+
Annual Report 2018
Range Resources Ltd and
Controlled Entities
ABN 88 002 522 009
+ Annual Report 2018
+ Contents
+ Contents .............................................................................................................................................. 2
+ About Range ...................................................................................................................................... 3
+ Statement from the Chairman and Chief Executive Officer .................................................... 4
+ Directors’ Report ................................................................................................................................ 6
+ Operational Review ......................................................................................................................... 11
+ Reserves and Resources Statement ............................................................................................. 17
+ Corporate Review ............................................................................................................................ 20
+ Financial Review .............................................................................................................................. 22
+ Corporate Social Responsibility (“CSR”) ...................................................................................... 26
+ Corporate Governance and Risk ................................................................................................. 28
+ Remuneration Report (Audited) ................................................................................................... 31
+ Auditor’s Independence Declaration ......................................................................................... 42
+ Consolidated Statement of Profit or Loss and other Comprehensive Income for the year
ended 30 June 2018 ........................................................................................................................... 43
+ Consolidated Statement of Financial Position as at 30 June 2018 ........................................ 44
+ Consolidated Statement of Changes in Equity for the year ended 30 June 2018 ............. 45
+ Consolidated Statement of Cash Flows for the year ended 30 June 2018 .......................... 46
+ Notes to Consolidated Financial Statements ............................................................................. 47
+ Directors’ Declaration ...................................................................................................................102
+ Independent Audit Report to the Members of Range Resources Limited .........................103
+ ASX additional information ..........................................................................................................106
+ Corporate Directory ......................................................................................................................109
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
2
+ Annual Report 2018
+ About Range
Range is a dual-listed (AIM: RRL and ASX: RRS) company with oil and gas
projects and oilfield service businesses in Trinidad and Indonesia. The
Company’s strategy is focused on growing production, reserves and
revenue from its assets. The Company is led by an experienced team
aligned with shareholders’ interests.
Reporting period highlights
•
Total production 25% higher than prior year (net production of 650
bopd);
Two development wells drilled;
•
• Production from waterflood continued to increase with average
production for the period of 200 bopd;
• Extensive infrastructure modernisation programme commenced;
•
Two acquisitions completed: Perlak oil and gas project in Northern
Sumatra, Indonesia and an oilfield services business in Trinidad;
Independent CPRs published on Trindad and Indonesia assets;
•
• Oilfield services business awarded new contract with Shell. Work
•
under contract safely completed;
Indonesia operations commenced with two offices and a services
company established;
• Chief Operating Officer and Trinidad General Manager appointed;
and
Legacy issue in Colombia successfully resolved.
•
Post reporting period highlights
• Oilfield services business awarded new contract with Touchstone.
Work under contract safely completed; and
• £1 million placement completed to accelerate growth strategy and
to continue investment in infrastructure and facilities upgrade in
Trinidad.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
3
+ Annual Report 2018
+ Statement from the Chairman and
Chief Executive Officer
Dear fellow shareholders
It is our pleasure to present the Annual Report for the 2018 financial year. It has been a
particularly busy period for our Company with the team firmly focused on demonstrating
production growth from our existing Trinidad portfolio and completing value-accretive
acquisitions of new assets.
We believe we have succeeded with our agenda with a 25% increase in production
recorded during the year - the highest annual production rate achieved by the Company
in the last five years. We have also successfully completed two new acquisitions: an
established oilfield services provider in Trinidad, and an onshore oilfield with historic
production in Indonesia.
In Trinidad, our operations were executed safely and efficiently. We place HSE practices
at the forefront of our operations and strive towards continuous improvement of our safety
performance, which is achieved through ongoing training, monitoring, reviews, internal
controls and implementation of corrective actions. Our outstanding HSE performance
continued during the year with reported LTI frequency rate significantly below the
average for onshore operators in Central America and Caribbean.
We have continued to demonstrate production growth from our ongoing work
programme in Trinidad and were able to achieve peak production in excess of 800 bopd.
Maintaining production rates at consistent levels is one of the challenges that we
continue to face, particularly at the Beach Marcelle field where production has been
growing over the last year. We are actively working to address this and have completed
upgrades to the oil handling and storage capacity as part of infrastructure modernisation
programme at the field.
During the year, we have continued with our development drilling and workover
programme with two new wells successfully drilled and over 250 workovers completed. At
our producing Beach Marcelle waterflood project, we completed pipeline construction
to provide access to additional water supply. After the year end, we have also
commenced data collection on some of the selected wells as part of expansion of the
existing waterflood pattern, which will include increasing the number of active producer
and injector wells.
Our commitment to Trinidad was demonstrated further by closing of the acquisition of the
oilfield services business (RRDSL) in November. Since that time, we have been busy
integrating RRDSL into the Group’s business. Our team has embarked on an active
marketing campaign of RRDSL and its services which has resulted in a new contract
award with Shell. This is a notable achievement for a growing business like RRDSL and is a
testament to the quality of its services, HSE standards, equipment and personnel.
Subsequent to the year end, RRDSL was successfully awarded a new contract with
another Trinidad operator Touchstone.
Our longer-term agenda is to establish RRDSL as a profitable business, servicing a wide
range of counterparties in Trinidad and internationally. We are currently in discussions with
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
4
+ Annual Report 2018
potential new E&P clients both in Trinidad and in Latin America with a view of securing
further third-party work and increasing revenues for Range.
In addition to RRDSL, we successfully closed an acquisition of a new upstream asset in
Indonesia in October. Operations at the Perlak field commenced in May with well
reactivations underway. The operator also commenced initial geological and
geophysical studies and established two offices in Indonesia. Range also established an
oilfield services company which will be focused on the provision of operational support
and certain oilfield services to the Perlak field. Ultimately, it is intended to develop this
company in a similar fashion to RRDSL to provide services to other onshore operators in
Indonesia.
Looking ahead, our main strategy will continue to be focused on growing production and
cashflows from our assets, with a longer-term goal of transforming Range into a self-
funding business generating cashflow which can be reinvested in transformational high-
return opportunities. We aim to achieve this by continuing our active work programme
across our enlarged portfolio and are hoping to demonstrate continued achievements
during the year ahead.
We would like to thank our shareholders for their support over the past year. We would
also like to thank governmental stakeholders of Trinidad and Indonesia for their support
and cooperation. Finally, we would like to thank our staff and fellow Directors for their
commitment to the Company during another busy year as we continue work towards
building Range into a profitable business.
Yours faithfully
Zhiwei Gu: Chairman Yan Liu: Chief Executive Officer
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
5
+ Annual Report 2018
+ Directors’ Report
The Directors of Range Resources Limited (“Range” or “the Company”) and the entities it
controls (together, the “Group”) present the financial report for the year ended 30 June
2018.
Directors
The names and details of the Company’s directors in office during the financial year and
until the date of this report are as follows. The directors were in office during the entire
period unless otherwise stated.
Name
Mr Zhiwei Gu
Mr Yan Liu
Mr Lubing Liu
Ms Juan Wang
Dr Yi Zeng
Mr Yu Wang
Position
Non-Executive Chairman
Executive Director, Chief Executive Officer
Executive Director, Chief Operating Officer (appointed
1 March 2018)
Non-Executive Director (resigned 1 March 2018)
Non-Executive Director
Non-Executive Director
Non-Executive Director (resigned 26 September 2017)
Mr Zhiwei Gu: Non Executive Chairman
Qualifications:
Interest in shares and options:
LL.B, LL.M., MSc
2,083,333 ordinary shares
30,000,000 unlisted options (£0.01, 30 March 2020)
Directorships held in other
listed entities during the past
three years
None
Mr Gu is an experienced corporate lawyer, who has worked with numerous companies
seeking listings on various international stock markets, including the Toronto Stock
Exchange and the Hong Kong Stock Exchange. He is currently a partner of Dentons, one
of the largest global law firms. Mr Gu has participated in several venture capital and
private equity investment cases by various funds such as London Asia Fund, Warburg
Pincus, Korea Development Bank, China Venture Investment Co., and China Cinda
AMC. During his time with China National Gold Group Corp., Mr Gu was in charge of
mineral resource merger and acquisition activities. Mr Gu holds a LL.B. from the Jilin
University in China; a LL.M. from the Northeast University in China; and a Master of
Applied Finance from the Macquarie University in Australia. Mr Gu is a qualified lawyer
and securities practitioner in China.
Mr Zhiwei Gu is a Chairman of the Remuneration and Nomination Committee and a
member of the Audit and Risk Committee.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
6
+ Annual Report 2018
Mr Yan Liu: Executive Director, Chief Executive Officer
Qualifications:
Interest in shares and options:
B.Ec, MCom
6,333,333 ordinary shares
50,000,000 unlisted options (£0.01, 30 March 2020)
Directorships held in other
listed entities during the past
three years
None
Mr Liu has over 20 years of accounting and corporate advisory experience in China and
Australia. Previously, Mr Liu was a partner of Agile Partners, the financial advisory
company based in China and the Financial Controller at Legalwise Seminars Pty in
Australia. He also spent 8 years at Chinatex Corporation where he worked in project
management positions. Mr Liu holds a Bachelor degree in Economics from the Central
University of Finance and Economics, China, and a Masters degree in Commerce from
the University of New South Wales, Australia.
Mr Yan Liu is a member of the Reserves and HSE Committee.
Mr Lubing Liu: Executive Director, Chief Operating Officer (appointed 1 March 2018)
Non-Executive Director (resigned 1 March 2018)
Qualifications:
Interest in shares and options:
BSc
None
Directorships held in other
listed entities during the past
three years
None
Mr Lubing Liu has over 23 years of global experience in petroleum exploration,
development, production, joint venture operations and new ventures. Prior to joining
Range, Mr Liu held various subsurface leader roles, including Chief Reservoir Engineer
with Melbana Energy Limited, Vice President of Exploration and Petroleum Technology
with Sinopec East Puffin Pty Ltd, and other international exploration and production and
energy service companies including ConocoPhillips, CNOOC, Woodside, RPS and
Senergy. Mr Liu has extensive waterflooding experience having worked at the Penglai
oilfield in China, the Chinguetti oilfield in Mauritania and Block 95 in Peru. Mr Liu holds a
BSc in Petroleum Engineering from the Southwest Petroleum University, China. He is a
Member of the Society of Petroleum Engineers.
Mr Lubing Liu is a member of the Remuneration and Nomination and the Reserves and
HSE Committees.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
7
+ Annual Report 2018
Ms Juan Wang: Non-Executive Director
Qualifications:
Interest in shares and options:
Directorships held in other
listed entities during the past
three years
BA, MBA
2,083,333 ordinary shares
7,500,000 unlisted options (£0.01, 30 March 2020)
Anterra Energy Inc. (from December 2014 to June 2016)
Ms Wang was previously the President of Energy Prospecting Technology USA, Inc. and
LandOcean Energy Canada Ltd. where she was responsible for overall management
work for the subsidiary companies of LandOcean in Houston and Calgary. Previously, she
was also an investment manager and director at Anterra Energy Inc. responsible for
Chinese investor liaisons and a manager of corporate mergers and acquisitions at
LandOcean. Ms Wang has a commercial banking background having previously worked
for Deutsche Bank and Bank of East Asia.
Ms Juan Wang is the Chairperson of the Audit and Risk Committee.
Dr Yi Zeng: Non-Executive Director
Qualifications:
BSc; MSc; PhD
Interest in shares and options:
Directorships held in other
listed entities during the past
three years
None
None
Dr Yi Zeng has over 30 years of experience in the oil and gas and mining industries. Dr
Zeng has held various technical and research positions with global companies including
BHP Billiton and Santos Asia Pacific. Dr Zeng holds a PhD in Geophysics from the Victoria
University of Wellington, New Zealand, an MSc in Applied Geophysics and a BSc in
Geophysical Exploration from the Chengdu University of Technology, China.
Dr Yi Zeng is a Chairman of the Reserves and HSE Committee and a member of the
Remuneration and Nomination and the Audit and Risk Committees.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
8
+ Annual Report 2018
Mr Yu Wang: Non-Executive Director (resigned 26 September 2017)
Qualifications:
Interest in shares and options:
BSc; MSc
None
Directorships held in other
listed entities during the past
three years
None
Mr Wang has over six years of corporate experience in finance and investments, focusing
on energy and mineral sectors. He is currently a senior investment manager at Shanghai
Anjin Investment Co. Ltd., responsible for project investments and management, both
domestically and overseas. Previously, he worked as an investment manager at Weihai
International Economic & Technical Cooperative Co., Ltd, specialising in project analysis
and evaluation of energy and mineral projects in Africa, including oil and gas projects in
the Republic of the Congo. Prior to that, Mr Wang was an investment analyst at Beijing
Golden Valley Investment Management Co., Ltd. Mr Wang holds an MSc in Economics
from the University of Edinburgh, and a BSc in Financial Economics from the University of
Dundee.
Company Secretary
The following persons held the position of company secretary during the financial year:
• Mr Nick Beattie
• Ms Sara Kelly
Mr Nick Beattie: Joint Company Secretary
Qualifications:
Interest in shares and options:
BA (Hons), FCIBS, AMCT
2,916,667 ordinary shares
25,000,000 unlisted options (£0.01, 30 March 2020)
Directorships held in other
listed entities during the past
three years
None
Mr Nick Beattie has over 25 years of experience in finance working with a range of
international banks. Most recently he was a Managing Director in the BNP Paribas
Upstream Oil and Gas team in London where he was responsible for leading the bank
relationships with UK focused independent E&P companies. Nick has over 10 years’
experience specifically financing the E&P sector and whilst at BNP Paribas, he structured
and led numerous reserve based loans, development financings and other debt
facilities. Prior to working with BNP Paribas, Nick worked as a Director within the Oil and
Gas finance team at Fortis Bank covering Europe, Middle East and Africa and in a variety
of roles with National Australia Bank Group. Nick is an Associate Member of the
Association of Corporate Treasurers, a Fellow of the Chartered Institute of Bankers in
Scotland and a Member of the Chartered Institute for Securities and Investment.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
9
+ Annual Report 2018
Ms Sara Kelly: Joint Company Secretary
Qualifications:
Interest in shares and options:
B.Com, LLB
1 ordinary share
Directorships held in other
listed entities during the past
three years
Drake Resources Limited (appointed June 2017)
Ms Sara Kelly is an experienced Company Secretary and Corporate Lawyer with over 13
years’ experience. Sara has comprehensive knowledge of and experience in
administering regulatory frameworks and processes in a listed company environment
and practised as a corporate lawyer specialising in acquisitions, takeovers, capital
raisings and listing of companies on ASX and AIM. Sara has acted as the company
secretary of a number of ASX listed companies. Sara is a partner at Edwards Mac Scovell,
a boutique Western Australian legal practice based in Perth.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
10
+ Annual Report 2018
+ Operational Review
Principal Activities
The principal activity of the Group during the financial year was oil and gas exploration,
development and production in Trinidad. During the year, the Company also acquired
two new assets: an oil and gas project in Indonesia and an oilfield services business in
Trinidad.
