and safety apparel is sourced
from the locally owned Brenorrs department store in Roma.
Following a competitive tender process, Ago Vires crews installed
the above-ground wellsite infrastructure for our Surat Basin drilling
program. They were subsequently awarded a contract for water
infrastructure at Atlas including pipework to connect the dams,
tanks and reverse osmosis plant.
"Communication between client and contractor is so
important," said Ago Vires Managing Director Marco Otaola.
"We find everyone works well together and projects run safely
and efficiently."
Ago Vires employs skilled people from the Surat Basin and
elsewhere in Queensland, supporting Senex’s policy to use local
contractors wherever possible.
“We have an excellent relationship with Senex. It’s
important for us to work together to achieve results”
Ago Vires Managing Director
Marco Otaola
Owner Nathan Garvie has worked in the business for 20 years
and says the store, which opened in 1971, has adapted to meet
changing demand.
“We’re fortunate to have strong industries in Roma but we also
work really hard to provide a good service,” Mr Garvie said. “That
means having stock on hand and turning things around as quickly
as possible.”
Local schools and sporting clubs also benefit from support from
Brenorrs, which has invested in new technology for on-site
embroidery and vinyl heat-press machines to keep everyone
looking sharp.
“It means a lot when Senex buys from our business,
creating extra income to be spent around town”
Brenorrs owner
Nathan Garvie
42 SUSTAINABILITY REVIEW
Investing in our communities
Senex supported more than 30 local
organisations across the Surat and Cooper
basins in 2020, contributing to education,
health, performing arts, sport and other
initiatives that support hundreds of families
across our areas of operation.
Big Dry Friday drought relief
School ovals rescued from drought
Supporting women in the bush
Despite heavy rain in 2020, the drought is not over. Many regional
and rural Australians continue to face hardship and need support
as much as ever. To support the regions where we operate, Senex
and staff raised $18,400 during the Big Dry Friday appeal run by
the Morgans Foundation.
Our donation was matched by Morgans Financial, resulting in
$36,800 being donated to Rural Aid for families to spend in their
local communities.
Morgans Executive Chairman Brian Sheahan said Senex had made
a real difference to communities in need.
“Thanks to Senex and its employees for their
contribution which, along with fantastic support from
Morgans’ staff, communities and clients, helped us to
raise over $1 million”
Morgans Executive Chairman
Brian Sheahan
The tough, brown oval where Darren Lockyer learnt to play rugby
league has been resurrected for the next generation of regional
Queensland sporting stars.
Senex joined its infrastructure partner Jemena and construction
contractors Valmec and Speicapag to sponsor the 2019 Women’s
Wellness Day in Miles.
Natural gas companies, including Senex and the Shell-operated
QGC venture, led the huge community effort to drought-proof
Wandoan State School’s ovals.
Murilla Community Centre’s Cecily Brockhurst said the turnout was
the biggest in five years as 220 women came together to enjoy
themselves and seek relief from the drought.
A team of almost 100 volunteers worked over four weekends to
cover 7,500m2 with 150 tonnes of turf. The final push came after
Senex and others funded more than half the $150,000 cost of the
turf, an irrigation system and a new pipe to bring treated water
from council bores.
Parents and Citizens Association President Greg Zillman said
the school could now host big regional sporting events, bringing
broader economic benefits to the town.
“People are feeling a bit down and this really lifted their spirits,” Ms
Brockhurst said.
Social isolation is a significant issue for women in Queensland’s
regions. Events like these enable women to access support, learn
about women’s health and make new friends.
Senex also supported the 2019 Channel Country Ladies Day in
Thargomindah, western Queensland, and the APPEA-led Roma
International Women’s Day event.
“Students are loving the new oval and the community
has a safe, green playing surface to access”
Wandoan State School Principal
Jason Day
Watch the story Video link: senexenergy.com.au/multimedia
“Together we can continue to inspire and empower
outback women, build resilience and equip them with
tools they need to thrive”
Channel Country Ladies Day Partnerships Coordinator
Maree Morton
ANNUAL REPORT 2020 SUSTAINABILITY REVIEW 43
Maranoa community grants
Cordillo woolshed restoration
Photos capture heart of the country
Senex partners with Maranoa Regional Council to sponsor the
small grants category of its community grants program. The
$30,000 grants pool is distributed to successful local applicants for
community projects, local events and education activities.
Ten projects received small grants funding this year. In 2020
Mitchell Rotary Club was awarded funding to complete a
shelter at the Fisherman’s Rest Hut as part of the River Walk
Project, pictured. Other recipients included Visit Roma Inc, which
received support to promote Maranoa as a tourism and business
destination; and Noonga Community Association, for an event to
keep young people in local farming communities.
“We’re excited about supporting the passionate and
hardworking volunteers that help to keep the Maranoa
community strong and vibrant”
Senex Community Manager
Trevor Robertson
Senex joined fundraising efforts to restore a historic woolshed on
one of our South Australian landholder’s properties.
The Cordillo Downs woolshed, about 1,000km north of Adelaide,
was damaged in 2017 when a storm blew off part of the heritage-
listed structure’s roof. At 60m long and 13m wide, the 136-year-
old structure is the biggest of its kind in the world.
Station manager Janet Brook told ABC News she was touched by
the support.
"It's been really pleasing to see how many people are
keen to see this example of our history keep going"
Cordillo Downs Station Manager
Janet Brook
Senex sponsors the Wandoan Photo Challenge, a competition
organised as part of the Wandoan Show that captures the people
and landscapes of Wandoan and surrounding communities.
This year’s challenge was more popular than ever, generating 247
stunning entries showcasing what’s best about life in the region.
First-time entrant Amie Pearce won the inaugural Best
Photographer Award after a last-minute decision to enter
the competition.
Senex is delighted to sponsor the Wandoan Photo Challenge
amid the ongoing challenges posed by both the drought and the
cancellation of many community events due to COVID-19.
Congratulations to all entrants on their thoughtful
and evocative photos.
To see a full list of winners, go to
www.wandoanphotochallenge.com
Pictured: (above) the People's Choice winner, an entry by Alexis Rose.
44 SUSTAINABILITY REVIEW
Indigenous engagement
Senex has positive and mutually beneficial relationships
with traditional custodians of the land.
Throughout 2020 we engaged with Traditional Owners
to conduct surveys to protect heritage sites and to
perform site inductions to ensure our workplaces are
culturally aware.
In December we entered into a Native Title Agreement
with the Iman People of central and south-west
Queensland. On behalf of the Iman People, the Wardingarri
Aboriginal Corporation Registered Native Title Body
Corporate made the agreement to authorise land subject
to Native Title to be added back into the Atlas permit.
This agreement enables Senex to access land previously
excluded from the lease for future development.
From the start of the 2020 calendar year some planned
cultural heritage meetings with the Mandandanji People
of south-west Queensland, and the Dieri People of
the far north-west of South Australia, were postponed
to minimise the risk of COVID-19 exposure to
Indigenous communities.
New scholarships supporting education and training
were agreed with the Iman People – one of $5,000 and
two of $2,500. These started on 1 July 2020 and will
provide three annual scholarships to support university or
certificate training.
Dieiri art prize showcases talent
Talented artists joined the Senex-sponsored Dieri People’s
art competition this year. The artworks showcased a range
of skills and artistic techniques to tell traditional stories.
Winners received cash prizes, with some of the artworks
being displayed in Senex’s Adelaide office.
Senex Senior Commercial Manager Wendy Roxbee said
the art competition was a small but important example
of the strong relationship between the Dieri People and
Senex. "We congratulate all the winners for their amazing
creativity, while promoting cultural awareness and bringing
traditional stories to life through their art,” Ms Roxbee said.
Pictured: 13-18 years first-prize winner Dakota Warren-Carlton,
being congratulated by Wendy Roxbee of Senex.
Indigenous engagement activities in 2020
65
people attended face-to-face inductions
with the Mandandanji People
2
face-to-face inductions were
presented by the Iman People
173
people completed Senex’s online Iman
induction before travelling to site
10
cultural heritage clearance
surveys with the Iman People for
Atlas and one for Roma North
5
cultural heritage clearance
surveys with the Mandandanji
People for Roma North
4
cultural heritage meetings were held in 2020
(two with the Iman People, one with the
Mandandanji People and one with the Dieri People)
ANNUAL REPORT 2020 SUSTAINABILITY REVIEW 45
Working with landholders
Senex strives to be a good partner and neighbour. We
work respectfully and constructively with landholders, with
whom we have relationships over many years.
Our approach is to be open, upfront and to do the right
thing. We take time to understand agricultural operations
on properties and we work together on the location
of infrastructure. We meet and, where possible, go
beyond the mandatory requirements designed to ensure
landholders’ rights are respected.
This way of working minimises our impacts and ensures
mutual benefits, ensuring agriculture and natural gas
operations can continue side by side.
Industry collaboration
Senex’s operations involve a wide range of communities,
businesses and people. We strive to work constructively
with everyone who has an interest in affordable, safe
and reliable natural gas production – from communities
where the gas is produced to users and consumers of this
valuable energy source.
Alongside our industry counterparts, we continued to be
an active participant in industry and government forums
and contributed submissions for key legislative reviews and
deliberations including the statutory 10-year independent
review of the Commonwealth Environmental Protection and
Biodiversity Conservation Act 1999 (EPBC Act) and the
Queensland Government’s royalty review.
We did this as an individual company and as a member
of the Australian Petroleum Production and Exploration
Association (APPEA), the South Australian Chamber of
Mines and Energy (SACOME) and Queensland Resources
Council (QRC).
Increasingly, our priority is to make a more powerful case
for our industry, directly addressing misinformation to
ensure our products are recognised for the important part
they will continue to play in the energy mix.
Pictured: Phil Woodhouse, who worked on construction of the Atlas pipeline,
was the winner of an APPEA photo competition that raised awareness of the
communities the industry works in. He took this photo of pipe at Wandoan that
has now been buried and connects Atlas to the domestic market..
Snapshot of landholder engagement in 2020
The overwhelming majority of the landholders Senex works with are in the Surat Basin.
53
landholder
relationships
758 2
individual landholder
interactions
recorded
more locally based
land access field
staff employed
11
Conduct and
Compensation
Agreements executed
61
Conduct and
Compensation Agreements
actively managed
Atlas landholder
engagement event
held – 8 landholders
attended
Compliance-focused:
regular weed certification
and land access
compliance checks
Active engagement: all
interactions recorded
for continuous
improvement
Timely: faster
response to
questions and
complaints
46 BOARD OF DIRECTORS
Board of
Directors
TREVOR BOURNE
Chairman, Independent Non-Executive Director
BSc (Mech Eng), MBA, FAICD
Trevor joined the Senex Board in December 2014
and was appointed Chairman in March 2015.
He is an experienced Non-Executive Director
with over 20 years in public and private company
directorships in Australia and Asia. Trevor was a
founding director of Origin Energy for 12 years,
following the demerger from Boral. At Origin he
chaired the Remuneration Committee and was
a member of the Audit and Safety Committees.
Trevor’s executive career included 15 years at BHP,
eight years with the then Orica subsidiary Incitec,
and 15 years with Brambles – the last six of which
as Managing Director of Australasia. Trevor was
also a director of Caltex Australia for 13 years
before retiring in May 2019. While at Caltex he
chaired the OH&S Committee and was a member
of the Remuneration Committee.
Trevor is Chairman of the Nomination
Committee. He is not a member of the other
Board committees, but attends and participates in
those meetings.
Other current and former* directorships
Sydney Water: Non-Executive Director, Chairman of the Safety
Committee (February 2014)
Virgin Australia Holdings Limited: Non-Executive Director, Chairman
of the Safety Committee, member of the Audit and Risk Management
Committee and the Remuneration Committee (January 2018)
Transport Asset Holding Entity of New South Wales:
Non-Executive Director (June 2020)
Caltex Australia Limited: Former Non-Executive Director (March
2015-May 2019)
*former directorships of listed entities in previous 3 years
IAN DAVIES
Managing Director and Chief Executive Officer
BBus (Acct), CA, Cert SII (UK), MAICD, F Fin
Ian has led Senex as Managing Director and Chief
Executive since 2010, navigating the business
through significant growth and transformation.
Under Ian’s leadership, the Company is pursuing
a long-held strategy to capture emerging
opportunities in Australia’s dynamic energy sector.
In 2017, Ian was elected to the Board of the
Australian Petroleum Production and Exploration
Association (APPEA) and in November 2019 was
appointed Vice Chairman.
Before joining Senex, Ian was influential in
the growth of the CSG-to-LNG industry in
Queensland as Chief Financial Officer of
Queensland Gas Company Limited (QGC). Ian
led the negotiation of the LNG joint venture
transaction with BG Group and the takeover
offer for QGC by BG Group, the largest
on-market takeover in Australian corporate
history at that time.
He also served as General Manager Business
Development and General Manager Ports and
Infrastructure, under BG Group ownership. Ian
spent the early part of his career in corporate
tax advisory within mining and energy with PwC
in Brisbane and as an investment banker with
Barclays Capital in London.
As Managing Director and Chief Executive, Ian is
not counted as a member of any board committee
but he attends and participates in all meetings of
board committees, except where conflicted.
Other current directorships
APPEA: Vice Chairman, Non-Executive Director (November 2017)
RALPH CRAVEN
Independent Non-Executive Director
BE, PhD, FIEAust, FIPENZ, FAICD
Ralph joined the Senex Board in September
2011. He has broad experience across the
energy sector including electricity, gas and other
resources. Before becoming a professional
director in 2007, Ralph held senior executive
positions with energy companies in Australia and
New Zealand. He was formerly Chief Executive of
Transpower New Zealand Ltd, Executive Director
with NRG Asia-Pacific and General Manager
with Shell Coal Pty Ltd. His previous tenures
include Chairman and Non-Executive Director
of Stanwell Corporation, Invion Limited, Ergon
Energy Corporation and Tully Sugar Limited, and
Deputy Chairman of coal seam gas company
Arrow Energy Limited.
Ralph is Chairman of the People and
Remuneration Committee and member
of the Audit and Risk Committee and the
Nomination Committee.
Other current directorships
Genex Power Ltd: Chairman, Independent Non-Executive Director
(May 2015)
AusNet Services Ltd: Non-Executive Director (January 2014)
Multicom Resources Ltd: Chairman, Independent Non-Executive
Director (July 2018)
ANNUAL REPORT 2020 BOARD OF DIRECTORS 47
TIMOTHY CROMMELIN
Independent Non-Executive Director
BCom, SF Fin, FAICD
DEBRA GOODIN
Independent Non-Executive Director
BEcon, FCA, MAICD
GLENDA MCLOUGHLIN
Independent Non-Executive Director
BEcon, MBA, FAICD
Tim joined the Senex Board in October 2010. He
has over 40 years of experience in stockbroking,
investment banking, corporate advisory, risk
management, and mergers and acquisitions. He
is Non-Executive Chairman of Morgans Holdings
(Australia) Limited and Non-Executive Chairman
of ASX-listed AP Eagers Limited, and previously
served as Deputy Chairman of CS Energy Limited
and Queensland Gas Company Limited. Tim is
a member of the University of Queensland’s
governing Senate, and other current directorships
include the Morgans Foundation, where he is
Deputy Chairman, Australian Cancer Research
Foundation and the Brisbane Lions Foundation.
Tim is Executive Chairman of Morgans Financial
Limited, who was an adviser to the company.
Senex has not had any material dealing with
Morgan’s during the last three financial years and
the Board has determined that Mr Crommelin
qualifies as independent.
Tim is a member of the Audit and Risk Committee
and Nomination Committee.
Other current directorships
AP Eagers Limited: Non-Executive Chairman (February 2011)
Debbie joined the Senex Board in May 2014.
She is an experienced company director and
audit committee chairman, and is currently a
Non-Executive Director of APA Group, Atlas
Arteria Limited and Australian Pacific Airports
Corporation Limited. Debbie has more than
20 years’ senior management experience
with professional services firms, government
authorities and ASX listed companies across a
broad range of industries and service areas. Her
executive experience in ASX listed companies
included roles in finance, operations, corporate
strategy, and mergers and acquisitions.
Debbie is Chairman of the Audit and Risk
Committee and member of the People
and Remuneration Committee and
Nomination Committee.
Other current and former* directorships
APA Group: Non-Executive Director (September 2015)
Atlas Arteria Limited: Non-Executive Director (September 2017)
Australian Pacific Airports Corporation Limited: Non-Executive
Director (March 2020)
oOh!media Limited: Former Non-Executive Director (November
2014 – February 2020)
Ten Network Holdings Limited: Former Non-Executive Director
(August 2016 – November 2017)
*former directorships of listed entities in previous 3 years
Glenda joined the Senex Board on 1 July 2020.
Glenda brings a wealth of experience in the
energy sector in both executive and advisory
capacities. Glenda has extensive commercial
experience as an investment banker, finance
executive and company director working at a
senior executive level in Australia and Asia.
She has held senior executive roles at leading
financial institutions Morgan Stanley, Credit
Suisse and Barclays Capital where she led the
Energy and Infrastructure Group in Australia.
In addition to her work in the energy sector,
Glenda has extensive experience in the
telecommunications, information technology,
media, transport and financial services sectors.
Glenda co-founded listed Australian gas company
Metgasco, where she was Executive Director and
Chief Financial Officer for eight years.
Glenda is a member of the People
and Remuneration Committee and
Nomination Committee.
Other current directorships
SCECGS Redlands Limited: Chairman, Non-Executive Director
(October 2016)
JOHN WARBURTON
Independent Non-Executive Director
BSc (Hons Geological Sciences), PhD Structural Geology, FGS,
FPESA, MAICD
John joined the Senex Board in March 2016. He
is a Petroleum Geoscientist by profession with
extensive technical and executive experience in
exploration, field development, commercial and
new business in the global oil and gas industry.
John has been active in the international
petroleum industry for 37 years. At BP he
held senior technical and leadership positions
before moving on to senior executive roles with
substantial oil and gas companies including
LASMO plc, Eni Pakistan Ltd and Oil Search Ltd.
At Oil Search John was Chief of Geoscience &
Exploration Excellence.
John is a member of the People
and Remuneration Committee and
Nomination Committee.
Other current directorships/other interests
Empire Energy Group Limited: Non-Executive Director
(February 2019)
Imperial Oil and Gas Pty Ltd (subsidiary of Empire Energy Group
Ltd): Non-Executive Director (March 2016)
University of Leeds, UK: Visiting Professor in the School of Earth
& Environment and Member of the External Advisory Board at
Petroleum Leeds (Centre for Integrated Petroleum Engineering &
Geoscience) (October 2010)
48 RISK MANAGEMENT
Risk Management
The Senex risk management framework incorporates an
enterprise-level view of risk, an understanding of management
options and the use of consistently developed information to
support decision making and management practices to achieve
organisational goals.
The framework is based on the international standard for risk
management (ISO 31000), is reviewed annually and is unchanged
from that described in detail in the Senex 2019 annual report. The
Audit and Risk Committee assists the Board in regularly monitoring
material business risks. The material business risks for Senex
are actively managed within the risk management governance
framework shown below.
Board
Oversee
Audit & Risk
Committee
Monitor, review
Risk Management
Policy
Chief Executive Officer
Prioritise, arbitrate,
deliver
Chief Financial
Officer
Facilitate, analyse,
aggregate
Risk Management
Working Group
Review, brainstorm,
report
Risk Management
Standard
Executive Committee
Allocate, evaluate,
align
Risk Management
Processes
Functional Managers
Manage, monitor,
measure
Risk Management
Tools
Employees
Identify, report,
manage
Senex has now successfully completed its two natural gas projects
in the Surat Basin, with production ahead of schedule. Accordingly,
there is an overall reduction in the level of some key risks identified
last year.
Set out below are the material business risks for Senex as at
30 June 2020. The risks summarised below are not an exhaustive
list of risks that may affect Senex, nor are the risks listed in order
of importance.
Operational risks
Exploration and development
Senex’s production growth is dependent on its ability to continue to
discover, develop and deliver resources and reserves.
Exploration outcomes are inherently uncertain and dependent
on the acquisition and analysis of data and development of
opportunities, and require the allocation of capital expenditure to
these opportunities. Senex’s ability to deliver production growth
may be impacted by the success of exploration and development
efforts, including data acquisition.
To ensure the highest possibility of success, Senex analyses existing
acreage for drilling prospects by applying best-in-class technologies
and processes for exploration and development. Senex applies
prudent expenditure management and forecasting to support
capital funding of exploration and development activities. Senex
considers partnering and farm-in opportunities to diversify risk.
Access and approvals
Senex’s ongoing Surat Basin activities include exposure to material
non-technical risks, including securing and retaining land access,
environmental requirements and water management.
The Surat Basin co-exists with agricultural properties and
population centres. Therefore, Senex operations require negotiated
land access agreements and broader community relationships.
These constraints have the potential to impact ongoing
development and production in the Surat Basin.
Senex uses comprehensive project management practices and
works closely with landholders, community and government
to ensure it manages these risks to ensure mutually beneficial
outcomes where possible.
Access to infrastructure
Senex operates the vast majority of the tenements it holds.
However, the delivery of Senex-owned product to market is largely
dependent on access to third-party infrastructure to process and
transport Senex’s oil and gas. An inability to access this supporting
infrastructure may result in production delays or increased costs
for Senex.
Senex has long-term contractual rights to infrastructure and works
closely with infrastructure suppliers and, where appropriate, explores
alternative routes to market to diversify risk. Senex also maintains a
prudent insurance program for a major business interruption event.
Safety and health
Oil and gas operations are subject to operating hazards which
could result in harm to its workforce or others, which may in turn
result in loss, regulatory fines and reputational damage.
The identification, effective control and overall management of
safety and health risks are the highest priority. Senex has detailed
safety and health management plans that include auditing and
verification processes. Senex continuously reviews its operational
risks and processes to ensure it operates at the highest standards of
safety management. In addition, Senex participates in industry safety
organisations and committees that enable it to promote safety
leadership and share good industry practice and lessons learned.
During 2020, Senex responded quickly to the COVID-19
pandemic ensuring operations continued without interruption.
Senex’s objective in addressing COVID-19 was to meet or exceed
government, World Health Organisation and industry guidelines.
The Company acted early to protect Senex workers, operations and
communities and ensure continuity of operations by implementing
strict protocols to prevent the spread of the virus including travel,
field and office access restrictions, provision of hygiene training and
consumables, temperature checks and social distancing.
ANNUAL REPORT 2020 RISK MANAGEMENT 49
Significant environmental incident
Senex’s operational activities involve the storage and transport of
produced oil and gas as well as the generation of waste materials.
These activities pose a risk of harm to the environment, the
workforce and communities near Senex operations from an
environmental incident or material non-compliance.
In addition to environmental harm, impacts from an environmental
incident or material non-compliance may include safety issues,
reputational damage and regulatory enforcement action.
Senex’s environmental processes and robust environmental
management system ensure we understand the potential risks and
impacts of our activities and implement appropriate management
strategies to prevent environmental harm and minimise the risk of an
environmental incident or non-compliance.
Loss of key data or loss of access to key data
Senex’s business continuity may be impacted by the compromise of,
or disruption to, corporate information, technology systems or data.
Unauthorised access to Senex’s data, a cyber-attack or significant
outages of key technology systems may result in serious business
disruption including loss of data, loss of access to data, compromise
or disruption of technology systems, privacy violation or damage
to reputation.
Senex has key cybersecurity controls in place such as firewalls,
restricted points of entry, multiple data back-ups and security
monitoring software. Cloud-based systems also provide a higher
level of redundancy, ease of remote access for staff and faster
recovery in the event of significant outages. Senex provides
cybersecurity training to staff in relation to governance and
incident response.
Extreme weather events
Senex’s oil and gas operational activities may be interrupted by an
extreme weather event such as flood, bushfire or storm.
These extreme weather events may result in loss of production,
delays in delivery of work programs or damage to infrastructure.
These considerations are built into operational designs including
contingency planning.
Senex also has flood mitigation plans as well as emergency and crisis
management frameworks in place to manage these risks. In addition,
Senex maintains a prudent insurance program for a major business
interruption event like an extreme weather event.
Climate change
Climate change and management of carbon emissions may lead to
increasing regulation and costs.