Production
The Group’s oil and gas production for the year was 237,352 barrels (average of 650
bopd) net to Range, which is a 25% increase in production from the previous year (2017:
522 bopd). Range is pleased to be reporting production growth during the period which is
mainly attributed to the ongoing work programme at the Beach Marcelle field.
Range had been facing challenges in maintaining production rates at consistent levels
largely due to the limitations associated with the infrastructure at the Beach Marcelle
field. To resolve this and accommodate production growth, the Company initiated
infrastructure modernisation programme at the field. As part of this programme, the
Company completed an upgrade to its oil handling and storage facilities.
+
Installation of a
new storage tank
Reserves
During the period, the Company published independent Competent Person's Reports
(“CPRs”) on its Trinidad and Indonesia assets. The Trinidad CPR which was completed by
Rockflow Resources Ltd confirmed net 2P reserves of 16 MMstb and net 2C contingent
resources of 8 MMstb. The Indonesia CPR which was completed by LEAP Energy Partners
Sdn Bhd confirmed net 2C contingent resources of 10.9 Bscf and 3.1 MMstb.
The CPRs are available on Range’s website:
http://www.rangeresources.co.uk/operations/reserves-and-resources/.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
11
+ Annual Report 2018
Trinidad
Health, Safety and Environment (“HSE”)
The health and safety of our people, contractors and communities are important to us.
We aim to achieve a safe and healthy work environment by upholding industry best
practice and enforcing robust safety procedures at all of our operating sites.
We manage our activities in order to minimise disturbance to the environment, utilising
environmental standards consistent with developments in technology, industry, codes of
practice and all relevant statutory requirements. We require our employees and
contractors to undertake their work in an environmentally sound manner and to consider
environmental protection.
During the year, the Company continued its focus on safe operations. The Company is
pleased to report that its average Lost Time Incident (“LTI”) frequency rate for the year of
0.43 is significantly below the average of 2.5 reported by the International Association of
Drilling Contractors for the onshore operators in Central America and Caribbean.
The Company notes that the LTI frequency rate was higher during the second half of FY
2018. The Company has been working with its supervisors and the HSE department to
address this and has been conducting daily tool box sessions, job safety analysis and
safety meetings. Range also established a Reserves and HSE committee which is
responsible for overseeing the health, safety, and environmental management within the
Group’s operations.
HSE Activity (12 month rolling average)
2.0
1.0
e
t
a
r
e
c
n
e
d
c
n
i
I
0.0
Jul '17 Aug '17 Sept '17 Oct '17 Nov '17 Dec '17 Jan '18 Feb '18 Mar '18 Apr '18 May '18 Jun '18
No. of Employee Hours
Lost Time Incident (frequency)
First Aid
Material Loss (equipment and property damage)
Near Miss
Environmental Spills
65000
55000
45000
35000
25000
15000
d
e
k
r
o
w
s
r
u
o
h
e
e
y
o
p
m
e
l
l
a
t
o
T
5000
-5000
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
12
+ Annual Report 2018
Waterflood programme
During the year, the Company continued production from two waterflood projects: the
South East area of Beach Marcelle field (the "SE Project") and parts of the Morne Diablo
field. The average combined production rate from waterflood projects for the year was
approximately 200 bopd.
At the SE project, the Company completed pipeline construction to connect to an
additional water source of 700 bwpd. It has been challenging to maintain injection rates
at a consistent level and these continued to fluctuate with peak injection of 1,450 bwpd.
The Company completed repairs on the existing pumps which should allow for stabilised
water injection rates of 1,500 bwpd.
Range is also looking to undertake expansion of the SE project to incorporate more
producer and injector wells. The expanded plan envisages up to 11 additional producers
and 6 injector wells across the SE Project. The programme is expected to deliver
enhanced production during early 2019.
+
Waterflood operations
Development drilling
During the year, the Company drilled two new development wells, the GY 684 well
located at the Beach Marcelle field and the QUN 161 well located at the Morne Diablo
field. The wells were drilled safely and efficiently by RRDSL. Both wells were successful, and
costs were capitalised in relation to these. The Company is particularly encouraged by
the results of the GY 684 well, which is one of the best producing wells drilled by Range in
recent years in Trinidad.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
13
+ Annual Report 2018
+The GY 684 well on production at the Beach Marcelle
As part of the upcoming work programme, the Company is planning on drilling two new
development wells located on the North-East area of the Beach Marcelle field. The North-
East area has an estimated 3.5 mmbbls of oil in place, of which only 6% has been
recovered to date. The Company estimates that at least a further 10% could be
produced from the area through primary recovery (additional 0.3 mmbbls). The wells are
planned for drilling once the majority of the sales infrastructure upgrade at the Beach
Marcelle field is completed. The first well is planned for drilling in Q4 2018 and the second
well in 2019.
In addition, Range intends to acquire a new geological tool which will allow for
enhanced data acquisition. This will assist in prioritising the lowest risk and highest return
drilling prospects and allow the Company to move towards an active shallow drilling
programme.
Optimization / workovers
The Company continued to undertake workovers on selected wells to provide additional
production. Over 250 workovers on the existing wells have been completed during the
year. The Company plans to continue its workover programme for the remainder of 2018.
Outlook and the upcoming work programme
Range’s planned work programme in Trinidad for the remainder of 2018 (calendar year) is
targeting stable production and includes:
1. Sales facilities upgrade at the Beach Marcelle field comprising:
• Addition of a new tanker truck unit;
Installation of a new transfer station;
•
Installation of a new 500-barrel settling tank;
•
Installation of a new LACT unit; and
•
• Upgrade on two 500-barrel sale tanks.
2. Optimisation (workovers) on approximately 50 wells
3. Optimisation of SE waterflood project
4. Drilling one new development well
5. New geological tool studies
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
14
+ Annual Report 2018
In-house oilfield business - RRDSL
Since the acquisition of RRDSL in Q4 2017, Range has been focused on integrating the
business into the Group. Range’s objective is to reduce the operating costs associated
with its upstream operations in Trinidad and increase upon the existing levels of business
with other operators to provide additional revenue stream.
During the year, RRDSL was successfully awarded a new contract with Shell Trinidad
Central Block Limited, a subsidiary of Royal Dutch Shell plc ("Shell"). The work scope under
the contract consisted of a one-well workover using RRDSL’s Rig 19 at Shell's operations
onshore Trinidad. Operations were safely completed during April 2018 with no HSE or LTI
incidents recorded.
+
RRDSL’s rig at
operations for Shell
Subsequent to the year end, RRDSL was successfully awarded a new contract with
Touchstone Exploration Trinidad Limited, a subsidiary of Touchstone Exploration Inc
("Touchstone"). Under the work scope of the contract, RRDSL provided turnkey services for
drilling one well on Touchstone's onshore WD8 block in Trinidad. The drilling operations
were safely completed.
With over 15 E&P companies operating onshore Trinidad, the Company sees significant
opportunity to expand third party customer base in the country. In addition, Range is in
discussions with potential clients in Latin America and is hoping to secure further third-
party work.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
15
+ Annual Report 2018
Indonesia
Since completion of the acquisition of interests in the Perlak field on 30 October 2017, the
Company has been working with its partners on expediting the agreed work programme.
The operator commenced initial geological and geophysical studies and established two
offices in Indonesia. Range also established an oilfield services company which will be
focused on the provision of operational support and certain oilfield services to the Perlak
field and ultimately it is intended to develop this company in a similar fashion to RRDSL
and provide services to other onshore operators in Indonesia.
Operations at the Perlak field commenced in May 2018, with reactivations on two wells
underway. The initial production and well performance are below the original
expectations, however work is still underway to establish stable production.
Looking ahead, Range intends to undertake G&G studies to improve reservoir
understanding and to assist in establishing a longer-term development plan for the field.
+
Operations at the
Perlak field
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
16
+ Annual Report 2018
+ Reserves and Resources Statement
Reserves
As at 30 June 2018, Range’s net proved and probable reserves (2P) are assessed to be 15.2
million barrels of oil (MMbbl). The key factors attributing to the revision in reserves are:
• Production during the period; and
• Amended timing for waterflood activity and drilling.
Reserves as at 30 June 2018 (MMbbl):
Category
Proved (1P)
Proved & probable
(2P)
Proved, probable &
possible (3P)
Developed
Undeveloped
Total
3.1
6.2
9.3
4.9
10.3
15.2
6.4
15.5
21.9
1. The reserve figures (1P, 2P and 3P) include reserves associated with the Company’s
Morne Diablo, South Quarry and Beach Marcelle licences in Trinidad. Range’s net
interest in all three fields is 100%.
2. Competent Persons Report (“CPR”) prepared by Rockflow Resources Ltd, effective
30 June 2017 was used as a basis for estimation of the reserve figures.
3. Range’s Morne Diablo and South Quarry fields are operated under farm-out
agreements, with rights to production net of Trinidad government royalties,
overriding royalties, and production taxes.
4. Range’s Beach Marcelle field is operated under the terms of an Incremental
Production Service Contract, entitling Range to a defined portion of the future
revenue stream. No oil and gas reserves are owned by Range.
Movement in reserves (MMbbl):
Category
Proved (1P)
Reserves as at 30
June 2017
FY 2018
production
Revisions
Reserves as at 30
June 2018
10.0
-0.2
-0.5
9.3
Proved & probable
(2P)
Proved, probable &
possible (3P)
16.0
-0.2
-0.6
15.2
22.9
-0.2
-0.8
21.9
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
17
+ Annual Report 2018
Contingent resources
As at 30 June 2018, Range’s net contingent resources 2C (P50) are assessed to be 12.9
million barrels of oil equivalent (MMboe). The key factor attributing to the increase in
contingent resources is the inclusion of the Indonesia assets.
Contingent resources as at 30 June 2018:
Category
Project
Trinidad
(net 100 %)
Indonesia
(net 23%)
Total
1C
2C
3C
Gas
Bscf
Oil
MMbbl
Total
MMboe
Gas
Bscf
Oil
MMbbl
Total
MMboe
Gas
Bscf
Oil
MMbbl
Total
MMboe
-
4.6
4.6
-
8.0
8.0
-
15.4
15.4
1.7
0.9
1.2
10.9
3.1
4.9
41.1
18.4
25.3
1.7
5.5
5.8
10.9
11.1
12.9
41.1
33.8
40.7
1. The Trinidad resource figures (1C, 2C and 3C) include contingent resources
associated with the Company’s Morne Diablo, South Quarry and Beach Marcelle
licences in Trinidad. Range’s net interest in all three fields is 100%.
2. The Trinidad resource figures are based on the CPR prepared by Rockflow
Resources Ltd, effective 30 June 2017.
3. The Indonesia resource figures (1C, 2C and 3C) include contingent resources
associated with the Company’s interest in the Perlak field. Range’s net interest is
23%.
4. The Indonesia resource figures are based on the CPR prepared by LEAP Energy
Partners Sdn. Bhd, effective 1 August 2017.
5. The interest in the Indonesia project was acquired during FY2018, therefore
contingent resources for FY2017 do not include Indonesia resources.
6. The conversion factor used for converting gas to oil equivalent volumes is 6,000 scf
to 1 boe.
Movement in contingent resources (MMboe):
Category
Contingent resources
as at 30 June 2017
Revisions
Contingent resources
as at 30 June 2018
1C
4.6
+1.2
5.8
2C
8.0
+4.9
12.9
3C
15.4
+25.3
40.7
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
18
+ Annual Report 2018
Notes on calculation of reserves and resources
•
The reserves and resources stated in this report are prepared in accordance with
the definitions and guidelines in the Society of Petroleum Engineers (SPE) 2007
Petroleum Resources Management System (PRMS).
• Range reviews and updates its oil and gas reserves and resources position on an
annual basis and reports the updated estimates as of 30 June each year.
Separately, Range reviews and updates its oil and gas reserves and resources
position as frequently as required by the magnitude of the petroleum reserves and
resources and changes indicated by new data.
The reserve and resource figures are reported according to Range's net economic
interest, net of royalties and net of lease fuel up to the reference point.
The reference point defined as the point of sale to third parties.
•
• Petroleum reserves and resources are prepared using deterministic and probabilistic
•
methods.
Totals may not exactly reflect arithmetic addition due to rounding.
• Project and field totals are aggregated by arithmetic summation by category.
•
• Oil and gas reserves estimates are expressions of judgment based on knowledge,
experience and industry practice. Estimates that were valid when originally
calculated may alter significantly when new information or techniques become
available. Additionally, by their very nature, reserve and resource estimates are
imprecise and depend to some extent on interpretations, which may prove to be
inaccurate. As further information becomes available through additional drilling
and analysis, the estimates are likely to change. This may result in alterations to
development and production plans which may, in turn, adversely impact the
Company's operations. Reserves estimates and estimates of future net revenues are,
by nature, forward looking statements and subject to the same risks as other
forward-looking statements.
Qualified person review
The information contained in this report has been reviewed and approved by Mr Lubing
Liu. Mr Liu is a suitably qualified person with 23 years of industry experience. Mr Liu is a full-
time employee of Range and holds a role of a Chief Operating Officer and Trinidad
General Manager. He holds a BSc in Petroleum Engineering from the Southwest Petroleum
University, China and is a member of the SPE (Society of Petroleum Engineers). Mr Liu is
qualified in accordance with ASX listing rule 5.41 and consents to the use of petroleum
reserve and resource figures in the form and context in which they appear in this statement.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
19
+ Annual Report 2018
+ Corporate Review
Completion of acquisition of RRDSL
Range completed the acquisition of RRDSL on 30 November 2017. The net consideration
of US$3.2 million is due by no later than 30 November 2020 and is subject to 6% interest per
annum.
In December 2017, Range advanced a partial payment of US$2.8 million to LandOcean
Petroleum Corp. Ltd as part of the consideration for the acquisition. The payment is on a
refundable basis and the funds will be immediately repayable to Range upon the
Company's request. This early, refundable payment benefits Range as it accrues interest
at 6%, generating a saving of almost US$100,000 for the Company during the period.
Please refer to Operations section for further details on RRDSL.
Completion of acquisition of oil and gas interests in Indonesia
Range completed the acquisition of an indirect interest in the Perlak field on 30 October
2017. As per the terms of the acquisition, the Company acquired an indirect 23% interest
(to increase to 42% upon completion of the minimum work programme) for a total
consideration of US$3.2 million payable in tranches.
Please refer to Operations section for further details on the project.
Director and management changes
Mr Yu Wang tendered his resignation as Non-Executive Director, effective 26 September
2017.
Mr Lubing Liu was appointed as Group Chief Operating Officer and General Manager of
Trinidad, responsible for overseeing the Company's upstream and oilfield services
operations focusing on Trinidad. Mr Lubing Liu also assumed a role of Executive Director.
These appointments were effective 1 March 2018.
Admission to trading on Alternative Investment Market (“AIM”)
The Company’s ordinary shares were admitted to trading on AIM effective 13 December
2017, under the ticker "RRL". The Company published an admission document which can
be viewed on Range’s website www.rangeresources.co.uk.
Termination of American Depository Receipt ("ADR") programme
The Company terminated its ADR programme as part of continued cost cutting exercise.
Successful resolution of the legacy issue in Colombia
The Company reached an agreement with Agencia Nacional de Hidrocarburos ("ANH")
to settle all outstanding historic claims and disputes between ANH and the consortium of
Optima Oil Corporation and the Company (the "Consortium"). The key terms of the
settlement arrangement are that ANH confirms that Range (and the Consortium) has no
liability for any payments or debts, all proposed penalties have been lifted, the
Consortium agrees to waive all potential claims against ANH and the consortium agrees
to the termination of the exploration licences. The agreement between the Consortium
and ANH is subject to court approval in Colombia, which is expected in FY19. The matter is
still contingent until this approval is obtained. Range also commenced the process of
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
20
+ Annual Report 2018
closing its Colombian branch office which is expected to result in cost savings of
approximately US$100,000 per annum.
Georgia
Range believes that it holds an interest in the Georgia Production Sharing Contract over
Block VIA (the “Georgia PSC”) through its 45% shareholding in Strait Oil and Gas Limited
(“SOG”). On 3 April 2017, the Government of Georgia represented by the LEPL State
Agency of Oil and Gas of the Ministry of Energy of Georgia (the “Agency”), announced
an open international tender on Block VIA. Range has been involved in the project since
2009 and invested substantial capital since that time with funds used to complete the
minimum work programme stipulated by the Georgia PSC.
The Agency has previously confirmed to SOG that this minimum work programme has
been satisfactorily completed. Range believes that the Georgia PSC remains valid and in
good standing and that the purported relicensing of the block would be a breach of the
Georgia PSC. Range and SOG contacted the Agency to seek an amicable resolution to
this issue and engaged legal advisers to explore relevant routes to preserve the value of
the investment in Georgia.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
21
+ Annual Report 2018
+ Financial Review
Summary of financial performance for the year
For the year to 30 June 2018, the Board is pleased to report a significant improvement in
the financial performance with a materially reduced loss after tax of US$17.5 million
compared to a loss in the prior year of US$54.4 million.
Whilst still disappointing to be reporting a loss, the Directors believe there has been
positive progress seen in several key areas, including:
• Revenues: 55% higher at US$13.1million (prior year US$8.4 million) with 97% of
revenues coming from upstream operations;
• Production: 25% higher at 237,352 barrels (prior year: 190,546 barrels);
• Realised oil price: 25% higher at US$55.40/bbl (prior year: US$44.27/bbl);
•
• General and administration expenses: 21% lower at US$4.1 million (prior year
First revenues generated by RRDSL from 3rd party drilling work;
US$5.2 million). This includes one-off costs of US$0.75 million related to the AIM
listing process completed during the year, so on an underlying basis the spend was
lower still at US$3.3 million (a 36% reduction); and
• Operating expenses for Trinidad upstream operations of US$6.2 million,
representing US$26/bbl which is a 43% improvement on prior year (prior year:
US$46/bbl).
During the year, Range continued to invest in growing the asset base of the Group with
US$3.9million capital expenditure in Trinidad in drilling, waterflood and workover activity.
In addition to the activity undertaken at the core Trinidad fields the Group also
completed two important acquisitions. With the Perlak field in Indonesia, Range has
invested approximately US$3.8 million during the year to firstly acquire its 60% interest in
Hengtai and then to fund its share of the operating costs during the first year of operation.
The RRDSL acquisition which completed at the end of November 2017 is particularly
significant as it allows us to have greater control over operating and drilling costs in
Trinidad and the benefits of this acquisition have already been seen with the total cost for
drilling the GY684 well in late 2017 being over 1/3rd cheaper than the cost of drilling the
comparable GY681 well.
Since the date of the acquisition, RRDSL has also been actively marketing its services to 3rd
parties with revenues generated during the year of approximately US$430,000 from other
operators. During just the first quarter of FY2019, RRDSL has already exceeded this level of
turnover and the Company aims to continue to grow this 3rd party revenue stream with
operators in Trinidad and the surrounding Caribbean/Latin America region.
Total operating costs for the Group have increased during the period to US$10.8 million
(prior year: US$8.8 million). This is a result primarily of the new business activities
undertaken during the period with substantially higher staff costs of the Group following
the acquisition of RRDSL which were approximately US$2.6 million higher in 7-month period
following the acquisition. The underlying operating costs for the Trinidad upstream
business were lower during the year at US$6.2 million (prior year: US$8.8 million). In
addition, the Company anticipates that further revenue growth should be seen from
additional 3rd party work undertaken by RRDSL and first modest sales volumes being
achieved at Perlak, Indonesia. Despite the increase in operating costs for the period
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
22
+ Annual Report 2018
there has been a 24% improvement in EBITDAX, which showed a negative US$6.0 million
for the year (prior year: negative US$7.9 million).
It is important to highlight that this is the first financial year since 2013 where there has
been no impairment charge recognised and the Board continues to see significant value
in the Trinidad asset base which can be released in the years ahead as production
growth is delivered.
Liquidity
Cash management remains a critical area of focus and at the period end the Group had
cash on hand and other liquid assets of US$6.7 million (including the US$2.8 million
refundable deposit which was paid to LandOcean with respect to the RRDSL acquisition
in December 2017). Post-reporting period, Range completed an equity placement raising
gross proceeds of GBP1 million.
Despite the increased production and revenues, the cash position has clearly reduced
during the year and this is a result of a number of factors which included: (i) the
acquisition and subsequent investment into the Perlak project totalling US$3.8 million, (ii)
provision of loans pre-acquisition to RRDSL of US$4 million, (iii) payment of first year coupon
on convertible note of US$1.6 million and (iv) the costs incurred with the AIM admission
process.
The acquisition of RRDSL is the principal reason for the increase seen in the level of net
borrowings and other interest-bearing payables to US$87 million (2017: US$61.9 million).
Range continues to benefit from highly competitive terms offered by LandOcean across
the various funding arrangements with no security provided over any assets, no financial
covenants or restrictive controls in place, no amortisation due until maturity and a
competitive interest rate of between 6-8% pa. The Board recognises though that the
maturity profile for the debts has reduced over the year with average period to maturity
of approximately 17 months and the first repayments being due at the end of November
2019. Range has held initial discussions with LandOcean regarding potential refinancing
options and the Company will be considering the most appropriate means to repay or
refinance the balance during the coming months.
Outlook
Range will continue to invest in the year ahead into growing production at Trinidad and
Indonesia. In the short-term this includes upgrades to infrastructure and drilling of a new
development well at Beach Marcelle before the end of the 2018 calendar year.
The Board remains focused on achieving long-term profitability and positive operating
cashflow through growth in revenues from increased production whilst maintaining a tight
control over costs. Fundamentally, production growth remains the key to reducing
operating costs on a per barrel basis, given the inherent fixed cost element within the
operations in Trinidad and the Board expects to see growth in the coming year from
development drilling activity, optimisation of existing waterflood schemes and the benefits
seen from new infrastructure and debottlenecking at the Beach Marcelle field.
In addition, during FY2019 a key financial objective is to secure appropriate terms for
repaying and/or refinancing the payables position with LandOcean.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
23
+ Annual Report 2018
Dividends
No dividends have been declared, provided for or paid in respect of the financial year
ended 30 June 2018 (2017: Nil).
Significant Changes in State of Affairs
The following significant changes in the state of affairs of the Company occurred during
the financial year:
Acquisition of RRDSL
Range completed the acquisition of RRDSL on 30 November 2017. The net consideration
of US$3.2 million is due by no later than 30 November 2020 and is subject to 6% interest per
annum.
Acquisition of oil and gas interests in Indonesia
Range completed the acquisition of an indirect interest in the Perlak field on 30 October
2017. As per the terms of the acquisition, the Company acquired an indirect 23% interest
(to increase to 42% upon completion of the minimum work programme) for a total
consideration of US$3.2 million payable in tranches.
Events Subsequent to Reporting Date
Completion of US$1.3m subscription
Subsequent to the year end, Range announced a subscription for new ordinary shares to
raise US$1,300,000 before expenses (the "Subscription"). Pursuant to the Subscription, the
Company issued 909,090,910 new ordinary shares at a price of 0.11 pence per new
ordinary share. The Company intends to use the proceeds from the Subscription to fund
sales infrastructure upgrade, as well as other general investment in asset upgrades in
Trinidad.
RRDSL new contract award
Subsequent to the year end, Range announced that RRDSL was successfully awarded a
contract with Touchstone Exploration Trinidad Limited, a subsidiary of Touchstone
Exploration Inc ("Touchstone"). Under the work scope of the contract, RRDSL provided
turnkey services for drilling one well on Touchstone's onshore WD8 block in Trinidad.
Georgia update
Subsequent to the year end, Range signed an agreement to acquire Georgian Oil Pty Ltd
(20% interest holder in SOG) for a nominal upfront sum. Following completion, Range will
hold a 65% interest in SOG. Completion is anticipated to occur in October 2018.
No other events occurred after the reporting date.
Likely Developments and Expected Results
The Company intends to progress with its work programme in Trinidad by implementing
the secondary recovery programme (waterflood), development drilling and workover
operations. The Company will also focus on growing its oilfield services business in Trinidad
by expanding its third-party customer base. In Indonesia, Range will continue work with
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
24
+ Annual Report 2018
the operator to successfully execute the work programme. Please refer to the Operational
Review for full details.
Environmental Regulation
The Group’s operations are not regulated by any significant environmental regulation
under a law of the Commonwealth or of a state or territory.
The Directors have considered compliance with the National Greenhouse and Energy
Reporting Act 2007 which requires entities to report annual greenhouse gas emissions and
energy use. The directors have assessed that there are no current reporting requirements,
but may be required to do so in the future.
Options
As at 30 June 2018, the unissued ordinary shares of Range under option are as follows:
Date of expiry
14 July 2018
14 July 2018
31 August 2018
3 September 2019
3 September 2019
30 March 2020
Exercise price
£0.01
£0.02
£0.01
£0.01
£0.02
£0.01
Number under option
161,472,247
118,729,593
14,000,000
194,585,862
172,557,274
120,500,000
Total: 781,844,976
During the year ended 30 June 2018 no ordinary shares of Range were issued on the
exercise of options (2017: nil).
Meetings of Directors
During the financial year, six meetings of the board of directors were held. Attendances
by each director during the year were as follows:
Director
Zhiwei Gu
Yan Liu
Juan Wang
Lubing Liu
Yi Zeng
Yu Wang (resigned 26 September 2017)
Board Meetings
Eligible to attend
6
6
6
6
6
2
Attended
6
6
6
6
6
0
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
25
+ Annual Report 2018
+ Corporate Social Responsibility (“CSR”)
Range is committed to conducting business in a socially responsible and ethical manner,
protecting the environment and the safety of local communities, engaging, respecting
and supporting the communities and cultures it operates in.
Range strives to grow and strengthen the social and economic relationships within the
communities it operates in, through the support and employment opportunities, as well as
innovative programmes in local health, education, environment, and cultural activities.
Range recognises the need for its business to provide direct support to the local
communities which rely on sponsorships and donations.
Range has commitment to hiring locally and aims to work closely with our host
governments. Over the years, Range has continued to be involved in numerous
community initiatives supporting local talent and progressing employment.
Supporting education
Over the years Range has been engaging with the Guayaguayare Roman Catholic
Primary School, located near the Company’s Beach Marcelle field in an effort to assist the
young people living in the area.
During the year, Range provided three scholarship grants to the top performing students,
as well as stationery supplies to the school.
+
Students awarded
a scholarship grant
Supporting musical talent
Range continues its support for the Morne Diablo Funk-a-delics, a steel orchestra for
youth. The programme provides music lessons to children where they learn to play the
steel pan (Trinidad and Tobago’s national musical instrument) and to read music.
During the year, Range provided financial assistance to the Morne Diablo Funk-a-delics
towards the purchase of uniforms. Range also continues to provide oil drums to be used
as steel pans for music practice.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
26
+ Annual Report 2018
Training and development of young professionals
During the year, Range participated in the Trinidad and Tobago Section of the Society of
Petroleum Engineers event. The event provided a forum for the engagement,
enlightenment and education of engineering and geoscience students and graduates
from the local universities of Trinidad and Tobago. Companies such as Range were given
the opportunity to meet young local talent, share experience and knowledge, provide
guidance and attract future employees.
Range continues to investigate options for incorporating students from the local
universities into its operations through training and work placement. Range will continue
its contribution to development of young local professionals in years to come.