There continues to be focus from governments, regulators and
investors in relation to how companies are managing the impacts
of climate change policy and expectations. Senex’s growth may be
impacted by increasing regulation and costs associated with climate
change and the management of carbon emissions.
Senex actively monitors current and emerging areas of climate
change risk and opportunities to ensure appropriate action can be
taken. Senex continuously focuses on improving its energy efficiency
and emissions management in delivering cost efficiencies.
Financial risks
Commodity prices
The prices Senex receives for the oil and gas the Company
produces are subject to volatility due to many factors including
global oil prices, the AUD/USD exchange rate and spot and
contract gas prices.
Commodity prices and foreign exchange rates are subject to global
economic forces. Movements in prices and exchange rates affects
Senex’s revenue, cashflow and asset values. Sustained periods of
low or declining commodity prices may impact the viability of growth
projects and access to suitably priced long-term sources of funds.
Senex has an active price and currency hedging strategy. Senex
manages its gas sales on a portfolio basis, priced through sales
contracts including fixed-price AUD gas sales contracts. Senex
pursues market opportunities for uncontracted gas. In addition, we
continue to focus on production costs, demonstrating our capacity
to operate effectively in a low-price environment.
Access to funding
Senex’s ability to fund operations and future growth is impacted by
cashflow from operating activities and bank borrowings.
Volatility or uncertainty in capital markets could restrict the
willingness of debt and equity investors to provide additional
capital, for example for growth opportunities.
Senex’s cashflows are increasing as a result of the completion of
the 2020 capital program. The Company’s future capital programs
are largely discretionary and Senex adopts prudent expenditure
management and forecasting which supports a Board-approved
capital and operating budget. Senex actively seeks partnering
opportunities to help fund key activities on a project-by-project
basis, and is not reliant on equity markets.
Strategic risks
Significant regulatory change
A change of government policy and changes to relevant legislation or
regulations may impact Senex’s finances or operations.
Changes in legislation, regulation or policy may result from
the election of new governments, political forces or external
community pressure. These changes may impact on development,
production and pricing of Senex products which, in turn, may
impact Senex’s ability to provide sustainable returns for investors
through profit erosion and loss of company value. Retrospective
or unexpected regulatory changes also potentially impact on the
longer-term viability of projects.
Senex actively monitors regulatory and political developments and
constructively engages with government, regulators and industry
bodies on an ongoing basis.
50 DIRECTORS' REPORT
Directors’ Report
Your Directors submit this Directors’ Report for the financial year ended 30 June 2020 (FY20).
The Financial Report covers Senex Energy Limited (the Company, the parent entity or Senex) and its
controlled entities/subsidiaries (collectively known as the Group). The Group’s presentation currency is
Australian dollars ($).
Principal activities
The principal activities of entities within the Group during the year were oil and gas exploration and
production. There was no significant change in the nature of these activities in FY20.
Directors
The Directors who served at any time during or since the end of FY20 until the date of this report,
their qualifications, experience and special responsibilities are set out on pages 46-47 and in the
adjacent table.
Key Management Personnel (KMP)
KMP of an entity for the purposes of the Corporations Act 2001 and the Accounting Standards are
those persons who have authority and responsibility for planning, directing and controlling the activities
of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.
Directors are KMP irrespective of whether they operate in an executive or non-executive capacity. The
Executive KMP are referred to in this report as Executives.
The KMP of the consolidated Senex entity in FY20 were the following individuals who served as
Directors or as Executive KMP in FY20:
Name
Non-Executive Directors
Trevor Bourne
Ralph Craven
Timothy Crommelin
Debra Goodin
Glenda McLoughlin
John Warburton
Position
Chairman, Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Former Non-Executive Directors
Vahid Farzad
Non-Executive Director
Executive KMP – Executives
Ian Davies
Suzanne Hockey
Mark McCabe
Peter Mills
David Pegg
Former Executive KMP
Gary Mallett
Managing Director and Chief Executive Officer (CEO)
Executive General Manager People and Performance
Chief Financial Officer
Chief Operating Officer
General Counsel and Company Secretary
Chief Financial Officer
Details on each individual service as KMP for FY20 are set out on page 57 of the Remuneration
Report. Details of the qualifications and experience of Directors are set out above an on pages
46 to 47.
ANNUAL REPORT 2020 DIRECTORS' REPORT 51
Senex’s Executive Committee
Operating and financial review
The Senex Executive Committee in FY20 comprised the CEO and the senior Executives who served as
Executive KMP. The Executive Committee generally meets on a weekly basis to discuss strategic and
operational matters.
Company Secretary
David Pegg is Senex’s General Counsel and Company Secretary. Details of Mr Pegg’s qualifications and
experience are set out on page 11.
Corporate Governance
Good corporate governance underpins the way Senex works and make decisions to sustainably
create shareholder value. During FY20, Senex complied with all eight principles of the ASX Corporate
Governance Principles and Recommendations (3rd Edition). Relevant governance practices were
updated during the year to reflect the new 4th Edition of the ASX Corporate Governance Principles
and Recommendations that come into effect from the end of FY20. Refer to Senex’s Corporate
Governance Statement at senexenergy.com.au.
Dividends
No dividends have been paid or declared by Senex since the end of the previous financial year and no
dividends have been paid or declared to the Company by any controlled entity during the year or to
the date of this report. The balance of the franking account at the end of FY20 was $6,100,000 (end of
FY19: $6,100,000).
The Group’s areas of strategic focus include oil and gas exploration and production in the Surat and
Cooper-Eromanga Basins.
The Group’s sales revenue for FY20 was $120,269,000 (FY19: $94,094,000). The Group’s statutory
net loss for FY20 was $51,367,000 (FY19: $3,295,000 profit). The Group’s underlying net profit for
FY20 was $3,835,000 (FY19: $7,211,000). The reconciliation of underlying net profit after tax to
statutory net profit after tax is set out on page 12 of this report.
A detailed operating and financial review is provided on pages 12-25 of this report. Material business
risks are discussed on pages 48 to 49 of this report.
Table 1: Ordinary fully paid shares issued during FY20
Parent entity
FY20
FY19
Number of shares
$,000 Number of shares
$,000
Movement in ordinary fully paid shares
on issue
Balance at the beginning of the period
1,453,069,535
540,468
1,447,271,094
540,213
Issues of shares during the period:
Exercise of unlisted options1
Vesting of Performance Rights
(nil consideration)
Exercise of Performance Rights
(nil consideration)2
Transaction costs on shares issued
(net of tax)
-
-
-
4,750,332
-
-
-
-
-
-
1,000,000
255
-
4,798,441
-
-
-
-
Balance at the end of the period
1,457,819,867
540,468
1,453,069,535
540,468
1. No ordinary fully paid shares were issued (FY19: 1,000,000 for a price of 25.5 cents) for the exercise of unlisted options during
the year held by the Managing Director.
2. 4,750,332 ordinary fully paid shares were issued during the year to senior executives in relation to short-term and long-term
incentive rights and for employee Retention Rights.
52 DIRECTORS' REPORT
Directors’ interests in equity securities of the Company and related bodies corporate
Environmental regulation and performance
In FY20 the Company had on issue three kinds of equity securities – Shares, Performance Rights and
Share Appreciate Rights (SARs). The glossary describes each of those equity securities. Table 2 shows
the interests of the Directors in the Shares, Performance Rights and SARs of the Company as at the
date of this report.
Table 2: Directors’ interests in Shares, Performance Rights and SARs
The Group’s operations are subject to environmental obligations under Commonwealth and State
environmental regulation. These regulations cover the entity’s exploration, development and production
activities. Compliance with the applicable environmental regulatory requirements is addressed in the
Company’s environmental management system. Compliance is monitored on a regular basis via the
conduct of environmental audits by regulatory authorities, independent consultants and by Senex. No
significant environmental breach or infringement was confirmed by any government agency in FY20.
Shares
Performance Rights
SARs
Class of security
Trevor Bourne
Ralph Craven
Timothy Crommelin
Ian Davies
Debra Goodin
Glenda McLoughlin
John Warburton
Vahid Farzad1
1,552,619
750,000
4,374,431
7,462,756
395,446
122,200
640,674
-
-
-
-
-
-
-
-
-
-
-
-
-
1. Mr Farzad is an executive of EIG Group, which held a relevant interest in Senex (resigned from the Board on 27 September 2019)
In FY20 the only equity securities on issue in each related body corporate of the Company were fully
paid ordinary shares, all of which were held by the Company. No Director had any interest in any equity
security of any related body corporate of the Company.
Significant changes in the state of affairs
There was no other significant change in the state of affairs of the Group during FY20 that is not
detailed elsewhere in this report.
Significant events after reporting date
Since the end of FY20, the Directors are not aware of any other matter or circumstance not otherwise
dealt with in the report or financial statements that has significantly or may significantly affect the
operations of the Company or the Group, the results of the operations of the Company or the Group,
or the state of affairs of the Company or the Group in subsequent financial years.
Likely developments and expected results
In FY20, the Group will continue to focus on its key operations. Further information on the likely
developments and expected results are included in the review of operations on pages 16-25.
Share rights to unissued shares
Table 3 is a summary of rights to Senex unissued shares (Performance Rights and SARs - all unlisted) as
at the date of this report.
Type of security
Number
Exercise price Conditions
Vesting
Expiry
FY17 STI Rights
FY18 STI Rights
FY18 LTI Rights
545,182
324,494
3,895,131
FY18 Retention Rights
1,329,610
FY18 Retention Rights
FY19 STI Rights
FY19 LTI Rights
FY19 Strategic Business
Milestone Rights
125,000
470,427
3,230,285
3,000,000
FY19 Retention Rights
1,759,790
FY20 STI Rights
FY20 LTI Rights
2,367,961
5,101,493
2019 Retention Rights
125,000
2019 Retention Rights
3,626,350
2019 Retention Rights
300,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Performance and service
Jul 2018
Sep 2023
Performance and service
Jul 2019
Sep 2024
Performance and service
Sep 2020
Sep 2024
Service
Service
Dec 2019
Sep 2024
Jun 2020
Sep 2024
Performance and service
Jul 2020
Sep 2025
Performance and service
Sep 2021
Sep 2025
Performance and service Dec 2020
Sept 2025
Service
Dec 2020
Sep 2025
Performance and service
Jul 2021
Sep 2026
Performance and service
Sep 2022
Sep 2026
Service
Service
Service
Jun 2021
Sep 2026
Dec 2021
Sep 2026
Dec 2022
Sep 2026
Type of security
Number
Starting price Conditions
Vesting
Expiry
FY16 SARs – tranche 1
4,245,923
FY16 SARs – tranche 2
1,171,674
FY17 SARS – tranche 1
6,719,019
$0.146
$0.146
$0.248
Performance and service
Sep 2018
Sep 2022
Performance and service Aug 2018
Sep 2022
Performance and service
Sep 2019
Sep 2023
10,341,130
2,607,362
Table 3: Rights to Senex unissued shares
ANNUAL REPORT 2020 DIRECTORS' REPORT 53
Movements in Performance Rights
Indemnification and insurance of Directors and Officers
From 1 July 2019 to the date of this report there have been the following movements in
Performance Rights:
• 11,705,924 Performance Rights were issued
• 2,864,522 Performance Rights were exercised
• 5,223,343 Performance Rights expired and lapsed
In FY20, Senex incurred a premium of $502,674 (FY19: $272,760) to insure Directors and Officers
of the Group. The premium increased due to additional insurance coverage and the effect of market
conditions. 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
Group. It is not possible to apportion the premium between amounts relating to insurance against legal
costs and amounts relating to insurance against other liabilities.
The terms of those Performance Rights, including vesting conditions (performance conditions and
service conditions) are described in the Remuneration Report, pages 56 to 71.
Directors’ meetings (unaudited)
The holder of a Performance Right is not entitled, by virtue of the Right, to participate in any share
issue of the Company or any related body corporate.
Table 4: The number of meetings of Senex’s Board of Directors and of each Board Committee held in
FY20, and the number of meetings attended by each Director
Movements in SARs
From 1 July 2019 to the date of this report there have been the following movements in SARs:
• Nil SARs were issued
• 3,440,888 SARs were exercised
• 2,928,597 SARs expired and lapsed
Details of those movements are disclosed in the Remuneration Report, Table 11.
The terms of those SARs, including vesting conditions (performance conditions and service conditions)
are described in the Remuneration Report, pages 56-71.
The holder of a SAR is not entitled, by virtue of the SAR, to participate in any share issue of the
Company or any related body corporate.
Shares issued on exercise of SARs or Performance Rights
From 1 July 2019 to the date of this report Senex issued:
• 2,162,594 shares to the Senex Employee Share Trust to provide to the holder of part FY16 LTI SARs
on the exercise of their Rights on 16 September 2019
• 834,589 shares to the Senex Employee Share Trust to provide to a holder of part FY18 STI Rights
on the exercise of their Rights on 30 July 2019, 21 August 2019 and 16 September 2019
• 1,348,330 shares to the Senex Employee Share Trust to provide to the holder of part FY18
Retention Rights on the exercise of their Rights on 29 January, 26 February, 24 March, 22 April,
26 June and 28 July 2020
• 479,729 shares to the Senex Employee Share Trust to provide to a holder of part FY17 STI Rights
on the exercise of their Rights on 26 June 2020
• 201,874 shares to the Senex Employee Share Trust to provide to a holder of part FY19 STI Rights
on the exercise of their Rights on 28 July 2020
Meetings of committees
Board meetings
Audit and Risk
People and
Remuneration
Nomination
A
12
12
11
12
12
12
1
B
12
12
12
12
12
12
2
A
6*
6
6
5*
6
6*
2*
B
6
6
6
6
6
6
2
A
5*
5
5*
5*
5
5
1*
B
5
5
5
5
5
5
2
A
1
1
1
1*
1
1
1
B
1
1
1
1
1
1
1
Trevor Bourne
Ralph Craven
Timothy Crommelin
Ian Davies
Debra Goodin
John Warburton
Vahid Farzad ~
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the Committee during the year
* = Not a member of the relevant Committee
~ = Mr Farzad (resigned on 27 September 2019)
54 DIRECTORS' REPORT
Non-audit services
Auditor independence
A copy of the auditor’s independence declaration as required under s.307C of the Corporations Act
2001 is set out on page 72.
Rounding
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports)
Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the
‘rounding off’ of amounts in a financial report or directors report.
Unless otherwise indicated, amounts in the Directors' Report (including the Remuneration Report) have
been rounded off in accordance with that legislative instrument to the nearest thousand dollars, or in
certain cases, to the nearest dollar.
The Company’s auditor, Ernst & Young (Australia), undertook some non-audit services for Senex
during the current year as disclosed in Note 24 to the financial statements. Table 5 details the services
provided, and amounts received or receivable for those non-audit services:
Table 5: Services provided and amounts received or receivable by Ernst & Young (Australia) for
non-audit services
Fees for assurance services that are required by legislation to be provided
by the auditor
Fees for other assurance and agreed-upon-procedures services under
other legislation or contractual arrangements where there is discretion as
to whether the service is provided by the auditor or another firm
Fees for other services
• Tax compliance
• Due diligence
• IT implementation controls assessment
• Remuneration review
• Debt compliance
Total
FY20
consolidated
($’000)
FY19
consolidated
($’000)
-
90
27
-
81
312
117
393
The Directors are satisfied that the provision of non-audit services is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of
each type of non-audit service provided means that auditor independence was not compromised.
Pictured (opposite): Atlas began
producing natural gas for the
domestic market in December 2019.
ANNUAL REPORT 2020 DIRECTORS' REPORT 55
56 DIRECTORS' REPORT
Remuneration Report (audited)
Dear Shareholders,
I am pleased to present the Senex Remuneration Report for FY20. This
report provides details of how Senex has approached remuneration in FY20
for Non-Executive Directors and Senior Executives linked to the company’s
strategy and performance outcomes.
Remuneration framework and corporate strategy
As Chair of the People and Remuneration Committee (Committee), I’d like
to take this opportunity to outline our framework and decision-making
process for setting and determining performance measures for remuneration.
How that translates into remuneration outcomes for FY20 is detailed in the
following pages.
The remuneration framework is intended to direct focus on our short and
long-term strategic objectives, align Directors, Executives and staff with
corporate objectives, drive company performance and provide a means to
attract, retain and appropriately reward talented people.
The Committee has been guided by the need to balance corporate and
individual performance aligned with the corporate (short-term) objectives and
(long-term) strategy for the period. Further detail around Senex’s corporate
strategy for 2020 is outlined on page 62-63 of this Remuneration Report.
2020 performance
COVID-19 and the response to the pandemic continues to influence the
global economy. During 2020, we remained focused on the safety and
wellbeing of our employees, contractors and communities. The introduction
of stringent protocols and effective business continuity measures have
ensured Senex can continue to operate safely and effectively. COVID-19
also had a significant impact on oil prices and oil and gas demand generally.
This led to a non-cash impairment this year (announced on 12 August 2020)
and, to ensure our business is ready for these difficult macro-economic
conditions, we’ve undertaken an organisational restructure.
Despite this and despite the uncertain landscape Senex has excelled,
achieving its FY20 corporate performance measures. Our robust balance
sheet, fixed price gas contracts and proactive hedging strategy provided
resilient cashflows in a lower oil price environment.
In brief, the Senex team has delivered on its promises for FY20. Senex
successfully completed its capital works program for its Surat Basin natural
gas development projects (Atlas and Roma North) and outperformed
expectations for FY20 production, EBITDA and capital expenditure savings.
The remuneration outcomes for FY20 reflect those achievements.
The Board is extremely pleased with Senex’s performance in FY20, which has
provided the foundation to achieve continued growth in production, earnings
and cashflow.
Focus for 2021 and beyond
We will continue to maintain balance sheet strength, maximise the
generation of free cashflow, grow organically in the medium-term maximising
value from opportunities in and around our Surat Basin natural gas projects,
and expand and diversify over time. The remuneration framework for FY21
and following two years will reflect this.
In a time of rapid and widespread change, the Board remains cognisant of the
need to ensure that the remuneration mix for senior executives is balanced,
transparent and simple, and drives alignment with the creation of shareholder
value. The Board will continue to set incentive targets which reflect Senex’s
focus on delivering risk-adjusted returns for investors, sustained growth and
value, and strong financial performance over the long-term.
The Board remains committed to actively engaging with you to seek feedback
and understand your perspectives on our remuneration arrangements.
Dr Ralph Craven
Independent Non-Executive Director
People and Remuneration Committee Chair
ANNUAL REPORT 2020 DIRECTORS' REPORT 57
3. Governance
Figure 1 sets out Senex’s Remuneration Governance.
See the Corporate Governance Statement for additional details of the Board’s approach to
remuneration. The Corporate Governance Statement is available at senexenergy.com.au.
Remuneration approach and governance
Senex has established three guiding principles as the foundation of its approach to remuneration. The
Board believes this approach will promote the key outcomes necessary to deliver long-term growth in
shareholder returns.
These guiding principles are:
1. aligning remuneration outcomes with strategic, operational and financial goals;
2. incentivising performance and rewarding performance outcomes fairly and reasonably; and
3. striking a balance between short-term and long-term growth-related objectives providing an
incentive for superior performance without encouraging irresponsible risk taking.
1. Introduction
Senex’s remuneration practices are aligned with the Company’s strategy of promoting long-term
growth in shareholder returns whilst attracting and retaining Executives with the right capability to
achieve results.
The information in this Remuneration Report has been audited.
2. Directors and Executives
The Key Management Personnel (KMP) of the Group (being those whose remuneration must be
disclosed in this Remuneration Report) include the Non-Executive Directors and those Executives who
have the authority and responsibility for planning, directing and controlling the key activities of Senex
directly or indirectly.
The Non-Executive Directors and Executives who were KMP for all or part of FY20 are identified in
Table 1 below.
Table 1: Key Management Personnel
Name
Position
Non-Executive Directors
Trevor Bourne
Debra Goodin
Chairman, Independent Non–Executive Director
Independent Non–Executive Director
John Warburton
Independent Non–Executive Director
Ralph Craven
Independent Non–Executive Director
Timothy Crommelin
Independent Non-Executive Director
Former Non-Executive Director
Dates
Full year
Full year
Full year
Full year
Full year
Vahid Farzad
Non-Executive Director
Until 25 September 2019
Executive KMP
Ian Davies
Managing Director and Chief Executive Officer (CEO)
Full year
Suzanne Hockey
Executive General Manager People and Performance
Full year
Mark McCabe
Chief Financial Officer
From 4 December 2019
Peter Mills
David Pegg
Chief Operating Officer
General Counsel/Company Secretary
Full year
Full year
Former Executive KMP
Gary Mallett
Chief Financial Officer
Until 10 October 2019
Note: Glenda McLoughlin was appointed as an Independent Non-Executive Director, after FY20 on 1 July 2020 and is not
included in this Remuneration Report.
58 DIRECTORS' REPORT
Figure 1: Remuneration governance
Board
The Board:
•
•
•
approves remuneration policies and framework, ensuring it complies with the guiding principles
approves Non-Executive Director, CEO and Executive remuneration
assesses and approves the award of incentives for the CEO and Executives giving due weight to performance
whilst retaining discretion to determine the final outcome
•
approves the appointment of external remuneration consultants and advisors
People and Remuneration Committee
The People and Remuneration Committee is delegated responsibility by the Board to review and make
recommendations on:
•
•
•
•
•
Senex’s remuneration policies and framework
remuneration of Non-Executive Directors
remuneration of the CEO and Executives
incentive arrangements of CEO and Executives
alignment of the interests of employees with the interests of shareholders
• ensuring the company values and culture is being embedded in the organisation
Composition: Dr Ralph Craven (Chair), Debra Goodin and John Warburton.
(Glenda McLoughlin was appointed to the People and Remuneration Committee on 1 August 2020).
The People and Remuneration Committee Charter is available on the Senex website.
Management
•
Provide information and support to the People and Remuneration Committee as required
Consultation with shareholders and other stakeholders
The Board and the People and Remuneration Committee frequently consult with major
shareholders, proxy advisors and other stakeholders.
Remuneration consultants and other external advisors
In performing their roles the Board and the Committee may directly commission and receive
information, advice and recommendations from independent external advisors in relation to:
• Executive remuneration
•
•
•
Non-Executive Director remuneration
incentive measures
other matters relevant to remuneration decisions
Any advice or recommendation provided by external advisors are used to assist the Board
and People and Remuneration Committee and are not in substitution of the People and
Remuneration Committee deliberations.
The Board has adopted protocols to ensure any advice or recommendations from external
advisors are commissioned directly by the People and Remuneration Committee Chairman
and are free from undue influence of management.
ANNUAL REPORT 2020 DIRECTORS' REPORT 59
4. Remuneration framework
Figure 2: Aligning remuneration and performance metrics with strategic objectives
Senex’s remuneration framework for each
Executive comprises three components:
1. total fixed remuneration
2. short-term incentive and
3. long-term incentive
Remuneration framework
The structure is intended to provide
an appropriate mix of fixed and
variable remuneration and provide
alignment between Executive and
shareholder interests.
The incentives are intended to drive
performance to deliver the Company’s
short and longer-term business objectives.
There were no significant changes in the
FY20 STI structure from the previous year,
except for the weighting between the
corporate performance measure which
represents 80% of STI (2019: 85%) and
the individual performance metric which
represents 20% of STI (2019: 15%). This
change was to allow room for additional
personal metrics for each Executive in
relation to safety leadership.
Total Fixed Remuneration (TFR)
(not ‘at risk’) comprises base salary
including superannuation.
Short Term Incentive (STI) (‘at
risk’) awarded on the achievement
of performance conditions over
a 12 month period. The STI (if
achieved) is payable up to 50% in
cash following the approval of the
financial statements with the balance
provided by the vesting of contingent
Performance Rights subject to a 12
month deferral and vesting condition.