+
Society of
Petroleum
Engineers event
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
27
+ Annual Report 2018
+ Corporate Governance and Risk
The Company has chosen to adopt the Corporate Governance Principles and
Recommendations (3rd Edition, March 2014) issued by the ASX Corporate Governance
Council in respect of the financial year ended 30 June 2018 and complies with the majority
of recommendations.
The Company’s 2018 Corporate Governance Statement, Appendix 4G and other ancillary
corporate governance related documents can be found on the Company’s website:
www.rangeresources.co.uk.
Principal risks and uncertainties
The achievement of the business strategy, production growth and future financial
performance are subject to various risks. Range continually monitors the effectiveness of
the Company’s risk management, internal compliance and control systems.
The Board does not have a stand-alone Risk Committee. However, the Company’s Audit
and Risk Committee oversees the Company’s risk management and compliance
function, with key responsibilities being to ensure that an appropriate risk management
framework is in place and is operating properly and reviewing and monitoring legal and
policy compliance systems and issues.
The Board has identified the following principal business risks and adopted mitigating
strategies as described below. It is not an exhaustive list of all risks that may affect the
Company nor have they been listed in any particular order of importance.
+ Risk
Exploration, development and production
There is a significant element of technical risk in exploring for and developing oil and gas
fields. Exploration is a speculative activity with an associated risk of discovery to find any
oil and gas in commercial quantities and a risk of development. If the Company is
unsuccessful in locating and developing or acquiring new reserves and resources that are
commercially viable, this may have a material adverse effect on future business, results of
operations and financial conditions. Development and production of oil and gas projects
may be exposed to low side reserve outcomes, cost overruns, production decrease or
stoppage, which may result from facility shutdowns, mechanical or technical failure and
other unforeseen events.
+ Mitigation
The Company aims to continuously improve the quality of its operations through rigorous
reviews. Technical work processes are used to ensure each opportunity has been
thoroughly evaluated before investment decisions are made. The Company employs
experienced personnel and engages independent consultants to review data, where
appropriate.
Oil and gas reserves
+ Risk
Oil and gas reserves are expressions of judgement based on knowledge, experience and
industry practice. These estimates may alter significantly or become uncertain when new
information becomes available and/or there are material changes of circumstances
which may result in the Company altering its plans which could have a positive or
negative effect on the Company’s operations.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
28
+ Annual Report 2018
+ Mitigation
Range has established Reserves and HSE committee which undertakes annual audits and
evaluations of the Company’s reserves and resources consistent with the Society of
Petroleum Engineers’ Petroleum Resource Management System. The assessment of
reserves and resources is also subject to independent review from time to time.
Health, Safety and Environment
+ Risk
Exploration, development and production of oil and gas involve risks which may impact
the health and safety of personnel, the community and the environment. Oil and gas
exploration, development and production can be potentially environmentally hazardous
giving rise to substantial costs for environmental rehabilitation, damage control and
losses. Failure to manage these risks could result in injury or loss of life, damage or
destruction of property, damage to reputation, and damage to the environment.
+ Mitigation
Health and safety are a very high priority for Range. Range has established reserves and
HSE committee which is responsible for ensuring that appropriate systems are in place to
manage health, safety, and environmental risks. The Company maintains strict reporting
requirements in respect of any incidents, hazards or near misses. Training, procedures
and competency are performed throughout the organisation. Appropriate insurances
are in place.
Regulatory
+ Risk
A substantial amount of Range’s properties and operations are located in Trinidad and
Tobago. Therefore, the Group’s operational and financial conditions are affected by
policy, taxation and other political or economic developments in or affecting Trinidad
and Tobago. There is a risk that regulatory approvals are withheld, take longer than
expected or unforeseen circumstances arise where requirements may not be
adequately addressed in the eyes of the regulator and costs may be incurred to
remediate non-compliance and/or obtain approvals.
+ Mitigation
Range continuously monitors the political, economic, and regulatory environments in
which it operates and actively cooperates with the government of Trinidad and Tobago
on strategies that might impact the Company.
Funding
+ Risk
Future investment and activities are dependent on having sufficient funds to enable the
exploration or development of projects, whether through debt or equity funding.
Limitations on the access to adequate funding could have a material adverse effect on
the business, results from operations, financial condition and prospects. There can be no
assurance that sufficient debt or equity funding will be available on acceptable terms or
at all.
+ Mitigation
The Board reviews and approves the allocation of cash resources via the annual budget.
The Board also considers longer term cash forecasts to ensure sufficient funds to meet its
goals.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
29
+ Annual Report 2018
Oil and gas prices
+ Risk
Future value, growth and financial conditions are dependent upon the prevailing prices
for oil and gas. Prices for oil and gas are subject to fluctuations and are affected by
numerous factors beyond the control of the Company. Sustained periods of low oil price
may impact the viability of growth projects.
+ Mitigation
The Company monitors and analyses the current and forecast oil prices on a regular
basis. Range does not currently hedge its oil price exposure. Price hedging
arrangements would be implemented if deemed appropriate for financial planning and
to mitigate commodity price risks.
Counterparties
+ Risk
The ability of the Company to achieve its stated objectives will depend on the
performance of the counterparties under various agreements it has entered into,
including joint venture arrangements. If any counterparties do not meet their obligations
under the respective agreements, this may impact on operations, business and financial
conditions.
+ Mitigation
The Company monitors performance across material contracts against contractual
obligations to minimise counterparty risk and seeks to include terms in agreements which
mitigate such risks.
+ Risk
Litigation
The nature of Range’s business means that it is likely to be involved in litigation or
regulatory actions arising from a wide range of matters, as well as investigations, inquiries
or disputes, debt recoveries, commercial and contractual disputes, environmental
claims, occupational health and safety claims etc. Any of these claims or actions could
result in delays, increase costs or otherwise adversely impact Range’s operations, and
adversely impact on financial performance and future financial prospects of the Group.
+ Mitigation
Range and its legal advisers actively monitor and manage potential and actual claims,
actions and disputes.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
30
+ Annual Report 2018
+ Remuneration Report (Audited)
Remuneration policy
The remuneration policy of Range has been designed to align director and executive
objectives with shareholder and business objectives by providing a fixed remuneration
component and offering specific long-term incentives based on key performance areas
affecting the Group’s financial results. The Board of Range Resources Limited believes the
remuneration policy to be appropriate and effective in its ability to attract and retain the
best executives and directors to run and manage the Group, as well as create alignment
of goals between directors, executives and shareholders.
The Board’s policy for determining the nature and amount of remuneration for Board
members and senior executives of the Company is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and
other senior executives, was developed and approved by the Board.
Non-executive directors, executive directors and senior executives receive a base salary
(which is based on factors such as length of service and experience), which is calculated
on a total cost basis and includes any FBT charges related to employee benefits including
motor vehicles, as well as employer contributions to superannuation funds where
applicable.
Executive and non-executive directors can be employed by the Company on a
consultancy basis on Board approval, with remuneration and terms stipulated in individual
consultancy agreements.
The Board exercises its discretion in determining remuneration performance of executives.
Given the size and nature of the entity, the Board does not deem it to be realistic to
measure performance against defined criteria. As such remuneration and performance
have historically not been linked.
All remuneration paid to directors and executives is valued at the cost to the Company
and expensed. Shares given to directors and executives are valued as the difference
between the market price of those shares and the amount paid by the director or
executive. Unlisted options are valued using the Black-Scholes methodology.
The Board policy is to remunerate non-executive directors at market rates for comparable
companies taking into consideration time, commitment and level of responsibility. As
approved by shareholders on 30 November 2011, the aggregate non-executive
remuneration per annum is currently A$350,000 (US$260,555). The Remuneration and
Nomination Committee determines payments to the non-executive directors and reviews
their remuneration annually. The Remuneration and Nomination Committee held three
meetings during the year. Independent external advice is sought when required. Fees for
non-executive directors are not linked to the performance of the Group. The directors are
not required to hold any shares in the Company under the Constitution of the Company;
however, to align directors’ interests with shareholder interests, the directors are
encouraged to hold shares in the Company.
Options may be issued to directors and executives as part of remuneration. Options issued
to directors historically were not based on performance criteria. However, the options
issued to the current directors on 27 March 2015 and the Key Management Personnel on 1
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
31
+ Annual Report 2018
Remuneration policy (continued)
September 2015 and November 2016, principally vest upon satisfaction of set company
performance criteria detailed in Note 30.
Under the Company’s share trading policy, all employees and directors of the Company
and its related companies are prohibited from trading in the Company’s shares or other
securities if they are in possession of inside information.
The Board believes that it has implemented suitable practices and procedures that are
appropriate for an organisation of this size and maturity.
Remuneration committee
A Remuneration and Nomination Committee was established during the year ended 30
June 2015. An annual review of remuneration is generally undertaken, however no review
was undertaken during the reporting period. The Remuneration and Nomination
Committee held discussions following the period end and is intending to undertake a
comprehensive review in early 2019.
No remuneration consultants were used by the Group during the year.
Company performance, shareholder wealth and directors and
executive’s remuneration
No relationship exists between shareholder wealth, director and executive remuneration
and Company performance.
Voting and comments made at the company’s 2017 Annual
General Meeting
The adoption of the Remuneration Report for the financial year ended 30 June 2017 was
put to the shareholders of the Company at the AGM held on 30 November 2017. The
remuneration resolution received a “first strike”, representing a ‘no’ vote from 91.43% of
shareholders who exercised their right to vote.
The Company did not receive any specific feedback at the AGM or throughout FY2018
on its remuneration practices. However, since the AGM, the Board has engaged with
shareholders to understand their concerns that led to this voting outcome. The Company
does not believe that the vote was directly related to remuneration practices. However,
the Board has taken the opportunity to improve the composition of its remuneration and
nomination committee by appointing an additional independent director.
The remuneration and nomination committee will be undertaking a review of the existing
executive and director compensation plans in 2019 and will implement changes as
necessary. The Company may also consider undertaking an independent review and
critique of its remuneration disclosures with the assistance of external consultants.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
32
+ Annual Report 2018
Key Management Personnel
Name
Position
Appointed/Resigned
Mr Zhiwei Gu
Non-Executive Chairman
appointed 25 May 2016
Mr Yan Liu
Ms Juan Wang
Executive Director, Chief
Executive Officer
Non-Executive Director
Mr Yu Wang
Non-Executive Director
Mr Lubing Liu
Dr Yi Zeng
Non-Executive Director
Executive Director, Chief
Operating Officer and
Trinidad General Manager
Non-Executive Director
Mr Nick Beattie
CFO & Company Secretary
Mr Lijun Xiu
Vice President of Operations
and Production
appointed 25 May 2016
appointed 30 November 2014
appointed 30 September 2015
resigned 26 September 2017
appointed 16 June 2016
resigned 1 March 2018
appointed 1 March 2018
appointed 16 June 2016
appointed 23 May 2014 (as CFO)
and 30 March 2015 (as Company
Secretary)
appointed 29 September 2016
resigned 25 June 2018
Details of remuneration
The remuneration for the Key Management Personnel of the Group during the year was
as follows:
Short Term Benefits
2018
Cash
salary &
fees
Currency
US$
Directors & Officers
250,000
Mr Gu (i)
166,685
Mr Y Liu
Ms Wang (ii) 141,250
Mr L Liu (iii)
Dr Zeng
Mr Beattie
Mr Xiu (iv)
Mr Yu Wang
(v)
Total
88,688
25,000
181,477
31,747
-
884,847
One-off
payment
Termination
benefits
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Post-
employment
benefits
Super
annuation /
pensions
US$
Share
based
payments
Options
Total
US$
US$
-
16,669
-
4,920
-
18,148
-
-
(12,990)
(32,009)
(10,853)
-
-
(27,373)
(760)
-
237,010
151,345
130,397
93,608
25,000
172,252
30,987
-
39,737
(83,985)
840,599
(i) Fees paid to Mr Gu comprised US$30,000 received in his capacity as a non-executive director,
US$25,000 in his role as Chairman and US$195,000 for additional consulting work.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
33
+ Annual Report 2018
Details of remuneration (continued)
(ii)Fees paid to Ms Wang comprised US$28,750 received in her capacity as a non-executive director
and US$112,500 received for additional consulting work.
(iii) Fees paid to Mr L Liu comprised US$16,667 received in his capacity as a non-executive director,
US$37,340 received for additional consulting work and salary of US$39,601 in his capacity as Chief
Operating Officer.
(iv) Fees paid to Mr Xiu comprised US$31,747 received in his capacity as a Vice President of
Operations and Production.
(v) Mr Yu Wang tendered his resignation as Non-Executive Director effective 26 September 2017.
Short Term Benefits
Post-
employment
benefits
Super
annuation /
pensions
US$
Share
based
payments
Options
Total
US$
US$
One-off
payment
Termination
benefits
US$
US$
-
-
-
-
-
-
-
104,000
-
104,000
-
-
38,750
-
-
-
-
-
-
38,750
-
16,203
-
-
-
-
17,112
-
-
33,315
21,515
23,971
(62,942)
1,558
-
-
23,041
7,096
-
14,239
271,515
202,205
(11,274)
106,558
64,660
25,000
211,269
227,096
-
1,097,029
2017
250,000
162,031
Cash
salary &
fees
Currency
US$
Directors & Officers
Mr Gu (i)
Mr Y Liu
Mr Chen (v) 12,918
Ms Wang (ii) 105,000
Mr L Liu (iii)
Dr Zeng
Mr Beattie
Mr Xiu (iv)
Mr Y Wang
Total
64,660
25,000
171,116
116,000
-
906,725
(i) Fees paid to Mr Gu comprised US$30,000 received in his capacity as a non-executive director,
US$25,000 in his role as Chairman and US$195,000 for additional consulting work.
(ii)Fees paid to Ms Wang comprised US$30,000 received in her capacity as a non-executive director
and US$75,000 received for additional consulting work.
(iii) Fees paid to Mr L Liu comprised US$25,000 received in his capacity as a non-executive director
and US$39,660 received for additional consulting work.
(iv) Fees paid to Mr Xiu comprised US$60,000 received in his capacity as a Vice President of
Operations and Production and US$56,000 plus a one-off payment of US$104,000 received for
additional consulting work.
(v) Mr Chen tendered his resignation as Non-Executive Director on 24 November 2016.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
34
+ Annual Report 2018
Equity instrument disclosures relating to Key Management
Personnel
Share-based payments (year ended 30 June 2018)
No options were issued to key management personnel. The expense reversal is due to the
change in the probability of meeting the vesting conditions prior to the options expiring as
explained below:
• Probability of meeting the 1,500 barrels of oil per day for a continuous 15-day
period in Trinidad vesting condition is 100%;
• Probability of meeting the 2,500 barrels of oil per day for a continuous 15-day
period in Trinidad vesting condition is 0%; and
• Probability of meeting the 4,000 barrels of oil per day for a continuous 15-day
period in Trinidad vesting condition is 0%.
Share-based payments (year ended 30 June 2017)
The following options were issued to key management personnel:
Name:
Number of options:
Grant date:
Mr Lijun Xiu
8,000,000
29 September 2016
The options expire on 30 March 2020 with an exercise price of £0.01 per share. The vesting
conditions of these options are as follows:
• 25% became exercisable on 31 March 2017;
• 25% will become exercisable upon the Company reaching production of 1,500
barrels of oil per day for a continuous 15-day period in Trinidad;
• 25% will become exercisable upon the Company reaching production of 2,500
barrels of oil per day for a continuous 15-day period in Trinidad;
• 25% will become exercisable upon the Company reaching production of 4,000
barrels of oil per day for a continuous 15-day period in Trinidad.
The value per option at the grant date was 0.21 cents, determined using the Black
Scholes option price model using the following key inputs:
Volatility:
100%
Exercise price
£0.01
Risk free rate:
1.92%
Share price on grant date
£0.00368
USD/GBP exchange rate
0.8028
Share-based payments (year ended 30 June 2016)
The following options were issued to key management personnel:
Name:
Number of options:
Grant date:
Mr Nick Beattie
25,000,000
1 September 2015
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
35
+ Annual Report 2018
Equity instrument disclosures relating to Key Management
Personnel (continued)
Name:
Number of options:
Grant date:
Mr Yan Liu
20,000,000
25 May 2016
Name:
Number of options:
Grant date:
Mr Zhiwei Gu
22,500,000
25 May 2016
Mr Liu's and Mr Gu's options were granted on 25 May 2016 however they were issued on
13 December 2016 once shareholder approval was obtained.
All options expire on 30 March 2020 with an exercise price of £0.01 per share. The vesting
conditions of these options are as follows:
• 25% became exercisable on 31 March 2017;
• 25% will become exercisable upon the Company reaching production of 1,500
barrels of oil per day for a continuous 15-day period in Trinidad;
• 25% will become exercisable upon the Company reaching production of 2,500
barrels of oil per day for a continuous 15-day period in Trinidad;
• 25% will become exercisable upon the Company reaching production of 4,000
barrels of oil per day for a continuous 15-day period in Trinidad.
Mr Nick Beattie options
The value per option at the grant date was 0.56 cents, determined using the Black
Scholes option price model using the following key inputs:
Volatility:
100%
Exercise price
Risk free rate:
1.92%
Share price on grant date
£0.01
£0.0057
USD/GBP exchange rate
0.6509
Mr Zhiwei Gu and Mr Yan Liu options:
The value per option at the grant date was 0.30 cents, determined using the Black
Scholes option price model using the following key inputs:
Volatility:
100%
Exercise price
Risk free rate:
1.92%
Share price on grant date
USD/GBP exchange rate
0.7468
£0.01
£0.0037
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
36
+ Annual Report 2018
Equity instrument disclosures relating to Key Management
Personnel (continued)
Share-based payments (year ended 30 June 2015)
On 27 March 2015, the following options were issued to key management personnel:
Name
Mr Yan Liu
Mr David Chen
Mr Zhiwei Gu
Ms Juan Wang
Number of options
30,000,000
30,000,000
7,500,000
7,500,000
All options expire on 30 March 2020 with an exercise price of £0.01 per share. The vesting
conditions of these options are as follows:
• 25% became exercisable one year from the issue date;
• 25% will become exercisable upon the Company reaching production of 1,500
barrels of oil per day for a continuous 15-day period in Trinidad;
• 25% will become exercisable upon the Company reaching production of 2,500
barrels of oil per day for a continuous 15-day period in Trinidad;
• 25% will become exercisable upon the Company reaching production of 4,000
barrels of oil per day for a continuous 15-day period in Trinidad.
The value per option at the grant date was 0.51 cents, determined using the Black
Scholes option price model using the following key inputs:
Volatility:
100%
Grant date:
Risk free rate:
1.92%
Exercise price
USD/GBP exchange rate
0. 7752
Share price on grant date
27/03/2015
£0.01
£0.0054
Fully paid share holdings
The numbers of shares in the Company held during the financial year or at time of
resignation by Key Management Personnel of the Company, including their personally
related parties, are set out below.
2018
Mr Gu
Mr Y Liu
Ms Wang
Mr Wang
Mr L Liu
Dr Zeng
Mr Beattie
Mr Xiu
Total:
Balance at
the start of
the year
2,083,333
6,333,333
2,083,333
-
-
-
2,916,667
8,000,000
21,416,666
Granted as
Compensation
Other
Changes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
the end of
the year
2,083,333
6,333,333
2,083,333
-
-
-
2,916,667
8,000,000
21,416,666
Balance
held
indirectly
-
-
-
-
-
-
-
-
-
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
37
+ Annual Report 2018
Equity instrument disclosures relating to Key Management
Personnel (continued)
Options held by Key Management Personnel
The numbers of options in the company held during the financial year or at time of
resignation by Key Management Personnel of the Company, including their personally
related parties, are set out below:
2018
Mr Gu
Mr Y Liu
Ms Wang
Mr Wang
Mr L Liu
Dr Zeng
Mr Beattie
Mr Xiu
Total:
Balance at
the start of
the year
30,000,000
50,000,000
7,500,000
-
-
-
25,000,000
8,000,000
120,500,000
Granted as
Compensation
Other
Changes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
the end of
the year
30,000,000
50,000,000
7,500,000
-
-
-
25,000,000
8,000,000
120,500,000
Vested and
exercisable
7,500,000
12,500,000
1,875,000
-
-
-
6,250,000
-
28,125,000
Loans to Key Management Personnel
There were no loans made to directors of Range and other Key Management Personnel
of the Group, including their personally related parties during the 2017 or 2018 financial
years. The consulting fees paid to Zhiwei Gu, Juan Wang and Lubing Liu were US$195,000,
US$112,500 and US$25,740 respectively. The amount due to Lijun Xiu is US$42,000.
Employment contracts of Directors and other Key Management
Personnel
On appointment, Executive Directors and Other Key Management Personnel enter into
an employment contract with the Company (or another company within the Group). This
contract sets out their duties, remuneration and other terms of employment. These
contracts may be terminated by either the Company or the employee as detailed below.
All non-executive directors are eligible to receive consulting fees for services provided to
the Company over and above the services expected from a non-executive director.
Mr Zhiwei Gu as Non-Executive Chairman
Non-Executive Chairman contract
Contract start date:
Base Payment:
Superannuation:
Notice period:
Termination benefits:
Consulting services:
25 May 2016
US$55,000 per annum
No superannuation entitlement
3 months
Payment in lieu of notice at Company option for termination
without cause
From May 2016, Mr Gu provides additional executive and
consulting services over and above services rendered to the
Company at a rate of US$16,250 per month
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
38
+ Annual Report 2018
Employment contracts of Directors and other Key Management
Personnel (continued)
Mr Yan Liu as Chief Executive Officer
Chief Executive Officer contract
Contract start date:
Base Payment:
Superannuation:
Bonus:
Notice period:
Termination benefits:
25 May 2016
AU$215,000 per annum
10% of base salary
Eligible to receive bonus at the discretion of the board
3 months
Payment in lieu of notice at Company option for termination
without cause
Ms Juan Wang as Non-Executive Director
Non-Executive Director contract
Contract start date:
Base Payment:
Superannuation:
Termination benefits:
Consulting services:
19 January 2015
US$30,000 per annum up to and including March 2018,
US$25,000 per annum thereafter
No superannuation entitlement
None
From January 2017 up to and including March 2018, Ms Wang
provided additional consulting services over and above services
rendered to the Company as a Non-Executive Director at a rate
of US$12,500 per month.
Mr Lubing Liu as Non-Executive Director
Non-Executive Director contract
Contract start date:
Base Payment:
Superannuation:
Termination benefits:
Consulting services:
16 June 2016, resigned 1 March 2018
US$25,000 per annum
No superannuation entitlement
None
Mr Liu may provide additional consulting services over and
above services rendered to the Company as a Non-Executive
Director from time to time as required at a rate of between
US$600 and US$1,200 per day.
Mr Lubing Liu as Chief Operating Officer, Trinidad General Manager and Executive
Director
Chief Operating Officer and Trinidad General Manger contract
1 March 2018
Contract start date:
US$144,000 per annum
Base Payment:
10% of base
Superannuation:
3 months
Notice period:
3 months’ salary
Termination benefits:
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
39
+ Annual Report 2018
Employment contracts of Directors and other Key Management
Personnel (continued)
Dr Yi Zeng as Non-Executive Director
Non-Executive Director contract
Contract start date:
Base Payment:
Superannuation:
Termination benefits:
16 June 2016
US$25,000 per annum
No superannuation entitlement
None
Mr Nick Beattie as Chief Financial Officer
Chief Financial Officer contract
Contract start date:
Base Payment:
Pension:
Bonus:
Notice period:
Termination benefits:
23 May 2014
GB£135,000 per annum, reviewed annually
10% of base
Eligible to receive bonus at the discretion of the board
3-6 months
6 months’ salary
Mr Lijun Xiu as Vice President of Operations and Production
Vice President of Operations and Production
Contract start date:
Base Payment:
Notice period:
Termination benefits:
29 September 2016, resigned 25 June 2018
US$144,000 per annum, reviewed annually
45 days
None
This is the end of the audited remuneration report.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
40
+ Annual Report 2018
Proceedings on behalf of the company
No person has applied for leave of Court to bring proceedings on behalf of the Company
or to intervene in any proceedings to which the Company is a party for the purpose of
taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Indemnifying officers or auditors
In accordance with the constitution, except where prohibited by the Corporations Act
2001, every director, principal executive officer and secretary of the Company shall be
indemnified out of the property of the Company against any liability incurred by him/her
in his/her capacity as director, principal executive officer or secretary of the Company or
any related corporation in respect of any act or omission whatsoever and howsoever
occurring or in defending any proceedings whether civil or criminal.
During the financial year, the Company has paid premiums of US$35,106 to insure the
Directors and Officers against certain liabilities arising out of the conduct of acting as an
officer of the Company. Under the terms and conditions of the insurance contract, the
nature of liabilities insured against and the premium paid cannot be disclosed.
Non-audit services
The total value of non-audit services provided by a related practice of BDO Audit (WA)
Pty Ltd in respect to the Company’s tax compliance is US$17,010 (2017: US$17,828).
The board of directors has considered the position and is satisfied that the provision of the
non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors are satisfied that the provision of
non-audit services by the auditor did not compromise the auditor independence
requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the Board to ensure they do not
impact the impartiality and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants
Auditor’s Independence Declaration
The auditor’s independence declaration, as required under Section 307C of the
Corporations Act 2001, for the year ended 30 June 2018 has been received and can be
found on the following page.
This report is signed in accordance with a resolution of the Board of Directors.
Zhiwei Gu: Chairman
28 September 2018
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
41
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF RANGE RESOURCES
LIMITED
As lead auditor of Range Resources Limited for the year ended 30 June 2018, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Range Resources Limited and the entities it controlled during the
period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth, 28 September 2018
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
+ Annual Report 2018
+ Consolidated Statement of Profit or
Loss and other Comprehensive Income
for the year ended 30 June 2018
The below consolidated statement of profit or loss and other comprehensive income should be
read in conjunction with the accompanying notes.
Revenue from continuing operations
Operating expenses
Royalties
Note
3
2018 (US$)
13,059,422
Consolidated
2017 (US$)
8,435,309
(10,769,092)
(8,770,969)
(4,605,811)
(2,494,497)
Depreciation, depletion and amortisation
Cost of sales
(4,950,666)
(20,325,569)
4a
(6,289,324)
(17,554,790)
Gross loss
(7,266,147)
(9,119,481)
Other income and expenses from continuing operations
Other income
Finance costs
General and administration expenses
Exploration expenditure and land fees
Impairment of non-current assets
Loss before income tax expense from continuing
operations
3
4b
4c
4d
15
421,897
(3,094,795)
(4,102,712)
(1,946,306)
-
174,367
(3,806,226)
(5,223,721)
(1,152,854)
(28,985,014)
(15,988,033)
(48,112,929)
Income tax expense
Loss after income tax from continuing operations
Loss from discontinued operations, net of tax
Loss for the year attributable to equity holders of
Range Resources Limited
6
5
(1,542,204)
(17,530,237)
-
(4,999,950)
(53,112,879)
(1,250,000)
(17,530,237)
(54,362,879)
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations
Other comprehensive loss for year, net of tax
Total comprehensive loss attributable to equity
holders of Range Resources Limited
25c
(1,423,892)
2,144,373
(1,423,892)
2,144,373
(18,954,129)
(52,218,506)
Loss per share from continuing operations attributable to the ordinary equity holders of the Company:
Basic loss per share (cents per share)
(0.68)
(0.23)
8a
Diluted loss per share (cents per share)
8b
n/a
n/a
Loss per share attributable to the ordinary equity holders of the Company:
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
(0.23)
n/a
8a
8b
(0.70)
n/a
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
43
+ Annual Report 2018
+ Consolidated Statement of Financial
Position as at 30 June 2018
The below consolidated statement of financial position should be read in conjunction with the
accompanying notes.