Long Term Incentive (LTI) (‘at risk’)
awarded on the achievement of
performance conditions over three
year periods and comprises only an
equity component.
n
o
ti
a
r
e
n
u
m
e
r
d
e
x
F
i
e
v
ti
n
e
c
n
i
m
r
e
t
-
t
r
o
h
S
e
v
ti
n
e
c
n
I
m
r
e
t
-
g
n
o
L
Performance metrics FY20
Alignment with strategic objectives
•
•
•
•
•
experience and qualifications
role and responsibility
reference to remuneration paid by comparable
companies and industry-peer companies
internal and external relativities
talent retention
To attract and retain talented and qualified Executives
with the right capability to achieve results and deliver
value for shareholders
Corporate metrics (80% of STI grant) comprising:
•
•
•
safety and environment
project development
strategy review
•
•
safety and eliminating unintended environmental
harm are paramount in all Senex’s operations and key
to maintaining the Company’s license to operate.
delivering key projects (Roma North and Atlas) are the
key levers to future de-risked cash-flow for Senex
Individual performance metrics (20% of STI grant)
•
strategy review for future growth
STI at risk: Maximum – 60% of TFR
FY20 LTI - performance against the metrics is measured
over a three-year period.
Relative Total Shareholder Return (TSR) – FY20 100%
of LTI grant and this is subject to a positive TSR over the
performance period.
FY20 LTI at risk
•
•
CEO – maximum 100% of TFR
Other Executives – maximum 50% of TFR
See page 62 for further details of the STI performance
metrics and outcomes for FY20
•
relative TSR is a measure of the return generated for
Senex’s shareholders over the performance period
relative to a peer group of companies being the S&P
/ ASX300 Energy Index
See page 64 for further details of the LTI performance
metrics and outcomes
60 DIRECTORS' REPORT
“At risk” remuneration
The maximum potential remuneration reflects the amount (at offer date) of total remuneration the
CEO and Executive KMP could receive if the maximum STI and LTI are achieved.
The remuneration mix of the CEO and other Executive KMPs align with the interests of shareholders
by having a greater portion of potential remuneration at risk thereby incentivising the achievement of
both short- and long-term performance metrics.
Figure 3: FY20 maximum potential remuneration
CEO
Executive KMP
38%
24%
47%
29%
38%
24%
Fixed Remuneration
STI (at risk)
LTI (at risk)
See section 7 (STI) and section 8 (LTI) for further details on the approach the Board takes to awards
in relation to the ‘at risk’ remuneration and the performance metrics or hurdles that have been set for
Executive KMP in order to secure their ‘at risk’ remuneration.
5. Company performance financial year 2020
Performance snapshot
During FY20, Senex continued to grow with increased production, revenue and operating cashflow,
while positioning the company to realise significant value from its enlarged portfolio of quality assets.
Senex has successfully delivered its transformational gas developments, with a major upgrade in gas
reserves and the foundation established for continued growth in production, earnings and cashflow.
Highlights include:
• $400 million Surat Basin development completed: 56 TJ/day of gas processing capacity constructed;
80 wells drilled; portfolio of high-quality domestic gas customers in place; current gas production
above 37 TJ/day, ramping to 48 TJ/day (~18 PJ/year)
• early works commenced on Roma North 24 TJ/day expansion: contracts agreed for Jemena to
procure long-lead items, including compression equipment
• full-year FY20 production up 73% to 2.1 mmboe, at the top end of upgraded guidance: growth
underpinned by a 278% increase in Surat Basin gas production to 1.2 mmboe (~7.2 PJ)
• EBITDA of $49.5 million at the top end of upgraded guidance; and with peak net debt now
~$60 million (down from $80 million initially budgeted)
• major Surat Basin gas reserves upgrade from successful drilling and production performance:
108% increase in 1P reserves to 210 PJ; 21% increase in 2P reserves to 739 PJ
Further information is summarised in the Operational and Financial review of this Report.
Figure 4 below shows Senex’s share price compared with its peer group – represented by the ASX 300
Energy Index – and the performance of Brent crude over the same period.
Figure 4: Senex’s share price comparison over four years
0.60
0.50
0.40
0.30
0.20
0.10
-
Jul 16
Jan 17
Jul 17
Jan 18
Jul 18
Jan 19
Jul 19
Jan 20
Jul 20
Senex (11.8%)
ASX 300 Energy Index (10.2%)
Brent Crude (17.0%)
6. Realised remuneration
Realised remuneration reflects the “take home pay” of the Executives KMP for FY20 and includes:
• total fixed remuneration for FY20
• the value of any STI from prior years that was awarded as deferred equity and actually received
in FY20
• any STI that was awarded as cash in respect of STI performance measures for FY20 and will be
received after the end of FY20 and
• any LTI from prior years that was awarded as deferred equity and actually exercised in FY20 valued
at the share price on the date of exercise
Table 2 has been provided to ensure shareholders are able to clearly understand the remuneration that
has been realised by the Executive KMPs in FY20. It has not been prepared in accordance with the
disclosure requirements of the Australian Accounting Standards or Corporations Act 2001. See Table 7
for Executive KMP remuneration disclosures in accordance with the Australian Accounting Standards
and Corporations Act.
ANNUAL REPORT 2020 DIRECTORS' REPORT 61
Table 2: Realised remuneration
Name
Current Executive KMP
Ian Davies
Suzanne Hockey5
Mark McCabe6
Peter Mills
David Pegg
Former Executive KMP
Gary Mallett6
Total Executive KMP
Year
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
TFR
$
850,000
850,000
308,000
385,000
292,566
-
610,000
504,478
425,000
385,000
175,291
500,000
2,660,857
2,624,478
STI (cash)1
STI (deferred)2
LTI (exercised)3
$
$
$
449,055
415,395
86,486
94,595
83,114
-
169,458
121,802
118,065
92,862
-
124,350
906,178
849,004
-
208,682
115,196
93,293
-
-
-
-
-
2,161,444
-
-
-
-
-
-
54,021
40,731
-
-
-
-
-
-
169,217
301,975
40,731
2,161,444
Other 4
$
21,931
18,824
4,933
7,096
2,534
-
4,933
9,473
4,933
7,096
17,343
38,901
56,607
81,390
Total
$
1,320,986
3,654,345
514,615
579,984
378,214
-
784,391
635,753
642,750
484,958
192,634
663,251
3,833,590
6,018,291
1. STI (cash) comprises any STI that was awarded as cash in respect of short-term performance measures for FY20 and will be received after the end of FY20. For the CEO STI (cash) also includes FY19 STI deferred cash component. For FY20, in respect of the STI
awarded to Executive KMP (other than for the MD/CEO where the maximum equity grant was approved by shareholders at the 2019 AGM), each Executive has elected to take shares in Senex in lieu of the cash component of the FY20 STI award.
2. STI (deferred) comprises the value of any STI from prior years that have been awarded as deferred equity (or cash for the MD/CEO) and actually received in FY20, with deferred equity valued at the share price on the date of vesting.
3. LTI (exercised) comprises any LTI from prior years that was awarded as deferred equity and actually exercised in FY20, valued at the share price on the date of exercise; and any shares issued in FY19 upon exercise of FY11 options.
4. Other comprises carparking, motor vehicle and travel related expenses.
5. Ms Hockey moved to a 0.8 full-time equivalent (FTE) role from 1 July 2019.
6. Refer to Table 1 of this Remuneration Report for dates of service.
Focus
Performance metric
Weighting % Performance outcome for FY20
D
L
O
H
S
E
R
H
T
T
E
G
R
A
T
H
C
T
E
R
T
S
62 DIRECTORS' REPORT
7. Short-term incentive (STI)
Table 3: Short-term incentive performance metrics FY20
The STI is ‘at risk’ remuneration subject to the achievement of pre-defined performance metrics
included in the corporate performance scorecard for the year (80 per cent of FY20 STI (FY19: 85
per cent)) as well as individual performance of each Executive KMP (20 per cent of FY20 STI (FY19:
15 percent)). Table 3 presents the corporate performance metrics, weightings and outcomes for FY20.
At the commencement of each performance year the Board determines the corporate performance
scorecard and metrics to be measured for that year (in this case, for the FY20 STI). The metrics
generally have performance levels set as:
• threshold being the minimum level of performance deserving of reward. Achievement of the
Threshold results in 25% of the STI being awarded
• target being a challenging but achievable level of performance. Achievement of the Target results in
50% of the STI being awarded and
• stretch being the upper limit of possible outcomes that were planned for and a very challenging goal
that is unlikely to be achieved. Achievement of the stretch results in 100% of the STI being awarded
Any achievement between threshold and target, and target and stretch results in a prorated
contribution of the STI being awarded.
The short-term performance metrics and hurdles in the corporate performance scorecard were chosen
to encourage outcomes and behaviours that support the safe operation and delivery of the base
business while pursuing long-term growth in shareholder value.
Protecting
our people
and the
environment
Delivering
what we
promise
Safety statistics and safety culture
performance
Continued excellence in environmental
performance
Capital Delivery
• production achieved
• wells online
• project capital costs
Financing and Commercial
• sale of Roma North facility
• milestones under debt facility
Stakeholder
• preserving Senex’s reputation
Strategy review implementation
20%
50%
10%
At the end of the performance year the Board determines the corporate performance rating for the
year on the basis of the level of achievement against those metrics (and individual performance), and
awards the STI to the CEO and Executive KMP.
Platform for
growth
The STI awarded would ordinarily be paid up to 50 per cent in cash and the balance in deferred
Performance Rights vesting in 12 months. For FY20, in respect of the STI awarded to Executive KMP
(other than for the MD/CEO where the maximum equity grant was approved by shareholders at the
2019 AGM), each Executive has elected to take shares in Senex in lieu of the cash component of the
FY20 STI award to align with shareholder outcomes.
Total Company Scorecard
80% of STI
grant
Other than for safety, stretch
measures were achieved
Individual
performance
Individual measures set for each
Executive KMP
20% of STI
grant
Refer below
ANNUAL REPORT 2020
DIRECTORS' REPORT 63
STI - FY20 corporate performance metrics and outcomes
Protecting our people and the environment
Safety: The Board has a strong focus on health and safety and recognises improved performance
within Senex, but the Board and management agree that further improvement is required in respect
of recorded safety statistics. Senex’s safety performance for FY20 was at Target level. There were two
lost time injuries (LTI) but zero incidences with a major severity level. The company has a strong focus
on major and serious injuries which is why this is specifically called out and measured. There was an
improvement since FY19 across all safety metrics including the total recordable injury frequency rate
(TRIFR), lost time injury frequency rate (LTIFR) and high potential incidents.
The Board assessed the overall safety culture across the company and was satisfied with the
improvement. This was demonstrated by senior executive site safety visits and interventions, team
leader safety discussions, executive quarterly safety reviews, safety training, culture programs and
whole-of-company safety initiatives, including safety stand-downs. In response to COVID-19, Senex
enacted strict protocols to ensure the safety and wellbeing of its people, while ensuring operations
were uninterrupted. This included initiatives to address mental health risks associated with working
from home and careful management of staff movement to field-based operations across borders and in
relation to their interaction with local communities.
Environment: Senex achieved excellent environmental performance in FY20. Senex continued this
with zero serious incidents.
Delivering what we promise
Capital delivery: Senex’s Surat Basin assets are the primary component of Senex’s near-term growth
strategy. FY20 was a pivotal period for the focused delivery of these projects. This is a short-term
delivery metric and an integral part of Senex’s strategic goal of building an east coast gas portfolio.
Senex was successful in achieving the stretch hurdle for each of the following key delivery milestones:
• production volumes were achieved ahead of schedule and with less wells drilled than originally
planned. 80 wells were drilled and brought online during FY20. Due to better than forecast
subsurface performance, expected production levels across the Surat projects were exceeded. This
resulted in 15 wells less than originally planned saving approximately $24 million from the drilling
program. Senex also achieved best-in-class drill and complete cycle times for the drilling program;
• project capital costs were approximately $30 million below budget.
Financing and commercial: Senex completed the sale of the Roma North facility to Jemena for
$50 million, improving liquidity and available capital, and progressed through all key milestones under
the debt facility arrangements.
Stakeholder: Senex strives to be an active member of the communities where it works and a good
neighbour. In FY20, Senex proudly continued its long-term partnerships focussed on building
sustainability and resilience. Senex maintained its support of important local community initiatives
despite the cancellation of many events due to COVID-19. Senex also shortened payment terms for
more than 400 smaller businesses, expediting the payment of millions of dollars.
Platform for growth
Strategy review implementation: In FY20, Senex conducted a formal strategy review to provide a
platform for future organic and inorganic growth, with all review outcomes fully implemented.
STI - FY20 individual Executive metrics and overall outcomes
The CEO’s individual performance measures for FY20 related to safety leadership, organisational
capability and succession planning. The CEO was awarded 17% of the possible 20% of his individual
KPI component of the STI, awarding a total of 93.6% of his total FY20 STI.
The other Executive’s individual performance measures were tailored to their respective roles and
responsibilities and in all cases included assessment of contribution to safety leadership and corporate
culture. On average the Executives were awarded 15.5% of the possible 20% in respect of the
individual KPI component of the STI, awarding an average STI outcome of 92.1%.
FY21 STI
Senex has now successfully established a resilient production and cashflow profile from the two natural
gas projects in the Surat Basin (Atlas and Roma North), providing the foundation for our business
going forward. Senex has also had excellent drilling results at Atlas which, together with continued
Roma North production outperformance, has driven a significant increase in gas reserves in the Surat
(with Surat Basin 1P (proved) gas reserves up by over 100% and Surat Basin 2P (proved and probable)
gas reserves up by over 20% during FY20). The Board will include, as a major component of the STI
framework for each year FY21 to FY23, delivery against a development plan to incentivise conversion
of Senex’s large undeveloped reserves position into substantially increased production, earnings and
cashflow in the near term. For FY21 and FY22, the maximum STI award (as a percentage of TFR) will
be lower than in FY20, with a higher maximum STI award in the last year, FY23.
64 DIRECTORS' REPORT
8. Long-term incentive (LTI)
Table 4: LTI grant details
The Board offered an LTI opportunity to the CEO and other Executive KMP for FY20 (FY20 LTI)
equivalent to 100 per cent of the CEO’s TFR and 50 per cent of Executive KMP’s TFR.
The LTI is ‘at risk’ remuneration subject to the achievement of pre-defined performance metrics
over a three-year period. At the commencement of each performance year, the Board assesses and
determines the performance hurdles for the LTI to be offered to the CEO and Executive KMPs and
ensures the performance hurdles align with shareholder interests.
The LTI offered to the Executive KMP for FY20 was the same in structure to the LTI offered for FY19,
which was 100% of the LTI is subject to one performance metric (being relative total shareholder
return (TSR)). The FY20 LTI offer comprised performance rights subject to this performance condition,
a three-year service condition and there being a positive TSR.
Each performance right issued under the LTI to each Executive KMP entitles the relevant KMP to
receive one share in Senex upon vesting. The number of performance rights issued is calculated by
dividing the respective Executive KMP’s LTI maximum potential remuneration by the volume weighted
average share price over the 10 days prior to the grant date.
The LTIs vest if and to the extent that the Board determines that the LTI performance condition is
satisfied at the end of the three-year performance period and the executive is a Senex group employee
on the vesting date.
Details of the LTI grants are set out in Table 4. For further details of the vesting and expiry dates in
respect to the LTI grants see page 52 of the Directors’ Report.
Grant
year
2017
2018
2018
Grant type
Fair value at
grant date $*
Vesting condition –
performance metric
0.11
0.24
0.34
LTI Tranche 1
(Performance
Rights)
LTI Tranche 1
(Performance
Rights)
LTI Tranche 2
(Performance
Rights)
Relative TSR performance at or
above 50th percentile against
S&P/ASX 300 Energy Index
(70%)
Relative TSR performance at or
above 50th percentile against
S&P/ASX 300 Energy Index
(70%)
Strategic and Financial hurdles
(30%) - see below for further
details.
Financial year
or period
FY17-FY19
FY18-FY20
FY18-FY20
2019
LTI
(Performance
Rights)
0.23 - 0.31
Relative TSR performance at or
above 50th percentile against
S&P/ASX 300 Energy Index,
with a positive TSR gate (100%)
FY19-FY21
Status
Vested in
September
2019
To be
determined
September
2020
Determined
and vested in
July 2020
To be
determined
September
2021
2019
0.23
SBM
(Performance
Rights)
Project Delivery (with a positive
TSR gate) – see below for
further details
26 September
2018 - 30
December
2020
To be
determined
in January
2021
2020
LTI
(Performance
Rights)
0.15 – 0.23
Relative TSR performance at or
above 50th percentile against
S&P/ASX 300 Energy Index,
with a positive TSR gate (100%)
FY20-FY22
To be
determined
September
2022
* Fair value of an award when granted is estimated using a Monte Carlo simulation methodology and Black-Scholes valuation
techniques which take into account a number of variables, including the share price when Rights are granted. Refer to Note 15
in the Financial Statements for additional detail.
ANNUAL REPORT 2020 DIRECTORS' REPORT 65
To achieve this LTI metric, Senex has responded to industry challenges and opportunities and built an
east coast gas position and portfolio. The company has achieved these strategic goals and the Board
has taken into account factors such as project delivery, capital efficiency, asset portfolio composition,
operating cashflow generation and profit growth, operating performance, personal safety performance
and process safety performance. At the outset, the Board acknowledged that these metrics involve a
level of subjective assessment which was seen as the best way to assess the step-change in Senex’s
business over the longer-term.
The Board assessed that the FY18 LTI strategic and financial goals (Tranche 2 for a maximum
30% award) were successfully met and awarded the full FY18 LTI for this Tranche:
• building a material supply position in the Australian east coast gas market
During this period, Senex has established itself as an important supplier of gas to the east coast
with more than 220 PJ of Gas Sales Agreement (GSA) volumes and approximately 620 PJ of 2P
undeveloped gas reserves in the Surat Basin.
• pursuing growth of Senex’s asset portfolio that provides diversification and builds
corporate capability
Senex has achieved full exploration and production value chain capability, particularly in respect of
unconventional gas development. Senex has successfully diversified away from oil to natural gas
and oil-linked natural gas. Oil production mix at the end of FY17 was 100%. By the end FY20, oil
production as a percentage of overall production had reduced to 33%, and is forecast to comprise
approximately 16% by the end of FY22 (as shown in the Foundation Asset Base Investor Briefing
announced to the ASX on 11 March 2020).
• continuing cost and operational leadership in low cost oil operations
Operational performance has continued to excel in the Cooper Basin during the performance period
and was demonstrated with an FY20 oil UOC (unit operating cost) 15% below budget.
LTI performance metrics and outcomes
Total shareholder return (TSR) hurdles
The vesting of Performance Rights for the relative TSR Performance Condition is conditional on
the Company achieving TSR at or above the 50th percentile of the TSR of a comparator group of
companies (S&P/ASX 300 Energy Index) over the three-year performance period.
The S&P/ASX 300 Energy Index was chosen based on consideration of a number of factors including
the number of constituents, its median volatility rank, its size and the fact that the group operates in
largely the same industry and is faced with the same operational and economic risks as Senex.
TSR measures the growth in the price of shares plus cash distributions notionally reinvested in shares.
The TSR of Senex over the performance period will be compared to the TSR of all of the companies
in the peer group which are still listed at the end of the performance period. This is measured by
reference to the share price from the grant date until the 10th day of share trading following release of
Senex’s full year results for the last of the three financial years that the LTI relates to.
The FY17 LTI included a component, being 70% of the maximum LTI, for relative TSR performance. As
indicated in the table above, this achieved the full award and vested in September 2019.
Each of the LTI offers for FY18 through FY20 include a relative TSR performance condition.
Commencing FY19, the LTI offers also included a positive TSR gate.
For FY21, the Board will change the relative TSR comparator, as further details on page 66 of this
Remuneration Report.
FY18 - Strategic and Financial Goals hurdle
In September 2017, the Board considered Senex’s portfolio and the changing nature of the Australian
oil and gas market and saw an opportunity to position itself as an east coast gas participant. The
Board set long-term metrics for expanding the company’s portfolio and, at the same time, maintaining
excellence in oil exploration and production in the Cooper Basin.
To properly align executives with this strategic goal, the Board agreed these strategic long-term
company goals:
• building a material supply position in the Australian east coast gas market
• pursuing growth of Senex’s asset portfolio that provides diversification and builds corporate
capability and
• continuing cost and operational leadership in low-cost oil operations
66 DIRECTORS' REPORT
FY18 – relative TSR
Tranche 1 of the FY18 LTI (Relative TSR) will be measured in September 2020, following the end of the
performance period. This comprises 70% of the potential FY18 LTI award.
FY19 and FY20 relative TSR and FY19 Strategic Business Milestone hurdle
The Board considers the appropriate LTI structure every year and, for FY19 and FY20, elected to use a
sole metric, relative TSR, and in each case subject to there being a positive TSR over the performance
period. The Board took the view that the transformation of the company, by establishing the Atlas and
Roma North natural gas projects, is best measured by the total relative shareholder return generated
over the three-year periods (as compared with its peers).
Given the significant capital investment for FY19 - 20, the development of two significant natural gas
projects in the Surat Basin, the delivery of material gas volumes into the Australian east coast gas market,
and the transformational nature of these investments, the CEO was also offered additional LTI Rights
in 2018, in the form of Strategic Business Milestone (SBM) Rights, as a way of ensuring leadership
continuity through this transformational project development period and securing value for shareholders.
The SBM Rights are ‘at risk’ remuneration subject to the achievement of pre-defined performance
metrics. The value of the SBM Rights as at the grant date equates to 162% of the CEO’s FY19 TFR.
The SBM offer to the CEO was approved by shareholders at the 2018 AGM and are described in detail
in the Notice of Meeting and Explanatory Memorandum for the 2018 AGM.
The agreed performance condition for the SBM Rights is that Senex’s natural gas projects in the Surat
Basin (Atlas and Roma North) are delivered by the construction of key infrastructure, completion of
the initial phase of development drilling and the commencement of commercial gas sales from each
project. At the end of the milestone delivery period (31 December 2020), the board will assess delivery
of the two projects against the pre-established development plans.
Vesting will be based on achievement of the milestone as assessed by the Board and is subject to there
being a positive TSR over the milestone delivery period.
Following the end of the milestone delivery period, SBM Rights that vest are subject to an exercise
restriction of six months ending 30 June 2021.
FY21 LTI
The LTI structure for FY21 will remain essentially the same as it currently is; except that, given the
reduction of companies within the S&P/ASX 300 Energy Index in recent years, the Board will for FY21
assess relative total shareholder return (TSR), over the three-year (LTI) performance period, against two
separate comparator groups (each with a 50% weighting) – the S&P/ASX 300 Index (less S&P/ASX 100
Index) and a predetermined group of up to 15 energy companies. The LTI award, as has been the case
for the last two years, will be subject to a positive TSR gate.
9. Non-Executive Directors
The Board seeks to set aggregate remuneration for Non-Executive Directors at a level that gives the
Company the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is
reasonable, competitive and acceptable to shareholders.
Maximum aggregate amount of annual remuneration
Total Non-Executive Director remuneration must not exceed $1,200,000, being the amount
determined by Senex shareholders at the 2017 AGM. The Directors agree the amount of remuneration
for Non-Executive Directors each year and the manner in which it is divided between Directors.
Each year, the Committee reviews the amount of the maximum aggregate annual remuneration
approved by shareholders and the manner in which it is apportioned amongst Non-Executive
Directors. The Board’s current practice is to apportion a higher fee to the Chairman than to the other
Non-Executive Directors. Each Non-Executive Director receives an additional fee for each Board
committee to which they are appointed, with a higher fee for the chair of each Board committee.
In addition to the fees set out below, the Company made superannuation contributions on behalf of
Non-Executive Directors at the statutory rate of superannuation contribution in FY20. Non-Executive
Directors are not entitled to retirement benefits other than mandatory statutory entitlements.
Non-Executive Directors can claim fees for any activities outside normal duties (eg, site visits) at the
daily rate of $2,500 plus superannuation and a half day rate of $1,250 plus superannuation as part of
their remuneration, provided that it does not exceed the maximum aggregate annual remuneration.