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Other current assets
Total current assets
Non-Current Assets
Trade and other receivables
Deferred tax asset
Available for sale financial assets
Goodwill
Property, plant and equipment
Exploration assets
Producing assets
Note
Consolidated
2018 (US$)
2017 (US$)
9
10
11
11
10
6c
13
15
16
17
18
3,945,683
4,875,766
3,277,096
3,054,911
15,153,456
2,251,384
13,517,531
-
3,241,472
25,489,614
6,744,997
109,091,650
17,254,360
5,740,726
2,353,143
233,140
25,581,369
6,866,394
6,853,135
45,238
-
2,021,682
632,176
108,347,455
Total non-current assets
160,336,648
124,766,080
Total assets
175,490,104
150,347,449
Current liabilities
Trade and other payables
Current tax liabilities
Borrowings
Option liability
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Employee service benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Non-controlling interest
Accumulated losses
Total equity
19
20
20b
21
19
20
22
23
24
25
17
9,929,506
246,917
1,600,000
33,345
811,737
12,621,505
50,441,779
42,439,606
64,761,942
731,350
158,374,677
1,613,499
283,220
-
341,618
784,316
3,022,653
51,390,088
21,071,631
54,500,144
340,289
127,302,152
170,996,182
130,324,805
4,493,922
20,022,644
383,918,397
24,822,953
3,517,873
(407,765,301)
4,493,922
383,918,397
26,339,311
-
(390,235,064)
20,022,644
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
44
+ Annual Report 2018
+ Consolidated Statement of Changes in
Equity for the year ended 30 June 2018
The below consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
Contributed
equity
Accumulated
losses
Note
Foreign
currency
translation
reserve
Share-based
payment
reserve
Option
premium
reserve
Non-
controlling
interests
Total equity
Balance at 1 July 2016
383,882,192
(335,872,185)
3,620,738
8,549,024
12,057,363
-
72,237,132
(US$)
(US$)
(US$)
(US$)
(US$)
(US$)
Other comprehensive
income
Loss attributable to
members of the
company
Total comprehensive
loss for the year
-
-
-
2,144,373
(54,362,879)
-
-
-
(54,362,879)
2,144,373
-
Transactions with owners in their capacity as owners:
Issue of share capital
24
36,205
-
-
-
-
-
-
(32,187)
Cost of share-based
payments
Balance at 30 June
2017
-
-
-
-
-
-
-
-
-
-
2,144,373
(54,362,879)
(52,218,506)
36,205
(32,187)
383,918,397
(390,235,064)
5,765,111
8,516,837
12,057,363
-
20,022,644
Balance at 1 July 2017
383,918,397
(390,235,064)
5,765,111
8,516,837
12,057,363
-
20,022,644
Other comprehensive
income
Loss attributable to
members of the
company
Total comprehensive
loss for the year
-
-
-
-
(1,423,892)
-
(17,530,237)
-
-
(17,530,237)
(1,423,892) -
Transactions with owners in their capacity as owners:
Issue of share capital
24
Cost of share-based
payments
Non-controlling
interests on acquisition
of subsidiary
Balance at 30 June
2018
-
-
4
17
-
-
-
-
-
-
-
-
(92,466)
-
-
-
-
-
-
-
-
-
-
-
-
(1,423,892)
(17,530,237)
(18,954,129)
-
(92,466)
3,517,873
3,517,873
383,918,397
(407,765,301)
4,341,219
8,424,371
12,057,363 3,517,873
4,493,922
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
45
+ Annual Report 2018
+ Consolidated Statement of Cash Flows
for the year ended 30 June 2018
The below consolidated statement of cashflows should be read in conjunction with the
accompanying notes
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Income taxes received
Interest received
Note
Consolidated
2018 (US$)
2017 (US$)
6,580,150
(9,868,121)
1,954,339
115,477
8,531,655
(6,255,175)
(958,253)
85,123
Payment for exploration expenditure
(1,253,329)
-
Net cash inflow/(outflow) from operating activities
29
(2,471,484)
1,403,350
Cash flows from investing activities
Cash acquired on business combination
Payment for property, plant & equipment
15(a)
357,940
16
(254,088)
-
(4,363)
Payment for asset acquisition
17(i)
(2,560,000)
-
Proceeds from disposal of property, plant and
equipment
Transfer from/(to) restricted deposit
Payments for available for sale assets
Payments for loan to external parties
Net cash inflow/(outflow) from investing activities
19,061
63,106
-
-
(4,047,630)
(6,484,717)
8,000,000
(6,830)
(5,153,759)
2,898,154
Cash flows from financing activities
On-demand refundable payment to LandOcean
Repayment of borrowings – convertible note
interest
Net cash inflow/(outflow) from financing activities
11
20
(2,800,000)
(1,600,000)
(4,400,000)
-
-
-
Net increase/(decrease) in cash and cash
equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of
financial year
Cash and cash equivalents at end of financial year 9
(13,356,201)
4,301,504
47,524
(48,396)
17,254,360
13,001,252
3,945,683
17,254,360
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
46
+ Annual Report 2018
+ Notes to Consolidated Financial
Statements
Note 1: Significant accounting policies
These financial statements are general purpose financial statements that have been
prepared in accordance with Australian Accounting Standards, Australian Accounting
Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001. Range Resources Limited is a for-profit
entity for the purpose of preparing the financial statements.
The financial statements cover the Group consisting of Range Resources Limited and its
controlled entities. Financial information for Range Resources Limited as an individual
entity is disclosed in Note 32. Range Resources Limited is a listed public company,
incorporated and domiciled in Australia.
The following is a summary of the material accounting policies adopted by the Group in
the preparation of the financial statements. The accounting policies have been
consistently applied, unless otherwise stated. The financial report was authorised for issue
by the Directors on 28 September 2018.
Basis of preparation
Reporting basis and conventions
The financial statements have been prepared on an accruals basis and are based on
historical costs modified by the revaluation of selected non-current assets, and financial
assets and financial liabilities for which the fair value basis of accounting has been
applied.
Compliance with IFRS
The financial statements of Range Resources Limited also comply with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB). The financial statements were approved by the Board of Directors on 28
September 2018.
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured
using the currency of the primary economic environment in which the entity operates (the
“Functional Currency”). The consolidated financial statements are presented in United
States Dollars (USD), which is Range Resources Limited’s functional and presentation
currency.
Going concern
This report has been prepared on the going concern basis, which contemplates the
continuity of normal business activity and the realisation of assets and settlement of
liabilities in the normal course of business.
For the year ended 30 June 2018 the Group recorded a loss of US$17,530,237 (2017:
US$54,362,879) and had net cash outflows of US$13,356,201 (2017: cash inflows of
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
47
+ Annual Report 2018
Note 1: Significant accounting policies (continued)
US$4,301,504). At June 2018, the Group had a working capital surplus of US$2,531,951
(2017: surplus of US$22,558,716).
The aility of the Group to continue as a going concern is dependent on securing
additional funding through the issue of shares and/or debt to fund its operational activities
and to finance the repayment of debt and payable obligation to LandOcean as this falls
due.
These conditions indicate a material uncertainty that may cast a significant doubt about
the Group’s ability to continue as a going concern and, therefore, it may be unable to
realise its assets and discharge its liabilities in the normal course of business.
At the reporting date, Range had US$3,945,683 of unrestricted cash at bank and an on-
demand cash receivable from LandOcean of US$2,800,000 as explained in Note 11.
Subsequent to the year end, Range Resources Limited announced a subscription for new
ordinary shares to raise US$1,300,000 million before expenses.
Management believe there are sufficient funds to meet the Group’s working capital
requirements as at the date of this report.
The Company will continue to focus its capital allocation on assets which maximise
production and enhance cash generation and returns to shareholders.
Should the Company not be able to continue as a going concern, it may be required to
realise its assets and discharge its liabilities other than in the ordinary course of business,
and at amounts that differ from those stated in the financial statements. The financial
report does not include any adjustments relating to the recoverability and classification of
recorded asset amounts or liabilities that might be necessary should the Company not
continue as a going concern.
Adoption of new and revised accounting standards
In the year ended 30 June 2018, the directors have reviewed all of the new and revised
Standards and Interpretations issued by the AASB that are relevant to the Company and
effective for the current annual reporting period.
As a result of this review, the directors have determined that there is no material impact of
the new and revised Standards and Interpretations on the Company and, therefore, no
material change is necessary to Group accounting policies.
(a) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all
subsidiaries of Range Resources Limited (“Parent Entity” or “Company”) as at 30 June 2018
and the results of all subsidiaries for the year then ended. Range Resources Limited and its
subsidiaries together are referred to as the “Group”.
Subsidiaries are all those entities (including special purpose entities) over which the Group
has control. The Group controls an entity when the Group is exposed to, or has rights to,
variable returns from its investment with the entity and has the ability to affect those
returns through its power to direct the activities of the entity.
Where controlled entities have entered or left the Group during the year, their operating
results have been included/excluded from the date control was obtained or until the
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
48
+ Annual Report 2018
Note 1: Significant accounting policies (continued)
date control ceased. A list of controlled entities is contained in Note 14 to the financial
statements. All controlled entities have a 30 June financial year-end.
All inter-company balances and transactions between entities in the Group, including any
unrealised profits or losses have been eliminated on consolidation. Accounting policies of
subsidiaries have been changed where necessary to ensure consistencies with those
policies applied by the Group.
Associates are all entities over which the Group has significant influence but not control or
joint control, generally accompanying a shareholding of between 20-50% of the voting
rights. Investments in associates are accounted for in the consolidated financial
statements using the equity method of accounting, after initially being recognised at cost.
(b) Income tax
The charge for current income tax expense is based on the profit for the year adjusted for
any non-assessable or disallowed items. It is calculated using tax rates that have been
enacted or are substantively enacted by the reporting date within each jurisdiction.
Deferred tax is accounted for using the liability method in respect of temporary
differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. No deferred income tax will be recognised from the
initial recognition of an asset or liability, excluding a business combination, where there is
no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled. Deferred tax is credited in profit or loss except
where it relates to items that may be credited directly to equity, in which case the
deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax
profits will be available against which deductible temporary differences can be utilised.
Deferred tax liabilities and assets are not recognised for temporary differences between
the carrying amount and tax bases of investments in foreign operations where the
company is able to control the timing of the reversal of the temporary differences and it is
probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to
offset current tax assets and liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates
to items recognised in other comprehensive income or directly in equity. In this case, the
tax is also recognised in other comprehensive income or directly in equity, respectively.
The amount of benefits brought to account or which may be realised in the future is
based on the assumption that no adverse change will occur in income taxation legislation
and the anticipation that the Group will derive sufficient future assessable income to
enable the benefit to be realised and comply with the conditions of deductibility imposed
by the law.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
49
+ Annual Report 2018
Note 1: Significant accounting policies (continued)
(c) Property, plant and equipment
Owned assets
Plant and equipment are measured on the historical cost basis less accumulated
depreciation and impairment losses.
The cost of fixed assets constructed within the Group includes the cost of materials, direct
labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably. All
other repairs and maintenance are charged to profit or loss during the financial period in
which they are incurred.
Oil and gas assets
These properties represent the accumulation of all exploration, evaluation and
development expenditure, pre-production development costs and ongoing costs of
continuing the develop reserves for production incurred by or on behalf of the entity in
relation to areas of interests.
Where further development expenditure is incurred in respect of a property after the
commencement of production, such expenditure is carried forward as part of the cost of
that property only when expected future economic benefits are to be received,
otherwise such expenditure is classified as part of the cost of production.
Depreciation
The depreciable amount of all fixed assets including capitalised lease assets is
depreciated on a straight-line basis over their useful lives to the Group commencing from
the time the asset is held ready for use. Leasehold improvements are depreciated over
the shorter of either the unexpired period of the lease or the estimated useful lives of the
improvements.
The depreciation rates used for each class of depreciable asset are:
Class of fixed Asset
Plant & equipment
Production equipment
Motor vehicles, furniture & fixtures
Leasehold improvements
Depreciation Rate
11.25% - 33%
10 - 20%
25 - 33%
10 - 12.50%
The residual values of the assets and their useful lives are reviewed and adjusted if
appropriate at each reporting date.
The carrying amount of plant and equipment is reviewed annually by the directors to
ensure it is not in excess of the recoverable amount from these assets. The recoverable
amount is assessed on the basis of the expected net cash flows which will be received
from the employment of the assets and subsequent disposal. The expected net cash flows
have been discounted to their present values in determining recoverable amounts.
The carrying amount of the asset is written down to its recoverable amount if its carrying
amount is greater than its estimated recoverable amount.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
50
+ Annual Report 2018
Note 1: Significant accounting policies (continued)
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These gains or losses are included in profit or loss. When revalued assets are sold,
amounts included in the revaluation reserve relating to that asset are transferred to
accumulated losses.
(d) Exploration and evaluation expenditure and the recognition of assets
Acquisition costs for exploration and evaluation projects are accumulated in respect of
each identifiable area of interest. These costs are only carried forward to the extent that
they are expected to be recouped through the successful development of the area or
where activities in the area have not yet reached a stage that permits reasonable
assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in
the year in which the decision to abandon the area is made.
A regular review is undertaken of each area of interest to determine the appropriateness
of continuing to carry forward costs in relation to that area of interest.
The recoverability of the carrying amount of the exploration and evaluation assets is
dependent on the successful development and commercial exploitation, or alternatively,
sale of the respective areas of interest.
The carrying values of expenditures carried forward are reviewed for impairment at each
reporting date when the facts, events or changes in circumstances indicate that the
carrying value may be impaired.
Accumulated expenditures are written off to profit or loss to the extent to which they are
considered to be impaired.
The group applies AASB 6 Exploration and Evaluation of Mineral Resources which is
equivalent to IFRS 6. The carrying value of exploration and evaluation expenditure is
historical cost less impairment.
Ongoing exploration costs incurred in respect of the Group’s Trinidadian and Indonesian
interests are expensed as incurred. Initial acquisition costs to obtain the right to explore
are capitalised.
(e) Producing assets
Upon the commencement of commercial production from each identifiable area of
interest, the exploration and evaluation expenditure incurred up to that point is
impairment tested and then reclassified to producing assets.
When production commences, the accumulated costs for the relevant area of interest
are amortised on a "units of production" method which is based on the ratio of actual
production to remaining proved and probable reserves (1P) as estimated by independent
petroleum engineers over the life of the area according to the rate of depletion of the
economically recoverable reserves.