Table 5: Annual fees for Non-Executive Directors*
Board
Audit & Risk Committee
People & Remuneration Committee
Chair
$
220,000
25,000
25,000
Member
$
110,000
12,500
12,500
* Membership of Nomination Committee is not paid and therefore is not applicable to this report
ANNUAL REPORT 2020 Table 6: Non-Executive Director remuneration
DIRECTORS' REPORT 67
Short-term
employment
benefits
Post-employment
Directors' fees
$
Superannuation
$
Total
remuneration
$
220,000
220,000
147,500
147,500
122,500
122,500
147,500
147,500
127,500
132,500
26,603
27,198
791,603
797,198
20,900
20,900
14,013
14,013
11,638
11,638
14,013
14,013
12,113
12,588
2,527
2,584
75,204
75,736
240,900
240,900
161,513
161,513
134,138
134,138
161,513
161,513
139,613
145,088
29,130
29,782
866,807
872,934
Name
Non-Executive Directors
Trevor Bourne
Ralph Craven
Timothy Crommelin
Debra Goodin
John Warburton
Former Non-Executive Director
Vahid Farzad1,2
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Total Non-Executive directors
2020
2019
1. Payment is made to EIG for provision of directors’ service.
2. Refer to Table 1 of this report for dates of service.
68 DIRECTORS' REPORT
10. Detailed remuneration disclosures
The table below for Executive KMP remuneration is prepared in accordance with the Australian Accounting Standards and Corporations Act 2001.
Table 7: Executive KMP remuneration
Short-term employment benefits
Salary
Bonus2
Non monetary
benefits
Post-
employment
benefits
Superannuation
Long-term
benefits
Long Service
Leave
Name
Year
$
$
$
$
$
Current executive KMP
Ian Davies
Suzanne Hockey3
Mark McCabe4
Peter Mills
David Pegg
Former executive KMP
Gary Mallett4
Total executive KMP
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
828,997
829,469
286,997
364,469
278,895
-
588,997
485,312
403,997
364,469
165,677
479,469
2,553,560
2,523,188
238,680
412,718
86,486
94,595
83,114
-
169,458
121,802
118,065
92,862
-
124,350
695,803
846,327
21,931
18,824
4,933
7,096
2,534
-
4,933
9,473
4,933
7,096
17,343
38,901
56,607
81,390
21,003
20,531
21,003
20,531
13,671
-
21,003
19,166
21,003
20,531
9,614
20,531
107,297
101,290
34,331
30,282
1,498
0
0
-
0
0
12,805
8,459
0
0
48,634
38,741
Equity settled
share-based
payments 1
Rights
$
854,916
489,968
208,911
224,428
71,372
-
263,759
123,881
175,052
81,394
0
0
1,574,010
919,671
Proportion of compensation
Total
remuneration
Performance
related
In equity
$
1,999,858
1,801,792
609,828
711,119
449,586
-
1,048,150
759,634
735,855
574,811
192,634
663,251
5,035,911
4,510,607
%
55%
50%
48%
45%
34%
-
41%
32%
40%
30%
0%
19%
45%
39%
%
43%
27%
34%
32%
16%
-
25%
16%
24%
14%
0%
0%
31%
20%
1. Share based payments comprise equity settled share options and performance
2. Bonuses comprise of STI that were awarded as cash in respect of short-term
3. Ms Hockey moved to a 0.8 full-time equivalent (FTE) role from 1 July 2019
rights. These amounts were calculated in accordance with AASB2 – Share Based
Payments. Share options were valued using the Black-Scholes option pricing model
and performance rights are calculated using the Monte-Carlo valuation model.
Although a value is ascribed and included in total KMP compensation, it should be
noted this amount was not received in cash. Share based payment expenses recorded
in previous periods have been reversed for any Executive KMP who have or will have
ceased employment.
performance measures for FY20 and will be received after the end of FY20 (and
FY19 for prior year). For FY20, in respect of the STI awarded to Executive KMP
(other than for the MD/CEO where the maximum equity grant was approved by
shareholders at the 2019 AGM), each Executive has elected to take shares in Senex
in lieu of the cash component of the FY20 STI award.
4. Refer to Table 1 of this report for dates of service.
Note: The benefit of the Directors & Officers insurance policy is not included in the
above table and is disclosed separately in the Directors’ Report.
ANNUAL REPORT 2020
DIRECTORS' REPORT 69
The employment agreement that the Company has entered into with each member of Executive
KMP has no fixed-term of employment. Table 8 sets out the termination provisions applicable to the
Executive KMP.
Shareholding guidelines
Executive KMP are expected to build a holding of shares or vested rights of greater than 50% of their
TFR within a three-year period.
Table 8: Current Executive KMP Service Agreements
Name
Ian Davies
Suzanne Hockey
Mark McCabe
Peter Mills
David Pegg
Duration of service
Notice period and payment in lieu
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
6 months
4 months
4 months
4 months
4 months
6 months
4 months
4 months
4 months
4 months
The terms of all Senex executive employment agreements include an obligation to comply with all
Senex policies including the Securities Trading Policy and the terms and conditions of all incentive plans
under which they may be granted STI or LTI performance related remuneration.
Commencing 19 August 2019, Non-Executive Directors are expected to accumulate and hold a
minimum number of ordinary shares in the Company which is of equal value to the Non-Executive
Director’s annual base director fee applicable from time to time, either:
a) progressively over three years from the date of appointment (for new directors); or
b) within three years from the date of commencement of this requirement (for existing directors).
All Executive KMP and Non-Executive Directors have met, or are on track to meet, their minimum
shareholding requirement within the time period. The Company offers Performance Rights to
Executive KMP as part of their incentive (eg. STI or LTI) remuneration and in previous years has offered
performance rights, share appreciation rights (SARs) and Options, to provide them with additional
incentive to develop Senex and create value for shareholders. Offers of such incentives form part of
Executive KMP remuneration packages.
Table 9: KMP Shareholdings as at 30 June 2020
A summary of the Performance Rights and SARs held by Executive KMP is set in Tables 10 and 11.
Name
Balance at
start of year
Granted as
compensation
Shares issued on
exercised Rights/ SARs
Net other
changes
Balance at the
end of year
Refer to page 52 of the Directors’ Report for further details of the vesting dates and expiry dates. There
has been no change to the terms and conditions of the Performance Rights in FY20.
Non-Executive Directors
Trevor Bourne
Ralph Craven
552,619
500,000
Timothy Crommelin
4,074,431
Debra Goodin
John Warburton
Vahid Farzad1,2
Executive KMP
Ian Davies
Suzanne Hockey
Mark McCabe2
Peter Mills
David Pegg
Gary Mallett2
242,435
512,133
-
6,369,030
277,335
-
-
257,739
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
1,552,619
250,000
300,000
117,011
128,541
-
750,000
4,374,431
359,446
640,674
-
479,729
614,000
7,462,759
-
-
-
433,073
-
-
250,000
-
-
-
277,335
250,000
-
690,812
-
1. Mr Farzad is a nominee of EIG Group which held a relevant interest in shares.
2. Refer to Table 1 of this report for dates of service.
70 DIRECTORS' REPORT
Table 10: Performance Rights
Name
Balance at start
of year
Granted as
compensation
Vested
Forfeited
Exercised
Balance at end
of year
Value of rights
granted
Value of rights
vested
Value of rights
forfeited
Vested
Forfeited
Executive KMP
Ian Davies
Suzanne Hockey
Mark McCabe1
Peter Mills
David Pegg
Gary Mallett1
Total
8,511,076
2,309,783
1,669,049
-
670,503
851,551
893,478
624,118
1,020,116
1,093,591
779,320
-
-
324,494
-
-
433,073
-
12,595,657
5,826,928
757,567
-
-
-
-
-
(893,478)
(893,478)
(479,729)
10,341,130
-
-
-
(433,073)
-
2,293,167
1,020,116
1,764,094
1,197,798
-
441,169
190,092
247,973
310,935
224,635
-
-
86,640
-
-
134,732
-
(912,802)
16,616,305
1,414,804
221,372
-
-
-
-
-
(318,236)
(318,236)
$
$
$
%
-
19%
-
-
51%
-
6%
%
-
-
-
-
-
(100%)
(7%)
1. Refer to Table 1 of this report for dates of service.
Table 11: Share Appreciation Rights
Name
Balance at start
of year
Granted as
compensation
Vested
Forfeited
Exercised
Balance at end
of year
Value of rights
granted
Value of rights
vested
Value of rights
forfeited
Vested
Forfeited
$
$
$
%
%
Executive KMP
Ian Davies
Suzanne Hockey
Total
3,590,400
2,830,696
6,421,096
-
-
-
2,607,362
1,165,644
(983,038)
(439,476)
3,773,006
(1,422,514)
-
-
-
2,607,362
2,391,220
4,998,582
-
-
-
278,206
133,000
411,206
(123,961)
(57,000)
(180,961)
73%
41%
59%
27%
16%
22%
Note: No other Executive KMP except those named above hold SARs.
ANNUAL REPORT 2020 DIRECTORS' REPORT 71
11. Additional information
Remuneration consultants
From time to time the Committee seeks certain information and advice regarding remuneration
information and incentive arrangements for Non-Executive Directors, the CEO and Executives from
external remuneration consultants. During FY20 the Committee engaged EY to provide general market
information only, totalling $20,000. EY did not provide advice that contained recommendations relating
to remuneration, benchmarking or performance outcomes.
Vesting on change of control
The Senex Performance Rights Plan and the Senex SARs Plan provide that in the event of change of
control of the Company all:
• unvested Performance Rights and unvested SARs that are subject only to a service condition will
vest immediately on change of control
• unvested Performance Rights and unvested SARs that are subject to a performance condition will be
tested for satisfaction of the performance condition on two alternative bases, and to the extent that
the performance condition is satisfied under those tests part or all of those unvested Performance
Rights and unvested SARs will vest immediately on change of control
• vested Performance Rights and vested SARs (including those that vest on change of control) will be
deemed to have been exercised at the time the change of control occurs
The Board has an overriding discretion to vest or increase vesting of unvested Performance Rights and
unvested SARs in the event of change of control.
Method of purchasing or issuing shares
Pursuant to the Senex Performance Rights Plan and the Senex SARs Plan the Company will provide the
award shares by transferring or issuing them to the Participant or to an employee share trust on behalf
of the Participant.
Senex has established an employee share trust to allocate and administer the Plans. Historically, the
Company has issued new shares and has not bought shares on market.
Clawback mechanism
In addition to the approach to “at risk” remuneration, each offer of STI or LTI to Executive KMP
(where one is offered) contains a right for the Company to clawback in certain circumstances incentive
remuneration that is provided to the executive.
In the event that:
• any measure of the Company’s performance against an STI or LTI performance condition is
misstated; and
• any incentive remuneration vests incorrectly in reliance on the misstated level of performance,
the Board has a right exercisable at its discretion upon subsequent discovery of the misstatement, to
clawback, out of any unvested and any vested but unexercised entitlements, that the executive holds
at that time or subsequently, the amount or value of any incentive remuneration that vested incorrectly
in reliance of the misstated level of performance.
Signed in accordance with a resolution of Directors.
Trevor Bourne
Chairman
21 August 2020
Ian Davies
Managing Director
72 AUDITORS' INDEPENDENCE DECLARATION
Auditors’ Independence Declaration
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Auditor’s Independence Declaration to the Directors of Senex Energy Limited
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
As lead auditor for the audit of the financial report of Senex Energy Limited for the financial year ended 30 June 2020, I declare to the best of my knowledge and belief, there
have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
Auditor’s Independence Declaration to the Directors of Senex Energy Limited
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Senex Energy Limited and the entities it controlled during the financial year.
As lead auditor for the audit of the financial report of Senex Energy Limited for the financial year ended 30 June 2020, I declare to the best of my knowledge and belief, there
have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
Ernst & Young
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Senex Energy Limited and the entities it controlled during the financial year.
Anthony Jones
Partner
Date: 21 August 2020
Ernst & Young
Anthony Jones
Partner
Date: 21 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
ANNUAL REPORT 2020
FINANCIAL STATEMENTS 73
Financial statements
for the Year Ended 30 June 2020
Contents
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditors’ Report
74
75
77
78
79
116
117
74 FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2020
Revenue
Other income
Expenses excluding net finance costs
Oil and gas exploration expense
Impairment
Finance expenses
(Loss)/profit before tax
Income tax benefit/(expense)
(Loss)/profit after tax
Net (loss)/profit attributable to owners of the parent entity
Other comprehensive income
Items that may be subsequently reclassified to profit or loss (net of tax)
Change in fair value of cash flow hedges
Total comprehensive (loss)/income for the period attributable to owners of parent entity
(Loss)/earnings per share attributable to the ordinary equity holders of the parent entity:
Basic (loss)/earnings (cents per share)
Diluted (loss)/earnings (cents per share)
The Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
30 June 2020
30 June 2019
Note
2 (a)
2 (b)
3 (a)
3 (b)
3 (c)
16
4
4
$'000
121,519
3,019
(110,962)
(2,782)
(52,145)
(10,016)
(51,367)
-
(51,367)
(51,367)
3,657
(47,710)
(3.53)
(3.53)
$'000
95,350
7,161
(86,105)
(11,327)
-
(1,784)
3,295
-
3,295
3,295
4,550
7,845
0.23
0.22
ANNUAL REPORT 2020
Consolidated Statement of Financial Position
AS AT 30 JUNE 2020
ASSETS
Current assets
Cash and cash equivalents
Prepayments
Trade and other receivables
Inventory
Other financial assets
Assets held for sale
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Oil and gas properties
Exploration assets
Intangible assets
Other financial assets
Total non-current assets
TOTAL ASSETS
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
FINANCIAL STATEMENTS 75
30 June 2020
30 June 2019
Note
$'000
$'000
9
5
11
21
5
7
7
7
17
11
79,908
590
19,965
6,725
9,558
116,746
-
116,746
49
249,196
292,512
46,707
4,133
348
592,945
709,691
62,669
1,457
27,385
10,393
3,429
105,333
50,941
156,274
49
57,683
208,530
75,018
5,163
949
347,392
503,666
76 FINANCIAL STATEMENTS
Consolidated Statement of Financial Position
AS AT 30 JUNE 2020
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Other financial liabilities
Lease liabilities
Liabilities directly associated with the assets held for sale
Total current liabilities
Non-current liabilities
Provisions
Interest bearing liabilities
Other financial liabilities
Lease liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Note
30 June 2020
30 June 2019
$'000
709,691
$'000
503,666
6
8
11
10
21
8
9
11
10
12
13
31,444
9,129
872
2,649
44,094
-
44,094
66,290
116,314
1,700
170,883
355,187
399,281
310,410
540,468
28,804
(258,862)
310,410
31,877
6,131
348
-
38,356
4,941
43,297
63,352
40,006
1,215
-
104,573
147,870
355,796
540,468
22,823
(207,495)
355,796
ANNUAL REPORT 2020
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments for exploration expenditure
Payments for rehabilitation of wells
Interest received
Interest paid
Receipts from commodity hedges
Reimbursement of third-party costs
Other receipts
Net cash inflow from operating activities
Cash flows from investing activities
Payment for oil and gas assets, plant and equipment and intangibles
Proceeds from free carry funding
Proceeds from sales of oil and gas properties and plant and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from shares issues
Proceeds from debt funding
Payments for debt facility costs
Payment of principal portion of lease liabilities
Payments to Halliburton under tight oil agreement
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
FINANCIAL STATEMENTS 77
30 June 2020
30 June 2019
Note
$'000
$'000
125,939
(75,613)
(5)
(349)
775
(8,207)
6,579
-
2,426
51,545
(160,794)
4,794
50,154
(105,846)
-
75,000
(343)
(2,984)
(164)
71,509
17,208
31
62,669
79,908
110,104
(60,061)
(9,348)
(295)
1,281
(1,495)
100
2,576
1,659
44,521
(112,367)
21,006
431
(90,930)
255
50,000
(7,769)
-
(239)
42,247
(4,162)
290
66,541
62,669
19
9
78 FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2020
The following table presents the Consolidated Statement of Changes in Equity for the year ended 30 June 2020:
Balance at 1 July 2019
Loss for the year
Other comprehensive income
Total comprehensive loss
Transactions with owners, recorded directly in equity:
Share-based payments expense
Balance at 30 June 2020
Contributed
equity
$'000
540,468
-
-
-
-
540,468
Accumulated
losses
Share-based
payments reserve
$'000
(207,495)
(51,367)
-
(51,367)
-
(258,862)
$'000
19,415
-
-
-
2,324
21,739
The following table presents the Consolidated Statement of Changes in Equity for the year ended 30 June 2019:
Balance at 1 July 2018
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners, recorded directly in equity:
Shares issued
Share-based payments expense
Balance at 30 June 2019
Accumulated
losses
Share-based
payments reserve
Contributed
equity
$'000
540,213
-
-
-
255
-
$'000
(210,790)
3,295
-
3,295
-
-
540,468
(207,495)
$'000
17,992
-
-
-
-
1,423
19,415
Hedging
reserve
$'000
3,408
-
3,657
3,657
-
7,065
Hedging
reserve
$'000
(1,142)
-
4,550
4,550
-
-
3,408
Total
$'000
355,796
(51,367)
3,657
(47,710)
2,324
310,410
Total
$'000
346,273
3,295
4,550
7,845
255
1,423
355,796
ANNUAL REPORT 2020
FINANCIAL STATEMENTS 79
About these financial statements
Basis of consolidation
The financial statements of Senex Energy Limited (the Company) and its controlled entities (collectively
known as “the Group”) for the year ended 30 June 2020 were authorised for issue on 21 August 2020
in accordance with a resolution of the Directors.
The Company is:
• a company limited by shares
• incorporated and domiciled in Australia
• publicly traded on the Australian Securities Exchange (ASX code: SXY)
• a for-profit entity for the purpose of preparing the financial statements
The principal activities of entities within the Group during the year was oil and gas exploration,
development and production.
The financial report is a general purpose financial report, which:
• has been prepared in accordance, and complies, with the requirements of the Corporations Act
2001, Australian Accounting Standards, other authoritative pronouncements of the Australian
Accounting Standards Board (AASB) and International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB)
• has been prepared on a historical cost basis, except for derivative financial instruments and
contingent consideration that have been measured at fair value
• is presented in Australian dollars ($) and all values are rounded to the nearest thousand ($’000)
except when otherwise indicated. The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors' Reports) Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to the ‘rounding off’ of amounts in the financial statements
• presents reclassified comparative information if required for consistency with the current
year’s presentation
• adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are
relevant to the Group and effective for reporting periods beginning on or before 1 July 2019. Refer
to Note 29 for further details
• does not early adopt Accounting Standards and Interpretations that have been issued or amended
but are not yet effective
The consolidated financial statements comprise the financial statements of the Group.
The controlled entities are all those entities over which the Group has power, exposure or rights to
variable returns from its involvement with the entity, and the ability to use its power over the entity to
affect its returns.
In preparing the consolidated financial statements, all intercompany balances and transactions, income
and expenses and profit and losses resulting from intra-group transactions have been eliminated in full.
The controlled entities are fully consolidated from the date on which control is obtained by the Group
and cease to be consolidated from the date on which control is transferred out of the Group.
A change in the ownership interest of a subsidiary that does not result in a loss of control is accounted
for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related
assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any
resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
Foreign currency translation
The functional and presentation currency of Senex Energy Limited and its controlled entities is
Australian dollars (AUD).
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are translated at the rate of exchange at the reporting date and any resulting gain or loss is
taken to profit or loss.
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
80 FINANCIAL STATEMENTS
Other accounting policies
NOTE 1: OPERATING SEGMENTS
Significant and other accounting policies that summarise the measurement basis used and are
relevant to an understanding of the financial statements are provided throughout the notes to the
financial statements.
The notes include information which is required to understand the financial statements and is material
and relevant to the operations, financial position and performance of the Group. Information is
considered material and relevant if, for example:
• the amount in question is significant because of its size or nature
• it is important for understanding the results of the Group
• it would influence the economic decisions that users make
• it helps to explain the impact of significant changes in the Group’s business – for example,
acquisitions, disposals and impairment write-downs
• it relates to an aspect of the Group’s operations that is important to its future performance
Significant accounting estimates and judgements
In the process of applying the Group’s accounting policies, management has made a number of judgements
and applied estimates of future events. Judgements and estimates which have been considered material to
the financial statements are found in the following notes:
Note
Type of judgement or estimate
7
8
Impairment of oil and gas properties, exploration assets and inventory
Rehabilitation obligations
Reserves estimates
Reserves are estimates of the amount of product that can be economically and legally extracted from
the Group’s properties. Estimates of recoverable quantities of proven and probable reserves include
assumptions regarding commodity prices, foreign exchange rates, discount rates, production and
transportation costs for future cash flows. It also requires interpretation of complex geological and
geophysical models in order to make an assessment of the size, shape, depth and quality of reservoirs and
their anticipated recoveries.
Changes in the estimate of reserves can impact:
• asset carrying values due to changes in estimated future production levels
• provision for rehabilitation due to the potential to impact the timing and cost of rehabilitation
• recognition of deferred tax assets due to changes in the likely recovery of tax benefits
• charge for depreciation and amortisation particularly where the charge is determined on a units of
production basis
An operating segment is a component of an entity that engages in business activities from which it
may earn revenues and incur expenses (including revenues and expenses relating to transactions with
other components of the same entity), whose operating results are regularly reviewed by the entity's
chief operating decision makers to make decisions about resources to be allocated to the segment; and
assess its performance; and for which discrete financial information is available.
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and
used by the executive leadership team in assessing performance and in determining the allocation
of resources.
The operating and reportable segments are based on the geographical location of the resources which
correspond to the Group’s strategy, are the sources of the Group’s major risks and have the most effect
on the rates of return.
Geographical segments
Surat Basin
The Surat Basin is a geological basin in Queensland and extending into New South Wales.
Cooper-Eromanga Basins
The Cooper-Eromanga Basins are sedimentary geological basins located mainly in the north east part of
South Australia and extending into South West Queensland.
Major customers
The Group sells gas and gas liquids to a range of customers including GLNG, ENGIE, Santos, CleanCo,
CSR, Orora and Origin Energy.
Oil revenue is predominantly derived from the sale of crude oil to two major customers: the South
Australian Cooper Basin Joint Venture (SACB JV) and IOR Petroleum. The SACB JV is a consortium of
buyers made up of Santos Limited and, Beach Energy Limited and their subsidiaries.
All customers are located within Australia.
Accounting policies
The accounting policies used by the Group in reporting segments internally are the same as those used
to prepare the financial statements.
Certain revenues, expenses, assets and liabilities are not allocated to operating segments as they are
not considered part of the core operations of any segment.
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
FINANCIAL STATEMENTS 81
NOTE 1: OPERATING SEGMENTS (Continued)
The following table presents the revenue and profit information for reportable segments for the year ended 30 June 2020 and 30 June 2019:
Revenue
Oil sales1
Gas sales
Total segment revenue from contracts with customers
Flowline revenue
Total segment revenue and revenue per the statement of comprehensive income
Surat Basin
Cooper-Eromanga Basins
Total
Consolidated
2020
$'000
-
54,147
54,147
-
54,147
2019
$'000
-
12,968
12,968
-
12,968
2020
$'000
59,126
6,996
66,122
1,250
67,372
2019
$'000
76,567
4,559
81,126
1,256
82,382
2020
$'000
59,126
61,143
120,269
1,250
121,519
2019
$'000
76,567
17,527
94,094
1,256
95,350
Segment profit/(loss)2
999
(1,465)
(36,662)
24,251
(35,663)
22,786
Reconciliation of segment profit/(loss) before tax to total (loss)/profit before tax
Corporate items:
Interest income
Other income
Interest expense
Expenses excluding net finance costs
(Loss)/profit before tax per the statement of comprehensive income
1 Inclusive of $7.4 million hedge settlements, net of premium expense (2019: $0.2 million hedge settlement net of premium) and fair value gains/(losses) on provisionally priced trade receivables.
2 Cooper-Eromanga Basin result is stated after $52.1 million impairment expense (2019: $nil).
558
2,041
-
(18,303)
(51,367)
927
(5)
(124)
(20,289)
3,295
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
82 FINANCIAL STATEMENTS
NOTE 1: OPERATING SEGMENTS (Continued)
The following table presents segment assets and segment liabilities at 30 June 2020 and 30 June 2019:
Segment assets
Segment operating assets
Assets held for sale
Corporate assets - cash
Corporate assets - other
Total assets per the statement of financial position
Segment liabilities
Segment operating liabilities
Liabilities directly associated with the assets held for sale
Corporate liabilities
Total liabilities per the statement of financial position
Consolidated
Surat Basin
Cooper-Eromanga Basins
Total
2020
$'000
2019
$'000
2020
$'000
2019
$'000
2020
$'000
2019
$'000
440,747
158,150
166,270
213,407
607,017
371,557
-
79,908
22,766
709,691
313,497
69,535
56,080
55,480
369,577
50,941
62,669
18,499
503,666
125,015
4,941
17,914
147,870
10,944
34,551
90,746
136,241
7,510
143,751
-
29,704
399,281
173,024
15,216
136,276
324,516
13,152
337,668
Additions and acquisitions of non-current assets (other than financial assets and deferred tax assets):
Property, plant and equipment and intangibles1
Exploration assets
Oil and gas properties
Total segment additions
Corporate additions1
Total additions
169,973
1,471
135,457
306,901
3,872
13,899
82,076
99,847
3,051
13,745
819
17,615
7,072
20,652
8,670
36,394
1 Inclusive of right of use asset additions of $160.9 million in the Surat Basin, $1.3 million in the Cooper-Eromanga Basin and $11.2 million in Corporate.
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
FINANCIAL STATEMENTS 83
PERFORMANCE
NOTE 2: REVENUE
Recognition, measurement and performance obligations
Revenue
Revenue is recognised when the Group transfers control of goods to a customer at the amount to
which the Group expects to be entitled. Where the sale price includes a variable component, the
Group estimates the price it will be entitled to for fixed and variable services at the time the revenue is
recognised. The following specific recognition criteria must also be met before revenue is recognised:
Revenue from contracts with customers
Revenue from the sale of produced hydrocarbons is recognised at a point in time when control of the
asset is transferred to the customer, which is typically on delivery of the goods as specified below.
Gas and gas liquids sales
The performance obligation for the sale of gas and gas liquids is satisfied when physical possession of
the gas or gas liquid is taken at the contractually agreed point of delivery. Payment is generally received
30 days from delivery and is recognised directly in ‘Trade receivables (not subject to provisional pricing)’.
Oil sales
The performance obligation for sales to the SACB JV is satisfied when physical possession of the
oil is taken by the customer. Payment is generally received within 80 to 100 days. Oil revenue is
provisionally priced until approximately 60 to 80 days after delivery and is recognised as ‘Trade
receivables (subject to provisional pricing)’ during this period. When pricing is finalised, oil sales are
transferred to ‘Trade receivables (not subject to provisional pricing)’.
The performance obligation for sales to IOR Petroleum is satisfied when physical possession of the
oil is taken. Payment is generally received 30 days from delivery and is recognised directly in ‘Trade
receivables (not subject to provisional pricing)’.
Flowline revenue
Flowline revenue represents third-party charges for usage of flowlines for transport of oil from Lycium
to Moomba. Revenue is recognised in the period in which the third party has used the flowline.
Interest income
Revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset.
Farm-outs and terminations outside the exploration and evaluation phase
When a farm-out is completed outside the exploration and evaluation phase, the Group derecognises
the proportion of the asset disposed of and recognises the consideration received or receivable from
the farmee. A gain or loss on the transaction is recognised for the difference between the net disposal
proceeds and the carrying amount of the asset disposed of.
The proceeds receivable from disposal of an item of property, plant and equipment or an intangible
asset is recognised initially at its fair value. If payment for the item is deferred, the proceeds are
recognised initially at the cash price equivalent. The difference between the nominal proceeds and the
cash price equivalent is recognised as interest revenue.
Consolidated
(a) Revenue from contracts with customers
Oil sales1
Gas and gas liquids sales
Other revenue
Flowline revenue
(b) Other income
Net gain on sale of assets
Net gain on termination of unconventional gas joint venture
Interest income
Other
2020
$'000
59,126
61,143
120,269
1,250
121,519
312
-
558
2,149
3,019
2019
$'000
76,567
17,527
94,094
1,256
95,350
54
5,400
927
780
7,161
1 Inclusive $7.4 million hedge settlements, net of premium expense (2019: $0.2 million hedge settlement net of premium) and
fair value gains/(losses) on provisionally priced trade receivables.
Disaggregated revenue information
Disaggregated revenue information by segment can be found in Note 1. All revenue from customer
contracts is derived in Australia and relates to goods transferred at a point in time.
Contract balances
Contract balances, including trade receivables (not subject to provision pricing), are disclosed in Note 5.
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
84 FINANCIAL STATEMENTS
NOTE 3: EXPENSES
(a) Expenses excluding net finance costs
Operating costs
Other operating costs
Pipeline and processing tariffs
Royalties
Depreciation and amortisation
Oil and gas properties
Other property, plant and equipment and intangibles
Third party product purchases
Flowline operating costs
Other expenses
Employee expenses not included in operating costs
Restructuring expense
Foreign exchange gain
Operating lease expense
Other
Total expenses excluding net finance costs1
Consolidated
2020
$'000
2019
$'000
Note
29,891
23,699
Impairment charge
(b)
Impairment
(c) Finance expenses
Rehabilitation accretion
Debt facility accretion
Lease and bank interest
(d) Employee costs2
Wages, salaries and bonuses
Share based payments
Employee administration expenses
Restructuring expense
13,981
8,995
24,593
14,633
4,921
1,173
4,539
2,638
(31)
-
5,629
110,962
10,213
7,549
16,320
10,457
-
830
6,056
2,109
(290)
1,759
7,403
86,105
Note
7
8
Consolidated
2020
$'000
2019
$'000
52,145
52,145
960
461
8,595
10,016
-
-
1,429
124
231
1,784
36,093
36,359
2,324
2,811
2,638
1,423
4,200
2,013
43,866
43,995
1 Includes $0.8 million reduction in expenses from State and Federal government measures to assist businesses during the
COVID-19 pandemic such as Jobkeeper payment and payroll tax rebates.
2 Includes all employee-related costs, including those costs that form part of cost of sales and costs capitalised as part of an
exploration or development project, as well as costs that may be recovered from other joint venture parties.
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
NOTE 3: EXPENSES (Continued)
Recognition and measurement
Employee benefits expense
The Group’s accounting policy for liabilities associated with employee benefits is set out in Note 18.
The policy relating to share-based payments is set out in Note 15.
All employees are party to a defined contribution scheme and receive fixed contributions from
Group companies. Payments to defined contribution schemes are recognised as an expense as they
become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a
reduction in future payments is available.
Finance costs
Finance costs are recognised as an expense when they are incurred. Provisions and other payables are
discounted to their present value when the effect of the time value of money is significant.
Capitalisation of borrowing costs
Borrowing costs relating to assets currently under development, which have been capitalised in ‘oil and
gas properties’ during the period, amounted to $4.3 million (30 June 2019: $2.1 million) at an interest
rate of the Bank Bill Swap Bid Rate (BBSY) plus margin.
FINANCIAL STATEMENTS 85
Consolidated
2020
(51,367)
2019
3,295
1,455,877
1,455,877
1,451,658
1,479,360
(3.53)
(3.53)
0.23
0.22
NOTE 4: EARNINGS PER SHARE
Net (loss)/profit attributable to the owners
of the parent entity ($’000)
Weighted average number of shares (thousands)
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
(Loss)/earnings per share (cents)
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
Recognition and measurement
The number of ordinary shares used in the calculation of basic (loss)/earnings per share is the weighted
average number of ordinary shares of Senex Energy Limited outstanding during the period.
There are no dilutive shares at 30 June 2020. For the purposes of calculating diluted earnings per
share at 30 June 2019, 27.6 million dilutive shares were taken into account. The Group’s only potential
dilutive ordinary shares are share awards granted under the employee share ownership plans for which
terms and conditions are described in Note 15.
At 30 June 2020, there are no instruments which are considered antidilutive (2019: nil).
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
86 FINANCIAL STATEMENTS
WORKING CAPITAL
NOTE 5: TRADE AND OTHER RECEIVABLES
Trade receivables (not subject to provisional pricing)
Trade receivables (subject to provisional pricing)
Deferred consideration owed by Beach Energy
Sundry receivables non-interest bearing and unsecured
Current trade and other receivables
Sundry receivables non-interest bearing and unsecured
Non-current trade and other receivables
Consolidated
2020
$'000
2,190
17,775
-
-
19,965
49
49
2019
$'000
902
20,712
4,794
977
27,385
49
49
Recognition and measurement
With the exception of trade receivables (subject to provisional pricing), trade and other receivables are
classified as financial assets held at amortised cost on the basis that they are held with the objective of
collecting contractual cash flows and the cash flows relate to payments of principal and interest on the
principal amount outstanding.
Trade receivables (subject to provisional pricing)
Trade receivables (subject to provisional pricing) are exposed to future commodity price and foreign
exchange movements and are therefore measured at fair value through profit or loss. Subsequent
changes in fair value are recognised in profit or loss until final settlement or the pricing is no longer
variable when they are transferred to trade receivables (not subject to provisional pricing).
Trade receivables (not subject to provisional pricing)
Trade receivables (not subject to provisional pricing) generally have terms of 30 days. They are
recognised at fair value. Customers who wish to trade on credit terms are subject to credit verification
procedures. Receivables are monitored on an ongoing basis and the Group’s exposure to bad debts is
not significant.
Impairment of trade receivables
The Group considers an allowance for expected credit losses (ECLs) for debt instruments held at cost.
The Group applies a simplified approach in calculating ECLs. The Group bases its ECL assessment
on its historical credit loss experience, adjusted for factors specific to the debtors and the economic
environment including, but not limited to, financial difficulties of the debtor, probability that the debtor
will enter bankruptcy or financial reorganisation and delinquency in payments.
In 2020 and 2019 all of the Group’s trade receivables and other current receivables which the Group
measures at amortised cost are short term (ie expected settlement within 12 months) and the Group
has credit assessment and risk management policies in place. The expected credit losses on trade
receivables was not considered material (<0.5 per cent).
Other debtors
These amounts generally arise from transactions outside the usual operating activities of the Group.
They do not contain impaired assets and are not past due. Based on the credit history and future
economic forecasts, it is expected that they will be received when due.
The consideration for the termination of the Senex-Beach Energy joint venture unconventional gas
project agreement was transferred as a free-carry commitment whereby the Group’s share of cash
calls was paid by Beach Energy for a program of work in the Senex-operated Cooper Basin western
flank areas.
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
FINANCIAL STATEMENTS 87
NOTE 6: TRADE AND OTHER PAYABLES
Current trade and other payables
Other creditors and accruals - unsecured
Unexpended government grant
Payables to joint operations creditors
20
Note
Consolidated
2020
$'000
26,255
-
5,189
31,444
2019
$'000
23,667
1,400
6,810
31,877
Recognition and measurement
Trade payables and other payables are carried at amortised cost. Due to their short-term nature, these
are not discounted. These represent liabilities for goods and services provided to the Group prior to
the end of the financial year that are unpaid. The amounts are unsecured and are usually paid within 30
days of recognition.
Government grants are recognised where there is reasonable assurance that the grant will be received,
and all attached conditions will be complied with. When the grant relates to an asset, which was the
case for grants at 30 June 2019, it is offset against the asset being constructed.
Pictured: Senex and Jemena, the major
energy infrastructure operator, have
formed a successful partnership at Atlas
and Roma North.
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
88 FINANCIAL STATEMENTS
RESOURCE ASSETS
NOTE 7: OIL & GAS ASSETS AND PROPERTY, PLANT & EQUIPMENT
Opening 30 June 2019
Cost
Accumulated depreciation, amortisation and impairment
Net book value
Additions
Disposals
Transfers
Written off to the profit and loss
Impairment charge
Depreciation and amortisation charge
Closing net book value
At 30 June 2020
Cost
Accumulated depreciation, amortisation and impairment
Net book value
Property, plant and equipment
Consolidated at 30 June 2020
Property, plant and
equipment
$'000
97,263
(42,920)
54,343
1,326
-
11,906
-
(2,902)
(8,469)
56,204
110,495
(54,291)
56,204
Assets under
construction
$'000
Right of use assets
Oil and gas properties
Exploration assets
$'000
$'000
$'000
3,340
-
3,340
11,358
-
11,098
-
(831)
-
24,965
25,796
(831)
24,965
-
-
-
173,492
(195)
-
-
-
(5,270)
168,027
172,563
(4,536)
168,027
373,437
(164,907)
208,530
136,276
-
3,707
-
(31,408)
(24,593)
292,512
513,420
(220,908)
292,512
318,522
(243,504)
75,018
15,216
-
(27,100)
(3,386)
(13,041)
-
46,707
288,296
(241,589)
46,707
Total
$'000
792,562
(451,331)
341,231
337,668
(195)
(389)
(3,386)
(48,182)
(38,332)
588,415
1,110,570
(522,155)
588,415
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
FINANCIAL STATEMENTS 89
NOTE 7: OIL & GAS ASSETS AND PROPERTY, PLANT & EQUIPMENT (Continued)
Property, plant and equipment
Consolidated at 30 June 2019
Opening 30 June 2018
Cost
Accumulated depreciation, amortisation and impairment
Net book value
Additions
Disposals
Transfers
Transfers to assets held for sale
Written off to the profit and loss
Depreciation and amortisation charge
Closing net book value
At 30 June 2019
Cost
Accumulated depreciation, amortisation and impairment
Net book value
Property, plant and
equipment
$'000
116,356
(35,834)
80,522
5,653
(19)
(17,910)
(4,712)
-
(9,191)
54,343
97,263
(42,920)
54,343
Assets under
construction
$'000
7,672
-
7,672
12,799
-
(16,832)
-
(299)
-
3,340
3,340
-
3,340
Right of use assets
Oil and gas properties
Exploration assets
$'000
$'000
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
280,888
(148,586)
132,302
90,746
-
48,153
(46,229)
(122)
(16,320)
208,530
373,437
(164,907)
208,530
314,545
(243,441)
71,104
34,553
(704)
(18,741)
-
(11,194)
-
75,018
318,522
(243,504)
75,018
Total
$'000
719,461
(427,861)
291,600
143,751
(723)
(5,330)
(50,941)
(11,615)
(25,511)
341,231
792,562
(451,331)
341,231
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
90 FINANCIAL STATEMENTS
NOTE 7: OIL & GAS ASSETS AND PROPERTY, PLANT & EQUIPMENT (Continued)
Recognition and measurement
Property, plant and equipment
Property, plant and equipment (PP&E) is stated at historical cost less accumulated depreciation and
any accumulated impairment losses. Repairs and maintenance costs are recognised in profit or loss
as incurred.
An item of PP&E is derecognised upon disposal or when no further future economic benefits are
expected from its use or sale. Any gain or loss arising on derecognition of the asset, being the
difference between the disposal proceeds and the carrying amount of the asset, is included in profit or
loss in the year the asset is derecognised.
Oil and gas properties
Oil and gas properties are carried at cost less accumulated amortisation and impairment. It includes
capitalised project expenditure, development expenditure and costs associated with lease and well
equipment on properties that have moved to production. Costs are accumulated on a field by field
basis and represent the cost of developing commercial reserves for production.
Capitalised costs include costs associated with a legal right to explore, cost of technical services and
studies, seismic acquisition, directly attributable overheads, materials used for exploration activities
and exploration drilling and testing. When proved reserves are determined, key government approvals
are obtained and development is sanctioned by management the relevant exploration expenditure is
transferred to oil and gas properties and associated physical assets are transferred to property, plant
and equipment.
In the event of a farmout of exploration assets, any cash consideration received directly from the
farmee is credited against costs previously capitalised with any excess accounted for as a gain
on disposal.
Depreciation and amortisation
Depreciation is calculated on a straight-line basis or a units of production basis over the estimated
useful life of the specific assets. Property, plant and equipment that are depreciated on a straight-line
basis use the following lives:
• office equipment, furniture and fittings
• motor vehicles
• field-based facilities, plant and equipment
2 to 7 years
5 to 8 years
5 to 30 years
Exploration assets
Exploration expenditure is expensed as incurred unless the following criteria is met and costs are
capitalised:
The Group uses the units of production method to amortise its oil and gas properties. The calculation is
based on Proved and Probable (2P) reserves as confirmed by the Group’s annual reserves certification,
with any change in reserves applied prospectively from the date of reserve change.
• right to tenure of the area of interest is current; and
• at least one of the following conditions is also met:
- the carrying value is expected to be recouped through the successful development and
exploitation of an area of interest; or alternatively, by its sale; and
- exploitation and evaluation activities in the area of interest have not reached a stage which
permits a reasonable assessment of the existence or otherwise of economically recoverable
reserves, and active and significant operations in, or in relation to, the area of interest are
continuing.
Right of use assets are depreciated on a straight-line basis, except for upstream gas facility leases which
are depreciated based on their usage profile.
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each reporting date.
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 FINANCIAL STATEMENTS 91
NOTE 7: OIL & GAS ASSETS AND PROPERTY, PLANT & EQUIPMENT (Continued)
Impairment
Recognition and measurement
The carrying amounts of the Group’s PP&E, oil and gas properties and exploration assets are reviewed
at each reporting date to determine whether there is any indication of impairment. Where an indicator
of impairment exists, a formal estimate of the recoverable amount is made to compare to the carrying
value and determine if any impairment exists.
Previously impaired assets are reviewed for possible reversal of impairment at each reporting date.
Impairment reversal will not exceed the carrying amount that would have been determined (net of
depreciation and amortisation) had no impairment been recognised for the asset or cash generating
units (CGUs). There were no reversals of impairment in the current or prior year.
How the Group calculates recoverable amount
The recoverable amount is the higher of an asset’s fair value less cost of disposal (FVLCD) and its value
in use (VIU).
Oil and gas properties and PP&E are assessed for impairment on a CGU basis. A CGU is the smallest
grouping of assets that generates independent cash inflows, and generally represents oil and gas fields
that share management and operating personnel and are operated as a single asset. Impairment losses
recognised in respect of CGUs are allocated to reduce the carrying amount of the assets in the CGU on
a pro-rata basis.
Individual assets within a CGU may become impaired if their ongoing use changes or if the benefits to
be obtained from ongoing use are less than the carrying value of the individual asset. An impairment
loss is recognised in the income statement whenever the carrying amount of an asset or its CGU
exceeds its recoverable amount.
Valuation methods
FVLCD is estimated from future cash flows to deliver the highest and best use of the asset or CGU
based on a market participant view, including the anticipated capital expenditure to achieve this. Cash
flows are discounted to their present value using a post-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
VIU is determined as the present value of the estimated future cash flows expected to arise from the
continued use of the asset in its present form and its eventual disposal. VIU is determined by applying
assumptions specific to the Group’s continued use and does not consider future development.
Key judgements and estimates
For oil and gas properties, the expected future cash flows are based on a number of factors, variables and
assumptions. In most cases, the present value of future cash flows is most sensitive to estimates of future
commodity price, foreign exchange and discount rates. The future cash flows for the FVLCD calculation
are based on estimates, the most significant of which are hydrocarbon reserves, future production profiles,
commodity prices, operating costs, future development costs necessary to produce the reserves and value
attributable to additional resource and exploration opportunities beyond reserves based on production
plans. The FVLCD calculation is categorised within level 3 of the fair value hierarchy.
Future commodity prices are based on the Group’s best estimate of future market prices with reference to
external market analysts’ forecasts, current spot prices and forward curves. The Group’s oil and gas price
forecasts include the expected impact of climate change and potential policy responses as one of the many
factors that can affect long term scenarios. The Group’s independent research into forecast oil and gas
consumption suggests that the global demand for the Group’s products will continue over the life of the
respective fields. Future commodity prices are reviewed at least annually. Where volumes are contracted,
future prices are based on the contracted price.
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
92 FINANCIAL STATEMENTS
NOTE 7: OIL & GAS ASSETS AND PROPERTY, PLANT & EQUIPMENT (Continued)
Forecasts of foreign currency exchange rates are estimated with reference to observable external market
data and forward values, including analysis of broker and consensus estimates.
Future prices (real) used in the 2020 impairment assessment are set out below. Real prices are escalated at
between 1.0 per cent to 2.0 per cent per annum:
Exploration assets
At 30 June 2020, the Group performed a review of indicators of impairment for exploration assets
which gave rise to an impairment charge of $13.0 million against the Cooper-Eromanga Basin CGU
(30 June 2019: $nil). The value to which the exploration assets were written down reflects the Group’s
view as to what is economically recoverable based on consideration of internal and external factors,
including expected Brent oil price and third party offers.
Brent oil – USD
FX rate
Brent oil – AUD
FY21
47
0.69
68
FY22
51
0.69
74
FY23
55
0.69
80
FY24
59
0.70
84
Long term
63
0.70
90
Inventory
The Group has performed a review of its inventory balances at 30 June 2020. Based on impairments
identified to oil and gas properties and exploration assets the Group has impaired $4.0 million (30 June
2019: $nil) of inventory items that are not expected to be required for future activity.
The discount rates applied to the future forecast cash flows are based on the weighted average cost of
capital, adjusted for risks where appropriate. The post-tax discount rate applied is 10.5 per cent.
In assessing FVLCD recent market transactions are considered as counterfactual indicators of value.
Due to adverse changes in applied assumptions during the year ended 30 June 2020, significantly as a
result of volatility and uncertainty from COVID-19, the Group has recorded an impairment of $35.1m
relating to oil and gas property and PP&E within the Cooper-Eromanga Basin CGU. Prior year comparatives
are not applicable as no indicators of impairment were identified in 2019.
In the event that future circumstances vary from these assumptions, the recoverable amount of the Group’s
Cooper-Eromanga Basin CGU could change materially and result in further impairment losses or the
reversal of previous impairment losses.
With regards to the other CGUs within the Group, the Group has determined no reasonable possible
change in assumptions results in any impairment at 30 June 2020.
Impairment expense
A reconciliation of impairment expense recorded against the Cooper-Eromanga Basin CGU for the
current financial year is presented below:
Oil and gas properties
Property, plant and equipment
Exploration assets
Inventory
Consolidated
2020
$'000
31,408
3,733
13,041
3,963
52,145
2019
$'000
-
-
-
-
-
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 FINANCIAL STATEMENTS 93
NOTE 8: PROVISIONS
Consolidated
Current
Rehabilitation
Other provisions
Non-current
Rehabilitation
Other provisions
Rehabilitation
Balance at the beginning of the year
Additional provision recognised during the year
Changes in cost estimate and discount rate adjustment
Transfer to assets held for sale
Completion of rehabilitation activity
Interest unwind of liability
Balance at the end of the year
Note
18
18
21
2020
$'000
1,729
7,400
9,129
64,999
1,291
66,290
64,563
10,289
(8,871)
-
(213)
960
66,728
2019
$'000
1,974
4,157
6,131
62,589
763
63,352
51,216
8,986
8,157
(4,941)
(284)
1,429
64,563
Recognition and measurement – rehabilitation provisions
The Group records the estimated cost of legal and constructive obligations to restore operating
locations to the state required by applicable legislation or operating licenses in the period that the
obligation arises. The nature of rehabilitation activities includes the removal of facilities, abandonment
of wells and restoration of affected areas and typically arises when the asset is installed at the
production location.
Using a discounted cash flow methodology, provisions are measured at the present value of
management’s best estimate of the expenditure required to complete rehabilitation activities. The
increase in the provision due to the passage of time is recognised in finance costs.
On initial recognition, the present value of the estimated rehabilitation cost is capitalised to oil and gas
properties or PP&E and depreciated over the useful life of the associated assets (between three and
30 years).
Changes in estimates to rehabilitation costs for sites which do not have a future economic benefit
are expensed.
The estimated costs of rehabilitation are reviewed every six months and adjusted as appropriate for
changes in legislation, technology or other circumstances.
Key judgements and estimates
The Group estimates the future removal costs of oil and gas wells and production facilities at the time
of installation of the assets. In most instances, removal of assets occurs many years into the future. This
requires assumptions to be made on removal data, current and future environmental legislation, the extent
of reclamation activities required, the engineering methodology for estimating future cost, future removal
technologies in determining the removal cost and inflation rates. The rehabilitation obligation is discounted
to present value using a ten-year government bond discount rate which is considered reflective of the
risk-free rate.
These estimates require significant management judgement and are subject to risk and uncertainty that
may be beyond the control of the Group. There is a possibility that changes in circumstances will materially
alter projections, which may impact the recoverable amount of assets and the value of rehabilitation
obligations at each reporting date.
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
94 FINANCIAL STATEMENTS
FINANCIAL MANAGEMENT
NOTE 9: NET CASH
The Group’s purpose is to create long-term shareholder value through the discovery, acquisition,
development and sale of oil and gas. The Group will invest capital in assets where they fit its strategy.