Subsequent costs such as workovers, are included in the carrying amount of the asset only
when it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be reliably measured. All other costs are charged to
profit or loss during the financial period in which they are incurred.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
51
+ Annual Report 2018
Note 1: Significant accounting policies (continued)
The carrying amount of producing assets is reviewed annually by the directors to ensure it
is not in excess of the recoverable amount from these assets. The recoverable amount of
an asset is the greater of its fair value less costs to sell and its value in use. In assessing
value in use, the estimated future cash flows of an asset 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. Where an asset does not generate
cash flows that are largely independent from other assets or groups of assets, the
recoverable amount is determined for the cash generating unit to which the asset
belongs. For producing assets, the estimated future cash flows for the value-in-use
calculation are based on estimates, the most significant of which are 2P hydrocarbon
reserves, future production profiles, commodity prices, operating costs and any future
development costs necessary to produce the reserves which the group is committed.
Under a fair value less costs to sell calculation, future cash flows are based on estimates of
2P hydrocarbon reserves. Estimates of 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. Future commodity prices are reviewed at least
annually.
The carrying amount of an asset is written down to its recoverable amount if its carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These gains or losses are included in profit or loss. When revalued assets are sold,
amounts included in the revaluation reserve relating to that asset are transferred to
accumulated losses.
The Group records the present value of the estimated cost of legal and constructive
obligations to restore operating locations in the period in which the obligation arises. The
nature of restoration activities includes the removal of facilities, abandonment of wells
and restoration of affected areas. A restoration provision is recognised and updated at
different stages of the development and construction of a facility and then reviewed on
an annual basis. When the liability is initially recorded, the estimated cost is capitalised by
increasing the carrying amount of the related exploration and evaluation/development
assets.
Over time, the liability is increased for the change in the present value based on a post-
tax discount rate appropriate to the risk inherent in the liability. The unwinding of the
discount is recorded as an accretion charge within finance costs. The carrying amount
capitalised in oil and gas properties is depreciated over the useful life of the related asset.
Costs incurred that relate to an existing condition caused by past operation and do not
have a future economic benefit are expensed.
(f) Financial instruments
The Group’s financial instruments include cash and cash equivalents, trade and other
receivables and available-for-sale financial assets.
Recognition
Financial instruments are initially measured at cost on trade date, which includes
transaction costs, when the related contractual rights or obligations exist. Subsequent to
initial recognition, these instruments are measured as set out below.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
52
+ Annual Report 2018
Note 1: Significant accounting policies (continued)
The Group classifies its financial assets in the following categories: loans and receivables
and available-for-sale investments. The classification depends on the purpose for which
the investments were acquired. Management determines the classification of its
investments at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market and are stated at amortised cost using
the effective interest rate method.
Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets designated in this
category not included in any of the other categories. Available-for-sale financial assets
are reflected at fair value. Unrealised gains and losses arising from changes in fair value
are taken directly to the available for sale investment revaluation reserve in equity.
Investments are designated as available-for-sale if they do not have fixed maturities and
fixed determinable payments and management intends to hold them for the medium to
long term.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation
techniques are applied to determine the fair value for all unlisted securities held at cost
less impairment, including recent arm’s length transactions, reference to similar
instruments and option pricing models.
Changes in the fair value of monetary securities denominated in a foreign currency and
classified as available-for-sale are analysed between translation differences resulting from
changes in amortised cost of the security and other changes in the carrying amount of
the security. The translation differences related to changes in the amortised cost are
recognised in profit or loss, and other changes in carrying amount are recognised in the
available for sale investment revaluation reserve in equity. Changes in the fair value of
other monetary and non-monetary securities classified as available-for-sale are
recognised in equity.
Impairment of assets
The Group assesses at each reporting date whether there is objective evidence that a
financial asset or group of financial assets is impaired. In the case of equity securities
classified as available-for-sale, a significant or prolonged decline in the fair value of a
security below its cost is considered an indicator that the securities are impaired. If any
such evidence exists for available-for-sale financial assets, the cumulative loss (measured
as the difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in profit or loss) is removed
from equity and included in profit or loss. Impairment losses recognised in the statement of
profit or loss and other comprehensive income on equity instruments classified as
available-for-sale are not reversed through profit or loss.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
53
+ Annual Report 2018
Note 1: Significant accounting policies (continued)
Recognition and de-recognition
Regular purchases and sales of financial assets are recognised on trade-date – the date
on which the Group commits to purchase or sell the asset. Investments are initially
recognised at fair value plus transaction costs. Financial assets are de-recognised when
the rights to receive cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the risks and reward of
ownership.
When the securities classified as available-for-sale are sold, the accumulated fair value
adjustments recognised in equity are included in profit or loss as gains and losses for
investment securities.
(g) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each entity within the Group is determined using the currency
of the primary economic environment in which that entity operates.
Transaction and balances
Foreign currency transactions are translated into the functional currency using the
exchange rates prevailing at the date of the transaction. Foreign currency monetary
items are translated at the year-end exchange rate. Non-monetary items measured at
historical cost continue to be carried at the exchange rate at the date of the transaction.
Non-monetary items measured at fair value are reported at the exchange rate at the
date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised
in profit or loss
Exchange differences arising on the translation of non-monetary items are recognised
directly in equity to the extent that the gain or loss is directly recognised in equity;
otherwise the exchange difference is recognised in profit or loss.
(h) Provisions
Provisions for legal claims, service warranties and make good obligations are recognised
when the Group has a present legal or constructive obligation as a result of past events, it
is probable that an outflow of resources will be required to settle the obligation and the
amount has been reliably estimated. Provisions are not recognised for future operating
losses.
Where there are a number of similar obligations, the likelihood that an outflow will be
required in settlement is determined by considering the class of obligations as a whole. A
provision is recognised even if the likelihood of an outflow with respect to any one item
included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the
expenditure required to settle the present obligation at the reporting date. The discount
rate used to determine the present value reflects the current market assessments of the
time value of money and the risk specific to the liability. The increase in the provision due
to the passage of time is recognised as interest expense.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
54
+ Annual Report 2018
Note 1: Significant accounting policies (continued)
(i) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other
short-term highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to insignificant risk of
changes in value, and bank overdrafts. Bank overdrafts are shown within short-term
borrowings in current liabilities on the statement of financial position.
(j) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less provision for impairment. Trade
receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are
known to be uncollectible are written off by reducing the carrying amount directly. An
allowance account (provision for impairment of trade receivables) is used when there is
objective evidence that the Group will not be able to collect all amounts due, according
to the original terms of the receivables. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial reorganisation, and default
or delinquency in payments (more than 30 days overdue) are considered indicators that
the trade receivable is impaired. The amount of impairment allowance is the difference
between the asset’s carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. Cash flows relating to short-term
receivables are not discounted if the effect of discounting is immaterial.
The amount of impairment loss is recognised in profit or loss within other expenses. When
a trade receivable, for which an impairment allowance had been recognised, becomes
uncollectible in a subsequent period, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against other
expenses in profit or loss.
(k) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts
collected on behalf of third parties. Revenue is recognised when the amount of revenue
can be reliably measured, and it is probable that future economic benefits will flow to the
Group.
Revenue from the sale of oil and gas and related products is recognised when the Group
has transferred to the buyer the significant risks and rewards of ownership and the
amounts can be measured reliably. In the case of oil, this usually occurs at the time of
lifting.
Interest revenue is recognised on a time proportion basis taking into account the interest
rates applicable to the financial assets.
(l) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where
the amount of GST incurred is not recoverable from the Australian Tax Office. In these
circumstances the GST is recognised as part of the cost of acquisition of the asset or as
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
55
+ Annual Report 2018
Note 1: Significant accounting policies (continued)
part of an item of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST.
Cash flows are presented in the consolidated statement of cash flows on a gross basis,
except for the GST component of investing and financing activities, which are disclosed
as operating cash flows.
(m) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to
conform to changes in presentation for the current financial year.
(n) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition
and measurement for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded
derivatives, and trading and available-for-sale securities) is based on quoted market
prices at the reporting date. The quoted market price used for financial assets held by
the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market (for example
over-the-counter derivatives) is determined using valuation techniques. The Group uses a
variety of methods and makes assumptions that are based on market conditions existing
at each reporting date.
The carrying value less impairment provision of trade receivables and payables are
assumed to approximate their fair values due to their short-term nature. The fair value of
financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash follows at the current market interest rate that is available to the Group
for similar financial instruments.
(o) Investments in associates
Investments in associates are accounted for using the equity method of accounting in the
consolidated financial statements.
Under the equity method, the investment in the associate is carried in the consolidated
statement of financial position at cost plus post-acquisition changes in the Group’s share
of net assets of the associate.
After application of the equity method, the Group determines whether it is necessary to
recognise any additional impairment loss with respect to the Group’s net investment in
the associate.
The Group's share of the associate post-acquisition profits or losses is recognised in the
statement of profit or loss and other comprehensive income. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investment.
When the Group's share of losses in the associate equals or exceeds its interest in the
associate, including any unsecured long-term receivables and loans, the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of
the associate.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
56
+ Annual Report 2018
Note 1: Significant accounting policies (continued)
The reporting dates of the associate and the Group are identical and the associate’s
accounting policies conform to those used by the Group for like transactions and events
in similar circumstances.
(p) Prepayments for investments
Prepayments for acquisitions of financial assets are recorded at the fair value of
consideration to acquire the assets.
On satisfaction of all terms of the acquisition contract have been satisfied the
prepayment is transferred and accounted for as an investment.
(q) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to
the end of financial year which are unpaid. The amounts are unsecured and are usually
paid within 30 days of recognition unless alternative terms are agreed. The Group’s most
material balance is with LandOcean which has specific payment terms of 3 years.
(r) Dividends
Provision is made for the amount of any dividend declared, being appropriately
authorised and no longer at the discretion of the entity, on or before the end of the
financial year but not distributed at reporting date.
(s) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds.
(t) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to equity
holders of the Company, excluding any costs of servicing equity other than ordinary
shares, by the weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings
per share to take into account the after income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares.
(u) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting to the
chief operating decision maker. The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating segments, has been
identified as the Chief Executive Officer.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
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+ Annual Report 2018
Note 1: Significant accounting policies (continued)
(v) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment, or more frequently if events or
changes in circumstances indicate that they might be impaired. Other assets are tested
for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which they
are separately identifiable cash inflows which are largely independent of the cash inflows
from other assets or groups of assets (cash-generating units). Non-financial assets other
than goodwill that suffered an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
(w) Intangible assets (goodwill)
Goodwill is measured at cost less any impairment write downs. Goodwill on acquisitions of
subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for
impairment annually or more frequently if events or changes in circumstances indicate
that it might be impaired, and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The
allocation is made to those cash-generating units or groups of cash-generating units that
are expected to benefit from the business combination in which the goodwill arose,
identified according to operating segments (note 28).
(x) Share-based payments
The fair value of options granted is recognised as an expense with a corresponding
increase in equity. The total amount to be expensed is determined by reference to the
fair value of the options granted, which includes any market performance conditions and
the impact of any non-vesting conditions but excludes the impact of any service and
non-market performance vesting conditions.
(y) Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits are recognised in
current liabilities in respect of employees’ services up to the reporting date and are
measured at the amounts expected to be paid when the liabilities are settled.
Long service benefit
The liability for long service benefit is recognised in current and non-current liabilities,
depending on the unconditional right to defer settlement of the liability for at least 12
months after the reporting date. The liability is 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. Consideration is given to
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Note 1: Significant accounting policies (continued)
expected future wage and salary levels, experience of employee departures and periods
of service.
(z) Leases
The determination of whether an arrangement is or contains a lease is based on the
substance of the arrangement and requires an assessment of whether the fulfilment of the
arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to
the lessee substantially all the risks and benefits incidental to ownership of leased assets,
and operating leases, under which the lessor effectively retains substantially all such risks
and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value
of the leased assets, or if lower, the present value of minimum lease payments. Lease
payments are allocated between the principal component of the lease liability and the
finance costs, so as to achieve a constant rate of interest on the remaining balance of
the liability.
Leased assets acquired under a finance lease are depreciated over the asset’s useful life
or over the shorter of the asset’s useful life and the lease term if there is no reasonable
certainty that the company will obtain ownership at the end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to
profit or loss on a straight-line basis over the term of the lease.
(aa) Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration
received, net of transaction costs. They are subsequently measured at amortised cost
using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12
months after the reporting date, the loans or borrowings are classified as non-current.
(bb) Compound financial instruments
Compound financial instruments issued by the Group comprise convertible notes that can
be converted to ordinary shares at the option of the holder, when the number of shares to
be issued is fixed.
The liability component of a compound financial instrument is recognised initially at the
fair value of a similar liability that does not have an equity conversion option. The equity
component is recognised initially at the difference between the fair value of the
compound financial instrument as a whole and the fair value of the liability component.
Any directly attributable transaction costs are allocated to the liability and equity
components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial
instrument is measured at amortised cost using the effective interest method. The equity
component of a compound financial instrument is not re-measured subsequent to initial
recognition.
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Note 1: Significant accounting policies (continued)
Interest related to the financial liability is recognised in profit or loss. On conversion the
financial liability is reclassified to equity and no gain or loss is recognised.
Convertible notes that can be converted to share capital at the option of the holder and
where the number of shares is variable, contains an embedded derivative liability. The
embedded derivative liability is calculated (at fair value) first and the residual value is
assigned to the debt host contract. The embedded derivative is subsequently measured
at fair values and movements are reflected in the profit or loss.
Certain convertible notes issued by the Group which include embedded derivatives
(option to convert to variable number of shares in the Group) are recognised as financial
liabilities at fair value through profit or loss. On initial recognition, the fair value of the
convertible note will equate to the proceeds received and subsequently the liability is
measured at fair value at each reporting period until settlement. The fair value
movements are recognised on the profit or loss as finance costs.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other
finance costs are expensed in the period in which they are incurred.
(cc) Non-current assets classified as held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. They are
measured at the lower of their carrying amount and fair value less costs to sell. For non-
current assets to be classified as held for sale, they must be available for immediate sale in
their present condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non-
current assets to fair value less costs to sell. A gain is recognised for any subsequent
increases in fair value less costs to sell of a non-current asset, but not in excess of any
cumulative impairment loss previously recognised.
Non-current assets are not depreciated or amortised while they are classified as held for
sale. Interest and other expenses attributable to the liabilities of assets held for sale
continue to be recognised.