The Group primarily monitors capital using the net (debt)/cash balance.
Current interest-bearing liabilities
Bank loan
Interest bearing loans and borrowings
Non-current interest-bearing liabilities
Bank loan
Debt facility transaction costs
Total interest-bearing liabilities
Less: cash and cash equivalent
Cash at bank and in hand
Total cash and cash equivalents
Net (debt)/cash excluding transaction costs
Consolidated
2020
$'000
2019
$'000
-
-
-
(125,000)
8,686
(116,314)
79,908
79,908
(45,092)
-
-
-
(50,000)
9,994
(40,006)
62,669
62,669
12,669
NOTE 10: LEASES
The Group acts as a lessee and has lease contracts for the Roma North and Atlas gas processing
facilities, office space, motor vehicles and other equipment used in its operations. Lease terms consist of:
• plant and equipment, including gas processing facilities
• motor vehicles and other equipment
• office leases
2 to 25 years
2 to 5 years
2 to 7 years
The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally,
the Group is restricted from assigning and subleasing the leased assets.
Set out below are the carrying amounts of right-of-use assets and the movements during the period:
Consolidated at 30 June 2020
Gas processing
facilities
$'000
Office
leases
$'000
Motor
vehicles
$'000
Other
equipment
$'000
Initial recognition at 1 July 2019
-
10,945
930
1,283
Total
$'000
13,158
Additions
Disposal
Depreciation charge
At 30 June 2020
160,059
-
(1,785)
158,274
275
(78)
(1,925)
9,217
-
-
(440)
490
-
160,334
(117)
(1,120)
(195)
(5,270)
46
168,027
Set out below are the carrying amounts of lease liabilities and the movements during the period:
Consolidated
Recognition and measurement
Interest-bearing liabilities are classified, at initial recognition, as loans and borrowings and are
recognised at fair value.
At 1 July 2019 (initial recognition)
After initial recognition, interest-bearing loans are subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or
premium on acquisition and debt facility transaction costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the profit and loss. Interest-bearing loans are derecognised
when the associated obligation is discharged, cancelled or expires.
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Cash and cash equivalent balances advanced to joint operations are not available for use by the Group
for settlement of corporate liabilities.
Addition
Interest expense
Lease surrender
Payments
At 30 June 2020
Current
Non-current
At 30 June 2020
2020
$'000
13,158
160,334
7,089
(232)
(6,817)
173,532
2,649
170,883
173,532
2019
$'000
-
-
-
-
-
-
-
-
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
FINANCIAL STATEMENTS 95
NOTE 10: LEASES (Continued)
Variable lease payments
The Group holds lease contracts (primarily for drilling rigs) which contain variable payments based
on the use of the leased asset. The activity is entirely at the Group’s discretion to meet operational
requirements. The lease liability and corresponding right-of-use asset for these contracts is calculated
based on the fixed rental payment components. Variable payments made under these contracts were
$12.9 million, $11.7 million of which has been recognised in oil and gas properties.
Opening balance reconciliation
The lease liability at 1 July 2019 can be reconciled to the operating lease commitments in Note 24 of
Senex Energy Limited’s 30 June 2019 Annual Report as follows:
Operating lease commitments as at 1 July 2019 (undiscounted lease payments) ($’000)
15,624
Weighted average incremental borrowing rate as at 1 July 2019
5.40 per cent
Discounted operating lease commitments at 1 July 2019 ($’000)
Less: commitments relating to short term leases ($’000)
Lease liability at 1 July 2019 ($’000)
13,171
(13)
13,158
The increase in the lease liabilities from 1 July 2019 is due to the recognition of new leases for the
Roma North and Atlas gas processing facilities which span between 20 and 25 years and other
office leases.
Lease liabilities mature as follows:
Within one year
After one year but more than five years
More than five years
Minimum lease payments
Future finance charges
Total lease liabilities
Amounts recognised in profit or loss:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term leases (included in operating costs)
Expense relating to leases of low-value assets
(included in other expenses)
Variable lease payments (included in operating costs)
Total amount recognised in profit or loss
Consolidated
2020
$'000
2019
$'000
11,310
83,893
216,950
312,153
(138,621)
173,532
Consolidated
2020
$'000
4,747
7,089
11
3
1,227
13,077
-
-
-
-
-
2019
$'000
-
-
-
-
-
-
Where the leased assets have been used for capital activity the depreciation on the corresponding
right-of-use asset and interest on the associated liability is capitalised to the balance sheet. During the
period, $0.5 million has been capitalised and forms a component of additions to oil and gas properties
(refer to Note 7).
The Group had total cash outflows for leases of $6.8 million in 2020 (2019: $nil).
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
96 FINANCIAL STATEMENTS
NOTE 10: LEASES (Continued)
Recognition and measurement
The Group accounts for leases by:
• recognising right-of-use assets and lease liabilities for all leases, with the exception of short-term
(12 months or less) and low-value leases (less than $5,000), in the Consolidated Statement of
Financial Position.
⁻
the lease liability is initially measured at the present value of future lease payments for the lease
term using the interest rate implicit in the lease or, if that rate cannot be readily determined, the
Group’s incremental borrowing rate, adjusted for asset-specific factors.
⁻ where a lease contains an extension option, the lease payments for the extension period will be
⁻
included in the liability if the Group is reasonably certain that it will exercise the option.
the right of use asset at initial recognition reflects the lease liability, initial direct costs and any
lease payments made before the commencement date of the lease less any lease incentives and,
where applicable, provision for dismantling and restoration.
• recognising depreciation of right of use assets and interest on lease liabilities in the Consolidated
Statement of Comprehensive Income over the lease term (refer to Note 7).
• recognising the cash paid in the Consolidated Statement of Cash Flows, split into a principal portion
(presented within financing activities) and interest portion (presented within operating activities).
• remeasuring the lease liability, and right of use asset, when there is a change in future lease
payments arising from a change in an index or rate, a change in the estimate of the amount
expected to be payable under a residual value guarantee or changes in the assessment of whether
purchase, renewal or termination options are reasonably certain to be exercised.
In the event that there is a modification to a lease arrangement, a determination of whether the
modification results in a separate lease arrangement being recognised is made. Where the modification
does result in a separate lease arrangement needing to be recognised, due to an increase in scope of
a lease through additional underlying leased assets and a commensurate increase in lease payments,
the measurement requirements described above are applied. Where the modification does not result
in a separate lease arrangement, the Group will remeasure the lease liability using the redetermined
lease term, lease payments and revised discount rate. A corresponding adjustment will be made to
the carrying amount of the right of use asset. Additionally, where there has been a partial or full
termination of a lease, the Group will recognise any resulting gain or loss in the profit and loss.
NOTE 11: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise cash and cash equivalents, cash flow hedges,
receivables, payables, interest bearing liabilities and other financial liabilities.
Risk exposures and management
The Group manages its exposure to key financial risks through the Group’s Risk Management
Framework under the supervision of the Audit and Risk Committee. The primary function of the Audit
and Risk Committee is to assist the Board to fulfil its responsibility to ensure that the Group’s internal
control framework is effective and efficient.
The main risks arising from the Group’s financial instruments are foreign currency risk, liquidity
risk, commodity price risk and interest rate risk. The Group uses different methods to measure and
manage different types of risks to which it is exposed. These include monitoring levels of exposure to
foreign exchange and assessments of market forecasts for foreign exchange, commodity prices and
interest rates.
Commodity price risk
The Group’s primary exposure to commodity price risk is the market price of oil and Roma North
natural gas which is largely denominated in USD and based on the Brent oil price or Brent oil price
related indices.
To mitigate commodity price risk, the Group has entered into monthly settled oil price swaps covering
317,731 barrels for the period 1 July 2020 to 30 June 2021. The monthly quantity of barrels swapped
is designed to cover a portion of highly probable forecast sales and is expected to reduce the volatility
attributable to price fluctuations of Brent oil. The oil price swaps mature as follows:
Maturity as at 30 June 2020
Maturity as at 30 June 2019
Oil price swaps
Within 1 year
1 – 2 years
Within 1 year
1 – 2 years
Notional amounts ($’000)
Average Brent price (AUD)
28,655
90.19
-
-
43,479
93.46
27,299
87.87
There is an economic relationship between the hedged items and the hedging instruments as the
terms of the oil price swaps match the terms of the expected highly probable forecast transactions. The
Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the oil
price swaps are identical to the hedged risk components. Hedge ineffectiveness can arise from:
• differences in the timing of the cash flows of the hedged items and the hedging instruments
• the counterparties’ credit risk differently impacting the fair value movements of the hedging
instruments and hedged items
• changes to the forecasted amount of cash flows of hedged items and hedging instruments
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 FINANCIAL STATEMENTS 97
NOTE 11: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
The Board will continue to monitor commodity price risk and seek to mitigate it if considered
necessary. The effect on profit before tax disclosure below takes into consideration any commodity
price derivatives in place at 30 June 2020 and is based on the commodity risk exposures in existence
at the reporting date.
Effect on profit before tax
Change on year-end oil price +10%
Change on year-end oil price -10%
Effect on equity
Change on year-end oil price +10%
Change on year-end oil price -10%
Consolidated
2020
$'000
788
(804)
(1,071)
1,092
2019
$'000
1,700
(1,758)
(4,881)
4,224
Foreign currency risk
The Group’s foreign currency exposure arises from sales or purchases by an operating entity in
currencies other than its functional currency. The majority of the Group’s sales are denominated and
received in USD. To manage foreign exchange exposure the Group converts funds to AUD on a regular
basis and hedges oil sales in AUD.
At the reporting date, and exclusive of commodity price derivatives, the Group had the following
exposure to foreign currency risk for balances denominated in USD, which are disclosed in AUD:
Financial assets
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Net exposure
Consolidated
2020
$'000
2019
$'000
4,226
17,775
(1,605)
20,396
3,223
21,383
(579)
24,027
The following table details the Group’s sensitivity to a 10 per cent increase or decrease in AUD against
the USD, with all other variables held constant. The sensitivity analysis is based on the foreign currency
risk exposures in existence at the reporting date and takes into account commodity price derivatives.
Effect on profit before tax
AUD / USD +10%
AUD / USD -10%
Effect on equity
AUD / USD +10%
AUD / USD -10%
Consolidated
higher/(lower)
2020
$'000
2019
$'000
(1,066)
1,050
829
(809)
(2,023)
1,964
3,959
(4,616)
Liquidity risk
The liquidity position of the Group is managed to ensure sufficient funds are available to meet the
Group’s financial commitments in a timely and cost-effective manner.
The Group funds its activities through operating cash, use of debt facilities and equity raisings. It is
the Group’s policy to continually review its liquidity position, including cash flow forecasts, to maintain
appropriate liquidity levels.
On 26 October 2018, the Group completed financial close of a $150 million Senior Secured Multi-
Currency Facility Agreement (SFA). The SFA comprises of Facility A (reserve-based facility to primarily
provide funding for key identified projects for Roma North and Atlas) and Facility B (working capital
facility for general corporate purposes).
On 20 September 2019, the Group agreed to an additional facility (Facility C) under the SFA (letters of
credit and bank guarantees). Facility A has a limit of $125 million, Facility B has a limit of $25 million and
Facility C has a limit of $10 million.
Facility A matures on 25 October 2025 and carries an effective interest rate of AUD BBSY plus margin.
Facility B and C mature on 25 October 2021 and attract varying cost dependent on the purpose of the
utilisation.
At 30 June 2020 the Group has drawn down $125 million (FY19: $50 million) of Facility A and has
utilised $25.9 million (FY19: $21.3 million) of Facility B and C to back performance guarantees issued
by the Group.
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
98 FINANCIAL STATEMENTS
NOTE 11: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
Interest rate risk
The SFA contains certain covenants that the Group must comply with on a quarterly basis and the
Director’s continue to monitor the Group’s compliance with these requirements. The Group was in
compliance with its covenants at 30 June 2020.
The remaining contractual maturities of the Group’s financial liabilities at 30 June 2020 is:
Consolidated
Trade and
other
payables
Other
financial
liabilities
Interest
bearing
liabilities
Lease
liabilities
Total
2020
$'000
Due for payment
In six months or less or on demand
31,444
In greater than six months but less
than one year
In one to five years
In greater than five years
-
-
-
436
436
2,294
2,294
4,877
6,433
39,051
9,163
1,700
136,301
83,893
221,894
-
-
216,950
216,950
31,444
2,572
140,889
312,153
487,058
The remaining contractual maturities of the Group’s financial liabilities at 30 June 2019 is:
Consolidated
Trade and
other
payables
Other
financial
liabilities
Interest
bearing
liabilities
Lease
liabilities
Total
2019
$'000
Due for payment
In six months or less or on demand
31,877
In greater than six months but less
than one year
In one to five years
In greater than five years
-
-
-
195
153
2,349
2,349
1,215
61,341
-
-
31,877
1,563
66,039
-
-
-
-
-
34,421
2,502
62,556
-
99,479
Interest rate risk arises from the Group’s exposure to variable AUD BBSY on the SFA principal
outstanding. To manage this risk the Group has entered into floating for fixed interest rate swaps to
fix interest payable on 60 per cent of the SFA principal outstanding. These contracts are expected to
reduce the volatility attributable to fluctuations of the AUD BBSY interest rate.
There is an economic relationship between the hedged items and the hedging instruments as the terms
of the interest rate swaps match the terms of the expected highly probable forecast transactions. The
Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the
interest rate swaps are identical to the hedged risk components. Hedge ineffectiveness can arise from:
• differences in the timing of the cash flows of the hedged items and the hedging instruments
• the counterparties’ credit risk differently impacting the fair value movements of the hedging
instruments and hedged items
• changes to the forecasted amount of cash flows of hedged items and hedging instruments
The following table details the Group’s sensitivity to a 0.5 per cent increase or decrease in the BBSY
after hedging is taken into account.
Effect on profit before tax
BSSY +0.5%
BSSY -0.5%
Effect on equity before tax
BSSY +0.5%
BSSY -0.5%
Consolidated
higher/(lower)
2020
$'000
(250)
250
268
(268)
2019
$'000
(10)
10
140
(140)
The sensitivity assumes that the change in interest rate is effective from the beginning of the financial
year and the net debt position and fixed/floating mix is constant. Interest rates and the debt profile of
the Group are unlikely to remain constant and therefore the above sensitivity analysis will be subject
to change.
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
NOTE 11: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
Credit risk
The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from
its financing activities, including deposits with banks and financial institutions, foreign exchange
transactions and other financial instruments.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed in accordance with the
Group’s treasury policy. Investments of surplus funds are made only with approved counterparties
and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the
Group on an annual basis or more frequently should the need arise. The limits are set to minimise the
concentration of risks and therefore mitigate financial loss through a counterparty’s potential failure to
make payments.
Trade receivables
Customer credit risk is managed through the Group’s established policy, procedures and controls relating
to customer credit risk management. Outstanding customer receivables are regularly monitored and
relate to the Groups’ major customers for which there is no history of credit risk or overdue payments.
Capital management and going concern
When managing capital, the Board’s objectives are to ensure the Group continues as a going concern
whilst creating long-term shareholder value.
At 30 June 2020 the Group had net current assets of $72.7 million, including cash of $79.9 million and
had substantially completed its multi-year, transformational, Surat Basin capital program. The Group
has been confirmed as operating in an essential services industry since the outbreak of COVID-19 and
has been able to operate at full capacity with minimal impact on its operations or supply chains.
FINANCIAL STATEMENTS 99
The financial performance of the business is monitored against an approved annual budget and
approved work plans to ensure that adequate funding will be available to carry out planned activities
and business continuity. In assessing going concern the Directors have considered projected cash
flow information for the 12 months from the date of approval of these financial statements, taking
into account an estimation of the potential impacts of COVID-19 through lower realised pricing.
These forecasts indicate that, taking into account reasonably possible downsides in price, existing
oil price hedging, minimal committed capital expenditure and existing long-term fixed price gas sales
agreements, the Group is expected to continue to operate within available cash levels and the terms of
its debt facilities.
The Directors therefore believe that it is appropriate to prepare the financial statements on a going
concern basis and have a reasonable expectation that the Group will be able to pay its debts as and
when they fall due for at least the next 12 months. No adjustments have been made relating to the
recoverability and classification of recorded asset amounts and classification of liabilities that might be
necessary should the Group not continue as a going concern.
Financial assets and liabilities
All financial assets not measured at fair value are recognised initially at fair value plus transaction
costs. Financial liabilities not measured at fair value are recognised initially at fair value. Subsequent
measurement of financial assets and liabilities depends on their classification, summarised in the
table below.
Financial assets and liabilities carried at amortised cost take into account any discount or premium on
acquisition, and fees or costs associated with the asset or liability. Due to the short-term nature of
these assets and liabilities, their carrying value is assumed to approximate their fair value.
Fair values
For financial assets and liabilities carried at fair value the Group uses the following to categorise the
inputs and methodology used to determined fair value at the reporting date:
Level 1
The fair value is calculated using quoted market prices in active markets.
Level 2
Level 3
The fair value is estimated using inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).
The fair value is estimated using inputs for the asset or liability that are not based on observable
market data.
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
100 FINANCIAL STATEMENTS
NOTE 11: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
The table below outlines the fair value of financial assets and liabilities:
Financial assets
Cash and cash equivalents
Trade and other receivables
Deferred consideration owed by Beach Energy
Trade and other receivables - subject to provisional pricing1
Other financial assets:
Crude oil price swaps - current2
Crude oil price swaps - non-current2
Financial liabilities
Trade and other payables
Interest bearing liabilities
Lease liabilities
Other financial liabilities - current:
Haliburton tight oil4
Interest rate swaps3
Other financial liabilities - non-current:
Haliburton tight oil4
Interest rate swaps3
See notes to table on the next page.
As at 30 June 2020
Fair value
through profit or loss
$'000
Fair value
through OCI
$'000
As at 30 June 2019
Fair value
through profit or loss
$'000
Fair value
through OCI
$'000
Amortised
cost
$'000
79,908
2,239
-
-
-
-
-
-
-
17,775
-
-
82,147
17,775
31,444
125,000
173,532
190
-
575
-
330,741
-
-
-
-
-
-
-
-
-
-
-
-
9,558
348
9,906
-
-
-
-
682
-
1,125
1,807
Amortised
cost
$'000
62,669
1,928
4,794
-
-
-
-
-
-
20,712
-
-
69,391
20,712
31,877
50,000
-
190
-
740
-
82,807
-
-
-
-
-
-
-
-
-
-
-
-
3,429
949
4,378
-
-
-
-
158
-
475
633
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
FINANCIAL STATEMENTS 101
NOTE 11: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
1) Level 2
The Group recognises trade receivables in relation to its provisionally priced sales contracts at fair
value. All derivatives and provisionally priced trade receivables are valued using forward pricing models
that use present value calculations. The models incorporate various inputs including the credit quality
of counterparties and forward rate curves of the underlying commodity. The changes in counterparty
credit risk had no material effect on financial instruments recognised at fair value and therefore the
other observable parameters outlined above categorise these assets as level 2 instruments.
2) Level 2
Crude oil price swaps have been designated as cash flow hedge instruments. The fair value of crude
oil price swaps has been determined with reference to the Brent ICE forward price (USD) and forward
exchange rate (AUD:USD) compared with the exercise price of the instrument along with the volatility
of the underlying commodity price and the expiry of the instrument.
3) Level 2
Interest rate swaps have been designated as cash flow hedge instruments. The fair value of interest
rate swaps has been determined with reference to the floating bank bill swap bid (BBSY) forward rate
compared with the fixed price leg that the Group will pay.
4) Level 3
The carrying value of the Halliburton tight oil agreement approximates fair value at 30 June 2020. Fair
value has been determined by reference to the initial amount funded by Halliburton and discounted
cash flows across the term of the agreement, with reference to expected production from the wells
subject to the agreement, Brent ICE forward price (USD), forward exchange rate (AUD:USD), forecast
operating costs and royalties and other commercial terms under the agreement.
The Group does not have any level 1 financial instruments as at 30 June 2020 or 30 June 2019.
Recognition and measurement - hedging
The Group uses derivative financial instruments including AUD and USD denominated Brent oil swaps
and put options, to hedge its foreign currency and commodity price risk. Such derivative financial
instruments are initially recognised at fair value on the date on which a derivative contract is entered
into and on each subsequent reporting date. Derivatives are carried as financial assets when the fair
value is positive and as financial liabilities when the fair value is negative.
Hedges are classified as cash flow hedges when hedging the exposure to variability in cash flows that
are either attributable to a particular risk associated with a recognised asset or liability or are a highly
probable forecast transaction.
At inception, the Group formally designates and documents the hedge relationship to which it wishes
to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.
Hedge documentation includes the identification of the hedging instrument, the hedged item, the
nature of the risk being hedged and how the Group will assess whether the hedging relationship meets
the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and
how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all
the following effectiveness requirements:
• there is ‘an economic relationship’ between the hedged item and the hedging instrument
• the effect of credit risk does not ‘dominate the value changes’ from the economic relationship
• the hedge ratio of the relationship is equal
The effective portion of the gain or loss on the hedging instrument is recognised in other
comprehensive income (OCI) in the hedge reserve, while any ineffective portion is recognised
immediately in profit or loss. The cash flow hedge reserve is adjusted to the lower of the cumulative
gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.
The amount accumulated in OCI is reclassified to profit or loss as a reclassification adjustment in the
same period or periods during which the hedged cash flows affect profit or loss.
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
102 FINANCIAL STATEMENTS
CAPITAL STRUCTURE
NOTE 12: CONTRIBUTED EQUITY
Movement in ordinary
fully paid shares on issue
NOTE 13: RESERVES
Parent entity
2020
Number
of shares
$’000
2019
Number
of shares
$’000
Share-based
payment reserve
Consolidated
2020
$’000
2019
$’000
21,739
19,415
Balance at the beginning of the period:
1,453,069,535
540,468
1,447,271,094
540,213
Issues of shares during the period:
Exercise of unlisted options1
Employee shares
-
Performance and share appreciation
4,750,332
rights (nil consideration)2
-
-
1,000,000
255
4,798,441
-
Balance at the end of the period
1,457,819,867
540,468
1,453,069,535
540,468
Hedge reserve
7,065
3,408
28,804
22,823
Recognition and measurement
The share-based payments reserve represents the
accrued employee entitlements to share awards that
have been charged to profit or loss.
The hedging reserve comprises the effective portion of
the cumulative net change in the fair value of hedging
instruments related to transactions that have not yet
occurred and changes in the time value of instruments.
Amounts in the reserve are recycled to profit or loss as
the underlying hedged transactions occur.
1 No ordinary fully paid shares were issued (FY19: 1,000,000 for a price of 25.5 cents) for the exercise of unlisted options during
the year held by the Managing Director.
2 4,750,332 ordinary fully paid shares were issued (FY19: 4,798,441) during the year to senior executives in relation to short-
and long-term incentive rights and for employee retention rights.
EMPLOYEE MATTERS
NOTE 14: KEY MANAGEMENT PERSONNEL
Compensation of Key Management Personnel comprises:
Recognition and measurement
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.
Ordinary fully paid 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 the shares held. Ordinary fully paid shares entitle their holder
to one vote, either in person or by proxy, at a meeting of the Company. Ordinary shares have no
par value.
Short-term
Post-employment
Share-based payments
Consolidated
2020
$
2019
$
4,146,207
5,285,712
182,501
234,674
1,574,010
1,047,934
5,902,718
6,568,320
Other transactions with Key Management Personnel
During the financial year, the Group made payments of $12,250 (FY19: $12,928) to Morgans Financial
Limited, a company associated with Mr Tim Crommelin (a non-executive director), for provision of data
services. None of the services were provided by Mr Crommelin as a director of the Group. There were
no other transactions with Key Management Personnel or their related parties during the current or
prior year.
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 FINANCIAL STATEMENTS 103
NOTE 15: SHARE-BASED PAYMENTS
Equity settled performance rights, share appreciation rights and options are issued to employees on a case by case basis at the Board’s discretion and are assessed annually. The table below provides a description
of the plans that the Company has in place.
Plan
Overview
Share Appreciation Rights
Performance Rights
The Company has adopted a share appreciation rights (SARs) plan for executives and
employees, which directly links equity-based incentives to performance conditions.
From FY18, the Company has adopted performance rights plans for executives and employees, which directly
links equity-based incentives to pre-defined performance conditions.
Vesting conditions
Service and performance conditions.
Service and performance conditions.
FY17 SAR’s (vested)
70 per cent of SARs are subject to a long term incentive (LTI) performance condition
(relative TSR performance condition) that the Company achieves total shareholder
return (TSR) at or above the 50th percentile of the TSR of a comparator group of
companies (S&P/ASX 300 Energy Index) over the three year performance period.
30 per cent of SARs are subject to an LTI performance condition (production run rate
performance condition) that the Company achieve a 30 consecutive day production
run rate in the 6 months ended 30 June 2020 of 2.5 – 3.0 mmboe.
FY16 SAR’s (vested)
70 per cent of SARs are subject to an LTI performance condition (relative TSR
performance condition) that the Company achieves a TSR at or above the 50th
percentile of the TSR of a comparator group of companies (S&P/ASX 300 Energy
Index) over the three year performance period.
30 per cent of SARs are subject to an LTI performance condition of achievement of
2P Reserves target (mmboe) over the three year performance period.
FY19 and FY20 LTI performance rights
100 per cent of FY19 and FY20 performance rights are subject to relative TSR performance condition that the
Company achieves TSR growth that is positive and at or above the 50th percentile of the TSR of a comparator
group of companies (S&P/ASX 300 Energy Index) over the three-year performance period.
FY19 strategic business milestone rights
The Company issued rights to the Chief Executive Officer during the period that are subject to natural gas
projects in the Surat Basin being delivered through the construction of key infrastructure, completion of the
initial phase of development drilling and the commencement of commercial gas sales from each project.
Vesting will be based on achievement of the milestone, subject to there being a positive TSR over the
milestone delivery period.
FY18 LTI performance rights
70 per cent of FY18 LTI performance rights are subject to relative TSR performance condition that the
Company achieves TSR growth that is positive and at or above the 50th percentile of the TSR of a comparator
group of companies (S&P/ASX 300 Energy Index) over the three-year performance period.
30 per cent of FY18 LTI performance rights are subject to the achievement of identified strategic and financial
goals linked to material project delivery and company transition over the three year performance period.
FY18, FY19 and FY20 short-term incentive performance rights
Performance rights issued to executive and non-executive employees in conjunction with their short-term
incentive entitlements are subject to service and performance conditions.
FY18 (vested), FY19 and 2019 retention rights
The Company has a retention rights plan designed to retain and incentivise existing employees and attract key
new employees. The retention rights have service conditions only.
Vesting period
Expiry period
3 years
7 years
2 - 3 years
6 - 7 years
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
104 FINANCIAL STATEMENTS
NOTE 15: SHARE-BASED PAYMENTS (Continued)
A reconciliation of outstanding awards is contained below:
2020
SARs
Performance rights
At 1 July 2019
(number)
18,506,101
20,810,797
Issued
(number)
-
13,477,792
Exercised
(number)
(3,440,888)
(2,587,738)
Forfeited
(number)
(2,928,597)
(5,223,343)
At 30 June 2020
(number)
Vested and exercisable
at 30 June 2020
(number)
Weighted average
remaining contractual
life (years)
12,136,616
26,477,508
12,136,616
2,274,196
2.7
2.4
The assumptions used when determining the fair value of awards issued during the year was:
2020
Performance rights
Retention rights
Weighted average fair value
($)
Risk-free interest rate
(%)
0.21
0.37
0.68% - 0.75%
0.60% - 0.73%
Estimated life
(years)
2.6 – 3.0
1.9 – 3.0
Share price at grant date
($)
Estimated volatility
(%)
0.32 – 0.40
0.32 – 0.39
50
50
Dividend yield
(%)
0.48% - 0.65%
0.49% - 0.65%
Employee share awards expense was $2,324,000 (2019: $1,423,000).
Recognition and measurement
The fair value at grant date of equity-settled share-based payment transactions is recognised as an
employee benefit expense over the period in which the performance and/or services conditions
are fulfilled.
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. An additional 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.
The fair values of awards granted were estimated using a Monte Carlo simulation methodology
and Black-Scholes option pricing techniques. In determining the share-based payment expense
for the year, the Group also estimates the number of equity instruments that will ultimately vest.
No adjustment is made for the likelihood of market performance conditions being met as the effect
of these conditions is included in the determination of fair value at grant date. Where awards are
forfeited because non-market-based vesting conditions are not satisfied, the expense previously
recognised is proportionately reversed.
If an equity-settled award is cancelled (other than a grant cancelled by forfeiture when the vesting
conditions are not met), 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.
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 OTHER FINANCIAL DISCLOSURES
NOTE 16: INCOME TAX
Income tax expense
The major component of income tax expense is:
Deferred tax benefit/(liability)
Net tax (asset)/liability not brought to account
Income tax benefit/(expense) reported in the
statement of comprehensive income
Consolidated
2020
$’000
2019
$’000
15,410
(15,410)
-
(601)
601
-
Numerical reconciliation between aggregate tax expense recognised in the income statement
and tax expense calculated per the statutory income tax rate
(Loss)/profit before income tax
At the Group’s statutory income tax rate of 30% (2019: 30%)
Research and development benefit
Assessable grant
Other
Derecognition of deferred tax on (losses)/gains
Income tax benefit/(expense) reported in the
statement of comprehensive income
Consolidated
2020
$’000
(51,367)
15,410
-
(938)
(15)
(14,457)
-
2019
$’000
3,295
(989)
425
-
(37)
601
-
FINANCIAL STATEMENTS 105
Deferred income tax at the reporting date relates to the following:
Consolidated
Statement of
Financial Position
Statement of
Comprehensive Income
2020
$’000
2019
$’000
2020
$’000
2019
$’000
Deferred tax assets/(liabilities)
Receivables
Property, plant and equipment, intangibles,
exploration assets and oil and gas properties
Trade and other payables
Provisions
Other
Income tax losses and offsets
Deferred tax assets/(liabilities)
1,223
34
(16,865)
(30,965)
-
(153)
13,362
10,611
(846)
77,990
74,864
167
79,446
59,140
1,189
14,100
154
2,750
(1,012)
(1,457)
15,724
Income tax losses and offsets not recognised as
realisation is not probable
(74,864)
(59,140)
(15,724)
-
(9,985)
(883)
5,514
(1,566)
4,333
(2,587)
2,587
Net deferred income tax asset/(liability) recognised
-
-
-
-
Tax transparency
The Group operates and has subsidiaries in Australia. During the financial year, the Group paid
$12 million of state taxes, fringe benefits tax and royalties in Australia (2019: $8.7 million).
Recognition and measurement
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to
the taxation authorities based on the period’s taxable income.
The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted at the reporting date and include state taxes, fringe benefits tax and royalties in Australia.
Deferred income tax is provided on all temporary differences at the reporting date between the tax
base of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax assets are recognised for all deductible temporary differences and carry-forward
of unused tax credits and unused tax losses, to the extent that it is probable that taxable income will
be available against which the deductible temporary differences and the carry-forward of unused tax
credits and unused tax losses can be utilised. The carrying amount of deferred income tax assets is
reviewed at each reporting date.
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
106 FINANCIAL STATEMENTS
NOTE 16: INCOME TAX (Continued)
NOTE 17: INTANGIBLE ASSETS
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to
the extent that it has become probable that future taxable profit will allow the deferred tax asset to
be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the
same taxable entity and the same taxation authority.
Income tax consolidation legislation
Senex Energy Limited and its controlled entities have implemented the tax consolidation legislation.
Senex Energy Limited is responsible for recognising the current tax receivable and liability and any
deferred tax asset on carry forward tax losses on behalf of the income tax consolidated group. The
Group has applied the separate taxpayer approach in determining the appropriate amount of current
taxes and deferred taxes to allocate to members of the tax consolidated group.
As a consequence, individual entities within the consolidated group will recognise current and deferred
tax amounts relating to their own transactions, events and balances. Any recognised balances relating
to income tax payable or receivable, or to tax losses incurred by the individual entity will then be
transferred to the head entity of the consolidated group, Senex Energy Limited, by way of inter-
company loan.
The tax consolidated group has entered into a tax sharing agreement which sets out the allocation of
income tax liabilities amongst the entities should the head entity default on its tax payment obligations
and the treatment of entities exiting the tax consolidated group. No amounts have been recognised in
the financial statements in respect of this tax sharing agreement as payment of any amounts under this
agreement are considered remote.
Income tax losses
At 30 June 2020, the Group had $259,965,000 (2019: $264,820,000) of carry-forward tax losses that
are available for offset against future taxable profits of the income tax consolidated group, subject to
the relevant tax loss recoupment requirements being met.
The carry-forward tax losses and offsets give rise to a deferred tax asset (which has not been
recognised at 30 June 2020) of $77,990,000 (2019: $79,446,000).
Consolidated
Note
2020
$'000
2019
$'000
At the beginning of the year
Cost
Accumulated amortisation
Net book amount
Movement for the year ended 30 June
Opening net book value
Transfer from assets under construction
7
Amortisation charged for the year
Net book amount
At 30 June
Cost
Accumulated amortisation
Net book amount
11,983
(6,820)
5,163
5,163
389
(1,419)
4,133
12,372
(8,239)
4,133
6,653
(5,554)
1,099
1,099
5,330
(1,266)
5,163
11,983
(6,820)
5,163
Recognition and measurement
The Group capitalises amounts paid for the acquisition of identifiable intangible assets, such as
software and licenses where it is considered that they will contribute to future periods through revenue
generation or cost reduction. These assets, classified as finite life intangible assets, are carried in the
balance sheet at the fair value of consideration paid less accumulated amortisation. Intangible assets
with finite useful lives are amortised on a straight-line basis over their useful lives of two to five years.
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
FINANCIAL STATEMENTS 107
NOTE 18: OTHER PROVISIONS
Consolidated
Recognition and measurement
Provisions are recognised when:
• the Group has a present obligation (legal or constructive) as a result of a past event
• it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation
• a reliable estimate can be made of the amount of the obligation
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the reporting date using a discounted cash flow
methodology. The increase in the provision due to the passage of time is recognised in finance costs.
Liabilities for employee service up to the reporting date such as un-paid wages and salaries including
non-monetary benefits, annual leave and long service leave are measured at the expected future
payment. Liabilities for restructuring activities communicated prior to the reporting date are also
recognised at the expected future payment. Restructuring activities provided for at 30 June 2019
were completed in the year ended 30 June 2020. Restructuring activities provided for at 30 June
2020 are expected to be completed in financial year 2021.
The liability for long service is recognised and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method.
Current
Annual and long service leave
Restructuring provision
Building rectification
Other provisions
Non-current
Long service leave
Other provisions
2020
$'000
2,366
2,638
2,396
-
7,400
766
525
1,291
2019
$'000
1,821
2,013
-
323
4,157
763
-
763
Movement in each class of provision during the financial year, other than provisions relating to
employee benefits, are set out below:
Building rectification and other provisions
Balance at the beginning of the year
Provision recognised/(released) during the year
Payments made during the year
Balance at the end of the year
Consolidated
2020
$'000
323
2,985
(387)
2,921
2019
$'000
389
(66)
-
323
Building rectification and other provisions include provisions relating to the Group’s obligation to
rectify defects identified from the construction of the Roma North gas compression facility that was
disposed of during the financial year (refer to Note 21), legal disputes, contractors’ claims and lease
liability adjustments.
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
108 FINANCIAL STATEMENTS
NOTE 19: CONSOLIDATED STATEMENT OF CASH FLOWS RECONCILIATION
NOTE 20: INTEREST IN JOINT OPERATIONS
Consolidated
2020
$'000
2019
$'000
The Group has an interest in the following joint operations whose principal activities were oil and gas
exploration and production in the Cooper-Eromanga and Surat Basins.
Reconciliation of the net (loss)/profit after
tax to net cash flows used in operations
Net (loss)/profit
Adjustments:
Depreciation and amortisation
Impairment expense
(Gain)/loss on foreign exchange translation
Gain on termination of unconventional joint venture
(Gain)/loss on disposal of assets
Unwind of the effect of discounting on provisions
Share-based payments
Write-off of exploration assets
Other
Changes in assets and liabilities:
Decrease in prepayments
Decrease in trade and other receivables
Decrease in inventory
Increase in other financial assets
Increase in trade and other payables
(Decrease)/increase in provisions
Net cash flows from operating activities
(51,367)
3,295
Exploration
Surat
39,226
52,145
(31)
-
(312)
1,425
2,324
4,641
(623)
2,056
1,643
20
(1,380)
2,460
(682)
51,545
26,777
ATP 1190 (Weribone)
-
Cooper-Eromanga Basin
PEL 90* (Kiwi)
PEL 94
PEL 182*
* denotes operatorship
(290)
(5,400)
318
1,429
1,423
1,831
(1,334)
190
10,830
87
-
2,785
2,580
44,521
Consolidated
2020
Percentage
2019
Percentage
20.7%
20.7%
100%
15%
57%
75%
15%
-
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
FINANCIAL STATEMENTS 109
NOTE 20: INTEREST IN JOINT OPERATIONS (Continued)
Consolidated
2020
Percentage
2019
Percentage
35%
70%
35%
25%
35%
60%
60%
60%
60%
60%
60%
60%
60%
57%
35%
70%
35%
25%
35%
60%
60%
60%
60%
60%
60%
60%
-
-
Production
Cooper-Eromanga
PPL 206 (Derrilyn)
PPL 207 (Worrior)*
PPL 208 (Derrilyn)
PPL 211 (Reg Spring West)
PPL 215 (Toparoa)
PPL 240 (Snatcher)*
PPL 242 (Growler)*
PPL 243 (Mustang)*
PPL 258 (Spitfire)*
PPL 263 (Marlet North)*
PPL 264 (Martlet)*
PPL 265 (Marauder)*
PPL 266 (Breguet)*
PPL 268 (Vanessa)*
* denotes operatorship
Retention
Cooper-Eromanga
PRL 15*
PRL 108*
PRL 109*
PRL 110*
PRL 120*
PRL 124*
PRL 128*
PRL 135 (Vanessa)*
PRL 136 (Marauder)*
PRL 137 (Martlet)*
PRL 138-150*
PRL 183-190*
PRL 207-209*
PRL 211
PRL 231-233*
PRL 237*
PRL 238-244*
* denotes operatorship
Consolidated
2020
Percentage
2019
Percentage
The Group’s share of the joint operation and revenue and
expenses consist of:
Consolidated
Revenue
Oil sales
Gas and gas liquids sales
Expenses
Expenses excluding
net finance costs
Oil and gas
exploration expenses
2020
$'000
48,718
1,250
49,968
37,194
3,263
2019
$'000
70,795
4,559
75,354
43,269
10,491
40,457
53,760
60%
100%
100%
100%
80%
80%
80%
57%
60%
60%
60%
80%
55%
15%
70%
70%
57%
60%
50%
50%
50%
80%
80%
80%
57%
60%
60%
60%
80%
55%
100%
70%
70%
57%
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
110 FINANCIAL STATEMENTS
NOTE 20: INTEREST IN JOINT OPERATIONS
NOTE 21: ASSETS HELD FOR SALE
The Group's share of the joint operations assets and liabilities consists of:
Consolidated
2020
$'000
2019
$'000
Note
On 12 September 2019 Senex Energy Limited completed the disposal of Senex Pipeline & Processing
Pty Ltd (SPP) for $50 million. SPP’s primary business was the construction and operation of the Roma
North gas compression facility and associated pipeline. SPP did not contribute to the Group’s result
during the year ended 30 June 2020.
The Group recognised a gain on disposal of SPP of $0.2 million.
8,542
19,459
NOTE 22: SUBSIDIARIES
Current assets
Trade and other receivables
Non-current assets
Property, plant and equipment
Exploration assets
Oil and gas properties
TOTAL ASSETS
Current liabilities
Trade and other payables
Provisions - rehabilitation
Non-current liabilities
Provisions - rehabilitation
TOTAL LIABILITIES
NET ASSETS
6
33,804
19,442
42,132
35,772
21,982
68,661
103,920
145,874
5,189
61
17,746
22,996
80,924
6,810
-
17,482
24,292
121,582
Recognition and measurement
The Group has interests in joint arrangements that are joint operations. In a joint operation the parties
with joint control of the arrangement have rights to the assets and obligations for the liabilities relating
to the arrangement.
In relation to its interests in joint operations, the Group recognises its:
• assets - including its share of any assets held jointly.
• liabilities - including its share of any liabilities incurred jointly.
• revenue - from the sale of its share of the output arising from the joint operation.
• expenses - including its share of any expenses incurred jointly.
The consolidated financial statements include the financial statements of Senex Energy Limited and its
controlled entities listed in the following table:
Parent entity
Senex Energy Limited
Directly controlled by Senex Energy Limited
Azeeza Pty Ltd
Victoria Oil Pty Ltd
Senex Weribone Pty Ltd
Permian Oil Pty Ltd
Victoria Oil Exploration (1977) Pty Ltd
Stuart Petroleum Pty Ltd
Senex Assets Pty Ltd
Senex Energy Employee Share Trust
Senex QLD Exploration Pty Ltd
Senex Pipeline & Processing Pty Ltd1
Directly controlled by Stuart Petroleum Pty Ltd
Stuart Petroleum Cooper Basin Oil Pty Ltd
Stuart Petroleum Cooper Basin Gas Pty Ltd
Country of
incorporation
Equity interest %
2020
2019
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1 On 12 September 2019 Senex Energy Limited completed the disposal of Senex Pipeline & Processing Pty Ltd. Refer to Note
21 for additional details.
The principal activities of Senex Energy Limited and its controlled entities were oil and gas exploration
and production in the Cooper-Eromanga and Surat Basins.
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
NOTE 23: DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (Relief Instrument),
Victoria Oil Exploration (1977) Pty Ltd (wholly-owned subsidiary) is a party to a deed of cross
guarantee with Senex Energy Limited (holding company) and was granted relief from the Corporations
Act 2001 requirement for preparation, audit and lodgement of financial statements, and directors’
reports for the year ended 30 June 2020.
It is a condition of the Relief Instrument that the Company and each of the subsidiaries enter into the
deed of cross guarantee. The effect of the cross guarantee is that the Company guarantees to each
creditor payment in full of any debt in the event of winding up of any of the subsidiaries under certain
provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the
Company will only be liable in the event that after six months any creditor has not been paid in full. The
subsidiaries have also given similar guarantees in the event that the Company is wound up.
The following companies are parties to the deed of cross guarantee and represent a ‘closed group’ for
the purposes of the Relief Instrument:
• Senex Energy Limited
• Azeeza Pty Ltd
• Victoria Oil Pty Ltd
• Senex Weribone Pty Ltd
• Permian Oil Pty Ltd
• Victoria Oil Exploration (1977) Pty Ltd
• Stuart Petroleum Pty Ltd
• Stuart Petroleum Cooper Basin Oil Pty Ltd
• Stuart Petroleum Cooper Basin Gas Pty Ltd
• Senex Assets Pty Ltd
As there are no other parties to the deed of cross guarantee that are controlled by the Company, the
‘closed group’ is the same as the ‘extended group’.
• Senex QLD Exploration Pty Ltd
Other comprehensive income
FINANCIAL STATEMENTS 111
(a) Consolidated Statement of Comprehensive Income and summary of movements in consolidated
accumulated losses
Set out below is a Consolidated Statement of Comprehensive Income and a summary of movements in
consolidated accumulated losses of the ‘closed group’:
Continuing operations
Revenue
Other income
Expenses excluding net finance costs
Oil and gas exploration expense
Impairment
Finance expenses
(Loss)/profit before tax
Income tax benefit/(expense)
(Loss)/profit after tax
Net (loss)/profit attributable to owners of the parent entity
Items that may be subsequently reclassified to
profit or loss (net of tax)
Change in fair value of cash flow hedges
Total comprehensive (loss)/income for the
period attributable to owners of parent entity
Consolidated
2020
$'000
2019
$'000
121,519
3,019
(110,962)
(2,782)
(52,145)
(10,016)
(51,367)
-
(51,367)
(51,367)
95,350
7,161
(86,105)
(11,327)
-
(1,784)
3,295
-
3,295
3,295
3,657
(47,710)
4,550
7,845
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
112 FINANCIAL STATEMENTS
NOTE 23: DEED OF CROSS GUARANTEE (Continued)
(b) Consolidated Statement of Financial Position
Set out below is a Consolidated Statement of Financial Position of the ‘closed group’:
(b) Consolidated Statement of Financial Position
ASSETS
Current assets
Cash and cash equivalents
Prepayments
Trade and other receivables
Inventory
Other financial assets
Assets held for sale
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Oil and gas properties
Exploration assets
Intangible assets
Other financial assets
Total non-current assets
TOTAL ASSETS
Consolidated
2020
$'000
2019
$'000
79,908
590
19,965
6,725
9,558
116,746
-
116,746
49
249,196
292,512
46,707
4,133
348
592,945
709,691
62,669
1,457
27,385
10,393
3,429
105,333
50,941
156,274
49
57,683
208,530
75,018
5,163
949
347,392
503,666
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Other financial liabilities
Lease liabilities
Liabilities directly associated with the assets held for sale
Total current liabilities
Non-current liabilities
Provisions
Interest bearing liabilities
Other financial liabilities
Lease liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Consolidated
2020
$'000
2019
$'000
31,444
9,129
872
2,649
44,094
-
44,094
66,290
116,314
1,700
170,883
355,187
399,281
310,410
540,468
28,804
(258,862)
310,410
31,877
6,131
348
-
38,356
4,941
43,297
63,352
40,006
1,215
-
104,573
147,870
355,796
540,468
22,823
(207,495)
355,796
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
FINANCIAL STATEMENTS 113
NOTE 24: AUDITORS REMUNERATION
NOTE 25: COMMITMENTS
The auditor of Senex Energy Limited and its controlled entities is Ernst & Young (Australia). Amounts
received or due and receivable are set out below.
Fees to Ernst & Young (Australia):
Fees for auditing the statutory financial report of the parent
covering the group and auditing the statutory financial reports of
any controlled entities
Fees for assurance services that are required by legislation to be
provided by the auditor
Fees for other assurance and agreed-upon-procedures services
under other legislation or contractual arrangements where there is
discretion as to whether the service is provided by the auditor or
another firm.
Consolidated
2020
$’000
2019
$’000
285
-
90
419
-
81
Fees for other services
27
312
Leasing commitments
The Group has low-value or short-term (less than 12 months) lease agreements which are not
recognised as liabilities as disclosed in Note 10:
Minimum lease and financing payments
No later than one year
Later than one year and not later than five years
Later than five years
Consolidated
2020
$’000
949
-
-
949
2019
$’000
3,020
8,038
4,692
15,750
Capital commitments
The following capital commitments, including those entered into by the Group in their capacity as
operator of Joint Operations, were contracted for at the reporting date but not recognised as liabilities:
•
•
•
•
•
tax compliance
due diligence
IT implementation controls assessment
remuneration review
debt compliance
Not later than one year
Later than one year and not later than five years
402
812
Later than five years
Consolidated
2020
$’000
6,262
-
-
6,262
2019
$’000
19,561
20,330
118,833
158,724
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
114 FINANCIAL STATEMENTS
NOTE 26: CONTINGENCIES
The Group is aware of Native Title claims made in respect of areas in Queensland in which the Group
has an interest and recognises that there might be additional claims made in the future. A definitive
assessment cannot be made at this time of what impact the current or future claims, if any, may have
on the Group.
The Group has entered various counterindemnities of bank and performance guarantees related
to its own future performance, which are in the normal course of business. The likelihood of these
guarantees being called upon is considered remote.
The Group also has certain obligations to perform exploration work pursuant to the terms of the
granting of petroleum exploration permits in order to maintain rights of tenure. These commitments
may be varied as a result of renegotiations of the terms of the exploration permits, licences or contracts
or alternatively upon their relinquishment and cannot be reliably estimated.
There were no other unrecorded contingent assets or liabilities in place for the Group at 30 June 2020.
NOTE 27: EVENTS AFTER THE REPORTING DATE
Since the end of the financial year, the Directors are not aware of any other matters or circumstances
not otherwise dealt with in the report or financial statements that have significantly or may significantly
affect the operations of the Company or the Group, the results of the operations of the Company or
the Group, or the state of affairs of the Company or the Group in subsequent financial years.
NOTE 28: PARENT ENTITY INFORMATION
(a) Summary financial information
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
NET ASSETS
EQUITY
Contributed equity
Share-based payments reserve
Other reserve
Accumulated losses
TOTAL EQUITY
Net loss
Other comprehensive income of the parent entity
Total comprehensive loss of the parent entity
Consolidated
2020
$'000
269,200
70,117
339,317
22,092
12,719
34,811
2019
$'000
263,410
119,856
383,266
14,730
3,848
18,578
304,506
364,688
540,722
21,485
7,065
540,722
19,161
3,408
(264,766)
(198,603)
304,506
(66,163)
3,657
(62,506)
364,688
(18,011)
4,550
(13,461)
(b) Guarantees entered into by the parent entity
There are cross guarantees provided as described in Note 23. No liability was recognised by the
parent entity or the consolidated entity in relation to this guarantee as the fair value of the guarantee is
considered immaterial.
(c) Contingent assets and liabilities of the parent entity
Aside from those disclosed in Note 26, there are no unrecorded contingent assets or liabilities in place
for the parent entity at 30 June 2020 (2019: nil).
(d) Contractual commitments for capital acquisitions
The parent entity had contractual commitments for capital acquisitions at 30 June 2020 of $nil
(2019: $nil).
ANNUAL REPORT 2020Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
FINANCIAL STATEMENTS 115
NOTE 29: NEW AND AMENDED ACCOUNTING STANDARDS AND INTERPRETATIONS
A number of other new standards are effective from 1 July 2019, and, with the exception of
AASB 16 Leases (AASB 16) discussed below, they do not have a material impact on the Group’s
financial statements.
The group has adopted AASB 16 as at 1 July 2019 using the modified retrospective approach where
the right of use asset has been recognised at an amount equal to the lease liability. Refer to Note 10 for
the Group’s accounting policy and impact for the financial year.
FOR THE YEAR ENDED 30 JUNE 2020Notes to the Financial Statements
116 FINANCIAL STATEMENTS
Directors' Declaration
In accordance with a resolution of the Directors of Senex Energy Limited, we state that:
(1) In the opinion of the Directors:
(a) the financial statements, notes and additional disclosures included in the Directors’ Report designated as audited of the consolidated
entity are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance for the year
ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in
Note 23 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross
guarantee described in Note 23.
(2) The financial statements and notes also comply with International Financial Reporting Standards as disclosed in ‘About these
financial statements’.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the
Corporations Act 2001 for the financial year ended 30 June 2020.
On behalf of the Board
Trevor Bourne
Chairman
Ian Davies
Managing Director
Brisbane, Queensland
21 August 2020
ANNUAL REPORT 2020
FINANCIAL STATEMENTS 117
Independent Auditor’s Report
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor's Report to the Members of Senex Energy Limited
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Senex Energy Limited (the “Company’) and its subsidiaries (collectively the “Group"), which comprises the consolidated statement of financial position as
at 30 June 2020, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial statements of the Group is in accordance with the Corporations Act 2001, including:
a)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020 and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the “Code”) that are relevant to our audit of the
financial statements in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of
how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report, including in relation to these matters. Accordingly, our
audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including
the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
118 FINANCIAL STATEMENTS
Independent Auditor’s Report (continued)
Independent Auditor's Report
Senex Energy Limited
Page 2
1.
Carrying value of oil and gas properties and property, plant & equipment (producing assets)
Why significant
How our audit addressed the key audit matter
During the period ended 30 June 2020, the Group recorded an impairment charge of $35
million in respect of oil & gas properties and property, plant & equipment, leaving the
Group with remaining oil & gas properties of $293 million and property, plant & equipment
of $294 million at 30 June 2020.
Australian Accounting Standards require the Group to assess at the end of each reporting
period whether there is any indication that an asset may be impaired, or whether the
reversal of a previously recognised impairment charge may be required. If any such
indication exists, the Group is required to estimate the recoverable amount of the asset.
The Group operates in an industry with exposure to fluctuations in commodity prices,
foreign exchange rates and estimation of reserves, impacting the Group’s revenues and
operating cash flows. Impairment assessments involve forecasts in these areas, all of which
are highly judgmental and ultimately impact on carrying value of producing oil and gas
properties. Accordingly, this was considered a key audit matter.
The Group has performed an impairment indicator assessment, concluding indicators were
present as a result of a market capitalisation deficiency at 30 June 2020 and a decline in
global oil prices. As a result of indicators being present, Senex’s management team
(“Management”) performed impairment testing and assessed the recoverable value of the
Cooper Basin Cash Generating Unit to be below the carrying value.
Disclosures regarding this matter can be found in Note 7 to the financial statements.
Our audit procedures included the following:
► Assessed the Group’s definition of cash generating units in accordance with Australian
Accounting Standards.
► Assessed the completeness of the Group’s consideration of potential impairment
indicators.
► Considered the relationship between asset carrying values and the Group’s market
capitalisation.
► Evaluated the modelling methodology use by Management with reference to Australian
Accounting Standards and with normal industry practice.
► Recalculated the carrying amount for each cash generating unit to ensure they were
prepared on a comparable basis with the cash flows in Management’s model;
► Tested the mathematical accuracy of Management’s model.
► Compared key forecast assumptions such as commodity prices, discount rates,
inflation rates, and foreign exchange rates to external observable market data.
► Considered the recoverability of proved and probable oil & gas reserves by agreeing
the Group’s reserves estimates to third party subsurface engineer reports and current
year production. We also assessed the qualifications, competence and objectivity of
the third-party experts used by the Group.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
ANNUAL REPORT 2020
Independent Auditor’s Report (continued)
FINANCIAL STATEMENTS 119
Independent Auditor's Report
Senex Energy Limited
Page 3
► Discussed with operational management the performance of the underlying assets and
any indication of underperformance, obsolescence, significant future capital
requirements or physical damage to assets.
► Considered if operation cost and capital assumptions included within Management’s
model are acceptable considering current performance, historical actuals and future
capital expansion including secondary recoveries (waterfloods).
► Considered the carrying value of producing assets against recent comparable market
transactions and the market value of comparable companies.
► Assessed the adequacy of the disclosures in Note 7 of the financial statements
2.
Impairment assessment of capitalised exploration and evaluation expenditure (non-producing assets)
Why significant
How our audit addressed the key audit matter
During the period ended 30 June 2020, the Group recorded an impairment charge of $13
million in respect of capitalised exploration and evaluation assets, leaving the Group with
remaining capitalised exploration and evaluation expenditure of $47 million at 30 June
2020.
For impairment purposes the carrying value of exploration assets is impacted by the
Group’s ability, and intention, to continue to explore its exploration assets. The results of
exploration work also determines to what extent the oil and gas reserves and resources
may or may not be commercially viable for extraction. The impairment testing process in
respect of these assets is complex and judgmental and commences with an assessment of
whether any indicators of impairment are present. Accordingly, this was considered a key
audit matter.
Given the decline in global commodity prices during the period, Management undertook a
process to identify any exploration expenditure previously capitalised which was unlikely to
be recovered through development or by sale. Although capitalised expenditure remains in
a number of key geographical areas of focus, Management concluded that future
Our audit procedures included the following:
► Considered the Group’s right of tenure to explore in the relevant exploration area,
which included obtaining and assessing supporting documentation such as license
agreements and correspondence with relevant government agencies.
► Examined the Group’s analysis of exploration and evaluation results relating to
activities carried out in the relevant license areas, including an evaluation of drilling
results and updates to the Group’s reported reserve and resources.
► Considered the Group’s intention to carry out significant exploration and evaluation
activities in relevant exploration areas or plans to transfer the assets to oil & gas
properties. This included the review of budgets, strategic plans and drilling plans in
addition to enquiries with executive and operational management.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
120 FINANCIAL STATEMENTS
Independent Auditor’s Report (continued)
Independent Auditor's Report
Senex Energy Limited
Page 4
production at current oil pricing forecasts would be unlikely to recover the capitalised
expenditure in full at certain areas of interest.
Disclosures regarding this matter can be found in Note 7 to the financial statements.
► Considered whether any other data or information available indicated the carrying
amount of the exploration and evaluation assets is unlikely to be recovered in full,
from either successful development or by sale.
► Assessed the Group’s ability to finance any planned future exploration and evaluation
activity in areas where impairment indicators where not otherwise identified.
► Considered the fair value of the Group’s exploration and evaluation assets with
reference to the Group’s market capitalisation and broker reports.
► Considered the carrying value of exploration and evaluation assets against recent
comparable market transactions and the market value of comparable companies.
Assessed the adequacy of the disclosures in Note 7 of the financial statements.
3.
Accrued oil revenue
Why significant
How our audit addressed the key audit matter
As at 30 June 2020 the Group has $8.4 million of accrued oil revenue (30 June 2019:
$18.6 million), which represents a significant portion (14%) of total annual oil revenue (30
June 2019: 24.5%).
In accordance with contractual terms within the Crude Oil Sale and Purchase Agreement
(‘COSPA’), risk and title of oil produced in the Cooper-Basin is transferred to the South
Australian Cooper Basin Joint Venture (“SACBJV”) when the oil reaches the Moomba
processing facility. The supply of oil to the Moomba processing facility is the point the
Group satisfies its performance obligation to the SACBJV in respect of the supply of oil.
Revenue is calculated using forecast oil prices when title has passed, with actual invoices
raised when the oil has shipped from Port Bonython.
Our audit procedures included the following:
► Assessed the point of revenue recognition with reference to the executed contracts
between the parties.
► Obtained directly from the SACBJV an independent confirmation of the barrels of oil
received at the Moomba processing facility, but not yet shipped via Port Bonython.
► For all accrued revenue barrels sold, assessed the estimated sales price applied by the
Group to forward commodity price assumptions together with estimates of quality
premiums and exchange rates for the period in which settlement is likely to occur with
reference to contractual arrangements and Brent oil price futures.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
ANNUAL REPORT 2020
Independent Auditor’s Report (continued)
FINANCIAL STATEMENTS 121
Independent Auditor's Report
Senex Energy Limited
Page 5
Given the complexity in calculating volume of oil supplied and judgement in the application
of the estimated transaction price, minor variations can lead to significant changes in the
calculated revenue recorded. As such, this was considered a key audit matter.
Disclosures regarding this matter can be found in Note 5 to the financial statements.
► Selected shipments which occurred close to the period end and assessed whether
revenue was recorded in the correct period.
Information Other than the Financial Statements and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information included in the Company’s annual report for the year ended 30 June 2020 other than the
financial statements and our auditor’s report thereon. We obtained the Directors’ Report, Operating and Financial Review, Material Risks, Glossary and Corporate Directory, that are to be included in
the annual report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the annual report after the date of this auditor’s report.
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon, with the exception of the Remuneration
Report and our related assurance opinion.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Statements
The directors of the Company are responsible for the preparation of the financial statements that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations
Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial statements that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating 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 Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial statements.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
122 FINANCIAL STATEMENTS
Independent Auditor’s Report (continued)
Independent Auditor's Report
Senex Energy Limited
Page 6
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represents the underlying transactions and
events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial statements of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
ANNUAL REPORT 2020
Independent Auditor’s Report (continued)
FINANCIAL STATEMENTS 123
Independent Auditor's Report
Senex Energy Limited
Page 7
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 29 to 47 of the directors' report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of Senex Energy Limited for the year ended 30 June 2020, 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.
Ernst & Young
Anthony Jones
Partner
Sydney
21 August 2020
Matthew Taylor
Partner
Brisbane
21 August
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
124 ADDITIONAL INFORMATION
Additional information
Tenement interests
Senex’s portfolio of exploration, development and production assets as at 30 June 2020.
Permit
(*Operated by Senex)
Area
(km2)
Interest
(%)
Joint Venturers
(**Operator)
Original PEL/
ATP
Senex net area
(km2)
EXPLORATION
Cooper/Eromanga Basins
PEL 94
PEL 182*
PEL 516*
PEL 639*
Surat Basin
899.87
870.18
1552.30
627.45
15
57
100
100
Beach**, Strike
Acer Energy
ATP 1190 (Weribone)
12.19
20.65
AGL, Armour Energy**
ATP 767*
ATP 889*
ATP 593*
ATP 771*
PCA 125* - (East)
313.6
76.95
384.6
538.36
154.00
100
100
100
100
100
PCA 126* - (West)
154.00
100
PCA 127* - (Central)
231.00
100
-
-
-
-
-
-
-
-
-
ATP 771
ATP 771
ATP 771
PCA 157 - (Weribone
block only)
12.19
20.65
AGL, Armour Energy**
ATP 1190
PCA 184*
76.90
100
PCA 249*
230.79
100
ATP 767
ATP 593
134.98
496.00
1552.30
627.45
2.52
76.90
76.95
230.79
538.36
154.00
(already counted
in ATP 771 area)
154.00
(already counted
in ATP 771 area)
231.00
(already counted
in ATP 771 area)
2.52
(already counted
in ATP 1190 area)
76.90
(already counted
in ATP 767 area)
0.00
(already counted
in ATP 593 area)
Permit
(*Operated by Senex)
Area
(km2)
Interest
(%)
Joint Venturers
(**Operator)
Original PEL/
ATP
Senex net area
(km2)
PRODUCTION
Surat Basin
PL 1022* (East)
230.60
100
PL 1023* (West)
230.50
100
PL 1024* (Central)
224.60
100
PL 1037*
58
100
Cooper/Eromanga Basins
PPL 203 (Acrasia)*
PPL 206 (Derrilyn1)
PPL 207 (Worrior)*
PPL 208 (Derrilyn)
PPL 209 (Harpoono)*
PPL 211 (Reg Sprigg
West2)
PPL 213 (Mirage)*
PPL 214 (Ventura)*
PPL 215 (Toparoa)
PPL 217 (Arwon)*
PPL 218 (Arwon East)*
PPL 221 (Padulla)*
PPL 241 (Vintage Crop)*
PPL 240 (Snatcher)*
PPL 242 (Growler)*
PPL 243 (Mustang)*
PPL 251 (Burruna)*
PPL 258 (Spitfire)*
2.03
1.40
6.41
0.26
10.02
0.12
9.69
1.56
0.89
0.81
0.62
4.56
0.53
3.08
7.87
3.61
1.02
8.10
100
35
70
35
100
25
100
100
35
100
100
100
100
60
60
60
100
60
ATP 767, 795
and 889
ATP 767 and
795
ATP 767 and
795
N/A Tender
Award
90
Santos
93
113
113
90
115
115
113
93
113
113
516
111
104
111
115
104
Santos**
Cooper
Santos**
Santos**, Beach,
Lattice Energy
Santos**
Beach
Beach
Beach
Beach
230.60
230.50
224.60
58.00
2.03
0.49
4.49
0.09
10.02
0.03
9.69
1.56
0.31
0.81
0.62
4.56
0.53
5.05
4.72
2.17
1.02
4.86
ANNUAL REPORT 2020 ADDITIONAL INFORMATION 125
Permit
(*Operated by Senex)
Area
(km2)
Interest
(%)
Joint Venturers
(**Operator)
Original PEL/
ATP
Senex net area
(km2)
Permit
(*Operated by Senex)
Area
(km2)
Interest
(%)
Joint Venturers
(**Operator)
Original PEL/
ATP
Senex net area
(km2)
PPL 263 (Marlet North)*
PPL 264 (Martlet)*
PPL 265 (Marauder)*
PPL 266 (Breguet)
0.58
1.30
1.87
1.98
60
60
60
60
PPL 268 (Vanessa)
1.80
57
RETENTION
Cooper/Eromanga Basins
PRL 15*
PRL 16*
PRL 50*3
PRL 51*3
PRL 52*3
PRL 53*3
PRL 54*3
PRL 55*3
PRL 56*3
PRL 57*3
PRL 58*3
PRL 59*3
PRL 60*3
PRL 61*3
PRL 62*3
PRL 63*3
PRL 64*3
PRL 65*3
PRL 66*3
6.87
3.09
97.76
99.34
97.33
99.63
96.07
99.63
99.36
99.19
98.59
99.14
99.68
98.87
98.83
94.35
98.04
97.70
96.27
60
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Beach
Beach
Beach
Beach
Beach
Beach
111
104 and PRL
137
PEL 104 and
PRL 136
104 and PRL
136
PEL 182 and
PRL 135
104
113
88
88
88
88
88
88
88
88
88
88
88
88
88
88
88
88
88
0.35
0.78
1.12
1.19
1.03
4.12
3.09
97.76
99.34
97.33
99.63
96.07
99.63
99.36
99.19
98.59
99.14
99.68
98.87
98.83
94.35
98.04
97.70
96.27
PRL 67*3
PRL 68*3
PRL 69*3
PRL 70*3
PRL 71*3
PRL 72*3
PRL 73*
PRL 74*3
PRL 75*3
PRL 76*
PRL 77*
PRL 78*
PRL 79*
PRL 80*
PRL 81*
PRL 82*
PRL 83*
PRL 84*
PRL 105*
PRL 106*
PRL 107* -
Surrendered
18/10/2019
PRL 108*
PRL 109*
PRL 110*
PRL 116*
PRL 117*
PRL 120*
PRL 124*3
96.95
98.52
94.08
77.35
75.96
72.53
94.48
82.57
49.05
84.77
77.21
98.23
96.99
60.28
78.46
76.66
98.58
52.89
82.54
23.27
94.03
41.89
93.22
83.79
63.92
1.59
99.30
84.83
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
80
Planet Gas
Planet Gas
90
90
90
90
90
90
90
90
90
102
102
113
113
113
113
113
113
113
115
115
115
105
105
105
115
115
514
514
96.95
98.52
94.08
77.35
75.96
72.53
94.48
82.57
49.05
84.77
77.21
98.23
96.99
60.28
78.46
76.66
98.58
52.89
82.54
23.27
94.03
Not counted in
total area
41.89
93.22
83.79
63.92
1.59
79.44
67.86
126 ADDITIONAL INFORMATION
Permit
(*Operated by Senex)
Area
(km2)
Interest
(%)
Joint Venturers
(**Operator)
Original PEL/
ATP
Senex net area
(km2)
Permit
(*Operated by Senex)
Area
(km2)
Interest
(%)
Joint Venturers
(**Operator)
Original PEL/
ATP
Senex net area
(km2)
PRL 128*3
PRL 135*
PRL 136*
PRL 137*
PRL 138*
PRL 139*
PRL 140*
PRL 141*
PRL 142*
PRL 143*
PRL 144*
PRL 145*
PRL 146*
PRL 147*
PRL 148*
PRL 149*
PRL 150*
PRL 183*
PRL 184*
PRL 185*
PRL 186*
PRL 187*
PRL 188*
PRL 189*
PRL 190*
PRL 207*
PRL 208*
PRL 209*
PRL 210*
86.58
0.91
72.20
72.73
89.23
94.85
98.41
77.29
99.36
94.97
88.87
94.54
98.03
85.18
94.12
94.62
22.82
82.58
93.50
86.78
86.67
97.32
93.83
88.70
98.13
99.14
98.89
98.47
98.80
80
57
60
60
60
60
60
60
60
60
60
60
60
60
60
60
60
80
80
80
80
80
80
80
80
55
55
55
100
Planet Gas
Beach
Beach
Beach
Beach
Beach
Beach
Beach
Beach
Beach
Beach
Beach
Beach
Beach
Beach
Beach
Beach
Cooper
Cooper
Cooper
Cooper
Cooper
Cooper
Cooper
Cooper
Cooper, Santos
Cooper, Santos
Cooper, Santos
514
182
104
104
104
104
104
104
111
111
111
111
111
111
111
111
111
110
110
110
110
110
110
110
110
100
100
100
637
69.26
0.52
43.32
43.64
53.54
56.91
59.05
46.37
59.62
56.98
53.32
56.72
57.58
51.11
56.00
56.77
13.69
66.06
74.80
69.42
69.34
77.86
75.06
70.96
78.50
54.53
54.39
54.16
98.80
PRL 2114
98.49
15
Vintage Energy Ltd**,
Bridgeport (Cooper
Basin) Pty Ltd,
Metgasco Ltd
PRL 212*
PRL 213*
PRL 214*
PRL 215*
PRL 216*
PRL 217*
PRL 218*
PRL 219*
PRL 220*
PRL 221*
PRL 222*
PRL 223*
PRL 224*
PRL 225*
PRL 226*
PRL 227*
PRL 228*
PRL 229*
PRL 230*
PRL 231*
PRL 232*
PRL 233*
PRL 237*
PRL 238*
PRL 239*
PRL 240*
86.53
97.12
96.61
88.65
71.61
97.11
89.87
86.42
96.38
85.56
93.61
95.12
95.86
98.84
98.37
51.96
89.93
99.00
95.76
86.82
95.04
94.66
17.64
98.50
99.10
99.15
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
70
70
70
70
57
57
57
Cooper
Cooper
Cooper
Cooper5
Beach
Beach
Beach
637
637
637
637
637
637
637
637
637
637
638
638
638
638
638
638
638
638
638
638
93
93
93
93
182
182
182
14.77
86.53
97.12
96.61
88.65
71.61
97.11
89.87
86.42
96.38
85.56
93.61
95.12
95.86
98.84
98.37
51.96
89.93
99.00
95.76
60.77
66.53
66.26
12.35
56.15
56.49
56.52
ANNUAL REPORT 2020 Permit
(*Operated by Senex)
Area
(km2)
Interest
(%)
Joint Venturers
(**Operator)
Original PEL/
ATP
Senex net area
(km2)
SXY interest in PPL 211 licence is 100%, working interest in RSW-1 well is 25%. No unitisation
agreement (as with Derrilyn) only letter agreement in place
ADDITIONAL INFORMATION 127
Area calculations
SA gross area (excl applications)
SA net area (excl applications)
QLD gross area (excl applications)
QLD net area (excl applications)
Total gross Senex area (excl applications)
Total net Senex area (excl applications)
km2
13,174
10,701
1,679
1,669
14,853
12,370
PRL 241*
PRL 242*
PRL 243*
PRL 244*
PRL 245*
PRL 246*
APPLICATIONS
Surat Basin
99.05
98.33
99.68
98.69
93.09
51.56
57
57
57
57
100
100
Beach
Beach
Beach
Beach
182
182
182
182
90
90
ATP 2042 - application
153.00
100
Cooper/Eromanga Basins
PPL 270
10.26
100%
preferred
tenderer for
PLR2018-1-1
PEL 516
(Gemba)
56.46
56.05
56.82
56.25
93.09
51.56
153.00
10.26
Footnotes:
[1] Santos PPL 206 forms part of Derrilyn Unitisation Agreement with PPLs 208 & 215
[2] Santos PPL 194 forms part of Reg Sprigg West agreement with PPL 211
[3] During the year, Senex and Oilex Limited (Oilex) entered into a sale agreement for the permits. Oilex has separately agreed to
transfer the permits to Armour Energy Limited. The transaction remains subject to conditions precedent which are expected
to be satisfied, and completion expected to occur, by September 2020.
[4] Transaction completed on 28 April 2020 to transfer 85% of permit to Vintage, Metgaso & Bridgeport, with Vintage to become
operator. Interest & operatorship to be assigned. Approval and Registration of Dealings approved 26 May 2020.
[5] 20% of Senex interest to be assigned to Metgasco
128 ADDITIONAL INFORMATION
Shareholder statistics
Additional information is provided pursuant to ASX listing rule 4.10 and not shown elsewhere in this
Annual Report:
The names of the 20 largest holders of fully paid shares, the number each holds, and the percentage of
capital each holds as at 31 July 2020:
No.
Name
A distribution schedule of the number of holders in each class of equity securities as at 31 July 2020:
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
Size of holding
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 +
Total
Number of Holders
Listed fully
paid shares
Unlisted
performance rights
Unlisted share
appreciation rights
1,111
4,045
2,286
6,128
1,499
15,069
-
-
-
36
33
69
-
-
-
-
5
5
The number of holders holding less than a marketable parcel of fully paid ordinary shares as at 31 July
2020 was 1,971.
2
3
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
4 NATIONAL NOMINEES LIMITED
5
6
ELPHINSTONE HOLDINGS PTY LTD
BOW ENERGY LIMITED
7 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
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