Non-current assets classified as held for sale are presented separately on the face of the
consolidated statement of financial position, in current assets. The liabilities of disposal
groups classified as held for sale are presented separately on the face of the statement of
financial position, in current liabilities.
(dd) Discontinued operations
A discontinued operation is a component of the Group’s business, the operations and
cash flows of which can be clearly distinguished from the rest of the Group and which:
•
•
•
represents a separate major line of business or geographical area of operations
is part of a single co-ordinated plan to dispose of a separate major line of business
or geographical are of operations
is a subsidiary acquired exclusively with a view to resale.
Range Resources Ltd and Controlled Entities
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Note 1: Significant accounting policies (continued)
Classification as a discontinued operation occurs at the earlier of disposal or when the
operation meets the criteria to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative
consolidated statement of profit or loss and other comprehensive income is re-presented
as if the operation had been discontinued from the start of the comparative year.
(ee) Inventories
Inventories include consumable supplies and maintenance spares and are valued at the
lower of cost and net realisable value. Cost is determined on a weighted average basis
and includes direct costs and an appropriate portion of fixed and variable production
overheads where applicable. Inventories determined to be obsolete or damaged are
written down to net realisable value, being the estimated selling price less selling costs.
Note 2: Critical accounting estimates and judgements
The directors evaluate estimates and judgements incorporated into the financial
statements based on historical knowledge and best available current information.
Estimates assume a reasonable expectation of future events and are based on current
trends and economic data, obtained both externally and within the Group. Areas
involving a higher degree of judgement or complexity, or areas where estimations and
assumptions are significant to the financial statements are disclosed here.
Producing asset expenditure
The classification of exploration and evaluation expenditure to producing assets is based
on the time of first commercial production. Producing asset expenditure for each area of
interest is carried forward as an asset provided certain conditions listed in Note 1(e) are
met and depreciated on a unit of production basis on P1 reserves. P1 reserves have been
determined by an independent expert.
Producing assets are assessed for impairment when facts and circumstances suggest that
the carrying amount of a production asset may exceed its recoverable amount. These
timings, calculations and reviews require the use of assumptions and judgement. The
related carrying amounts are disclosed in Note 18.
Reserves and resources
Estimates of reserves requires judgement to assess the size and quality of reservoirs and
their anticipated recoveries. Estimates of reserves are used to calculate depreciation,
depletion and amortisation charges.
Impairment of goodwill and producing assets
The Group tests whether goodwill or the producing assets has suffered any impairment in
accordance with the accounting policies stated in notes 1(e) and 1(w). The recoverable
amount of the cash-generating unit to which the assets belong is estimated based on the
present value of future cash flows.
The expected future cash flow estimation is always based on a number of factors,
variables and assumptions, the most important of which are estimates of reserves, future
production profiles, commodity prices and costs. In most cases, the present value of
future cash flows is most sensitive to estimates of future oil price and discount rates. A
Range Resources Ltd and Controlled Entities
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Note 2: Critical accounting estimates and judgements
(continued)
change in the modelled assumptions in isolation could materially change the recoverable
amount. Refer to note 15 for details of these key assumptions.
Deferred tax liability
Upon acquisition of SOCA Petroleum Ltd in June 2011, in accordance with the
requirement of AASB 112 Income Taxes, a deferred tax liability of US$46,979,878 was
recognised in relation to the difference between the carrying amount for accounting
purposes of deferred development assets and their actual cost base for tax purposes.
The carrying value of this deferred tax liability is US$28,429,185 at 30 June 2018. In the
event that the manner by which the carrying value of these assets is recovered differs
from that which is assumed for the purpose of this estimation, the associated tax charges
may be significantly less than this amount.
Recoverability of deferred tax assets
Deferred tax assets are recognised only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses. Management considers that it
is probable that future taxable profits will be available to utilise those temporary
differences. Judgement is required to determine the amount of deferred tax assets that
can be recognised, based upon the likely timing and the level of future profits.
Fair value of assets acquired and liabilities assumed in business combination
Identifiable assets acquired and liabilities assumed in business combination are measured
at their fair values at the acquisition date.
Share based payments transactions
The Group measures the cost of equity-settled share-based payment transactions with
employees by reference to the fair value of the equity instruments at the grant date. The
fair value is determined using a Black-Scholes model. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on
the carrying amounts of assets and liabilities within the next annual reporting period but
may impact expenses and derivative liability.
Contingent liabilities
The Directors are of the opinion that no provision is required to be raised in respect to any
of the matters disclosed in Note 27 as the likely outcome of any outflow is considered to
be remote.
Recoverability of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is
dependent on a number of factors, including whether the Group decides to exploit the
related lease itself or, if not, whether it successfully recovers the related exploration and
evaluation asset through sale. Factors that could impact the future recoverability include
the level of reserves and resources, future technological changes, which could impact
the cost of mining, future legal changes (including changes to environmental restoration
obligations) and changes to commodity prices. To the extent that capitalised exploration
Range Resources Ltd and Controlled Entities
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Note 2: Critical accounting estimates and judgements
(continued)
and evaluation expenditure is determined not to be recoverable in the future, profits and
net assets will be reduced in the period in which this determination is made.
Note 3: Revenue
From continuing operations
Revenue from sale of oil
Note
Consolidated
2018 (US$)
2017 (US$)
12,629,996
8,435,309
Revenue from third party services
429,426
-
Total revenue from continuing operations
13,059,422
8,435,309
Other income
Interest income
Other income
Total other income
Note 4: Expenses
240,390
181,507
421,897
78,021
96,346
174,367
Note
Consolidated
2018 (US$)
2017 (US$)
Loss before income tax includes the following specific expenses:
a: Cost of sales
Costs of production
Royalties
Staff costs
Oil and gas properties depreciation,
depletion and amortisation
6,688,758
4,605,811
4,080,334
4,950,666
6,613,133
2,494,497
2,157,836
6,289,324
Total cost of sales
20,325,569
17,554,790
b: Finance costs
Fair value movement of derivative liability
Fair value movement of option liability
Foreign exchange loss
Interest expense
Interest on convertible note
Other finance income
Total finance costs
c: General and administration expenses
Directors’ and officers’ fees and benefits
Share based payments – employee,
director and consultant options
Other expenses
Total general and administration expenses
(2,308,556)
(308,273)
193,109
3,209,959
2,308,556
-
3,094,795
(786,021)
(494,096)
1,362,426
2,119,996
1,871,318
(267,397)
3,806,226
20(b)
-
840,599
1,097,029
(92,466)
(32,187)
3,354,579
4,102,712
4,158,879
5,223,721
Range Resources Ltd and Controlled Entities
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Note 4: Expenses (continued)
d: Exploration expenditure
Indonesia (i)
Trinidad (ii)
Other
Total exploration expenditure
1,253,329
670,856
22,121
1,946,306
-
822,383
330,471
1,152,854
(i) Amounts expensed in the year in Indonesia relate to exploration activities in the Perlak field for
which the company policy is to expense.
(ii) Amounts expensed in the year in Trinidad relate to land fees in relation to St Mary’s for which the
company policy is to expense.
Note 5: Discontinued operations
During 2017 the Group fully wrote down the asset held-for-sale which relates to 45%
interest in the unlisted company Strait Oil & Gas Limited ("Strait") due to uncertainty over its
recoverability.
a: Results of discontinued operations
Revenue
Cost of sales
Asset write off
Other expenses
Results from operating activities
Income tax (expense)/benefit
Results from operating activities, after tax
Loss on sale of subsidiary asset
Loss from discontinued operations
Note 6: Income Tax Expense
Note
Consolidated
2018 (US$)
2017 (US$)
-
-
-
-
-
-
-
-
-
-
-
(1,250,000)
-
(1,250,000)
-
(1,250,000)
-
(1,250,000)
a: Income tax expense
Current tax
Deferred tax
Adjustments for current tax of prior periods
Note
Consolidated
2018 (US$)
2017 (US$)
-
1,419,725
122,478 9
1,542,204
-
4,974,750
25,200
4,999,950
Income tax expense/(benefit) is attributable to:
Loss from continuing operations
Loss from discontinued operations
Aggregate income tax expense
b: The prime facie tax on profit from ordinary activities before income tax is reconciled
to the income tax as follows:
4,999,950
-
1,542,204
-
4,999,950
1,542,204
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Loss from continuing operations before
income tax
Loss from discontinuing operations before
income tax
Prime facie tax payable on loss from
ordinary activities before income tax at
30% (2017: 30%) Group
Add tax effect of:
Other taxes
Expenses not deductible for tax
Tax losses not brought to account
Capital expenses deductible for tax
purposes
Deferred tax assets not brought to
account
Differences in tax rates
Unrecognised deferred tax asset
Capital losses
Revenue losses
Other
Offset of deferred tax liabilites
Net Deferred Tax Assets not brought to
account
c: Recognised deferred tax assets
Temporary differences
Recognised deferred tax liabilities
Accelerated depreciation
DTL arising on business combination
Net deferred tax liabilities
Note
Consolidated
2018 (US$)
2017 (US$)
(15,988,033)
(48,112,929)
-
(1,250,000)
(15,988,033)
(49,362,929)
(4,474,410)
(14,433,879)
(4,796,410)
(14,433,879)
88,626
4,883,415
11,316,449
25,200
23,850,271
11,471,474
(5,961,448)
(8,092,768)
331,010
4,179,397
(4,319,439)
1,542,204
(11,999,745)
4,999,950
443,654
10,595,377
2,866,987
(5,680,826)
443,654
10,470,664
1,400,991
(3,147,098)
8,225,192
9,168,211
13,517,531
13,517,531
6,853,135
6,853,135
(36,332,757)
(28,429,185)
(64,761,942)
(26,167,218)
(28,332,926)
(54,500,144)
Deferred tax assets not brought to account, the benefits of which will only be realised if
the conditions for deductibility set out in Note 1(b) occur.
Range Resources Ltd and Controlled Entities
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Note 7: Auditor’s remuneration
Note
Consolidated
2018 (US$)
2017 (US$)
Remuneration of the auditor of the Parent Entity for:
Auditing or reviewing the financial report
by BDO Audit (WA) Pty Ltd
Non-audit services provided by a related
entity of BDO Audit (WA) Pty Ltd in respect
to Parent Entity’s tax compliance
Professional services provided by BDO UK
LLP in respect to AIM admission
Total remuneration for the Parent Entity
Remuneration of the auditors of the subsidiaries
Auditing or reviewing the financial report
by BDO UK
Auditing or reviewing the financial report
by BDO Barbados
Auditing or reviewing the financial report
by BDO Trinidad
Auditing or reviewing the financial report
by BDO Indonesia
Total remuneration for the subsidiaries
Note 8: Loss by share
56,016
70,000
17,010
17,828
160,591
233,617
2,016
14,175
30,801
19,300
66,292
-
87,828
5,327
10,331
29,251
-
44,909
Note
Consolidated
2018 (US$)
2017 (US$)
(0.23)
(0.23)
a: Basic loss per share
Loss per share from continuing operations
attributable to the ordinary equity holders
of the company
Loss per share attributable to the ordinary
equity holders of the company
b: Diluted loss per share
Loss per share from continuing operations
attributable to the ordinary equity holders
of the company
Loss per share attributable to the ordinary
equity holders of the company
c: Reconciliation of loss used in calculating earnings per share
Basic/ Diluted loss per share
Loss from continuing operations
attributable to the ordinary equity holders
of the company
Loss attributable to the ordinary equity
holders of the company
d: Weighted average number of shares used as the denominator
Weighted average number of ordinary
shares used as the denominator in
calculating basic EPS
n/a
n/a
(17,530,237)
(17,530,237)
7,595,830,782
(0.68)
(0.70)
n/a
n/a
(53,112,879)
(54,362,879)
7,595,830,782
Range Resources Ltd and Controlled Entities
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Note 9: Cash and cash equivalents
Cash at bank and on hand
Risk exposure
Note
Consolidated
2018 (US$)
3,945,683
2017 (US$)
17,254,360
Information about the Group’s exposure to credit risk, foreign exchange risk and price risk
is provided in Note 33.
Note 10: Trade and other receivables
Current
Trade receivables (i)
Taxes receivable
Total trade and other receivables
Note
Consolidated
2018 (US$)
2017 (US$)
1,197,336
3,678,430
4,875,766
658,338
5,082,388
5,740,726
(i) Trade receivables are generally due for settlement within 30 days. They are presented as current
assets unless collection is not expected for more than 12 months after the reporting date. Trade
receivables are neither past due nor impaired.
Fair value approximates the carrying value of trade and other receivables at 30 June 2018
and 30 June 2017.
Non-current
Other receivables (i)
Total trade and other receivables
Note
Consolidated
2018 (US$)
2017 (US$)
2,251,384
2,251,384
6,886,394
6,886,394
(i) Other receivables are comprised of receivables from LandOcean Energy Services Co. Ltd
(US$1,220,713) and Sincep Oilog Equipment Co. Ltd (US$44,150) which are both part of LandOcean
group of companies. The total interest due is US$986,521.
Fair value approximates the carrying value of trade and other receivables at 30 June 2018
and 30 June 2017.
Risk exposure
Information about the Group’s exposure to credit risk, foreign exchange risk and price risk
is provided in Note 33.
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Note 11: Other current assets
Current
Prepayments
Inventory – finished goods
Other assets (i)
Total other current assets
Note
Consolidated
2018 (US$)
2017 (US$)
242,142
3,277,096
2,812,769
6,332,007
208,946
2,353,143
24,194
2,586,283
(i) Other assets include a refundable payment of $2,800,000 made to LandOcean Petroleum Corp.
Ltd on 22 December 2017 in respect of RRDSL acquisition. The amount is receivable on-demand,
unsecured and accrues 6% interest.
Note 12: Assets held for sale
During 2017 the Group fully wrote down the asset held-for-sale which relates to 45%
interest in the unlisted company Strait Oil & Gas Limited ("Strait") due to uncertainty over its
recoverability.
Note
Consolidated
2018 (US$)
2017 (US$)
Movements in assets classified as held for sale are as follows:
Opening net book amount
Transfer from investment in associate
Sold in period
Impairment loss relating to discontinued
operations
Closing net book amount
-
-
-
-
-
1,250,000
-
-
(1,250,000)
-
Note 13: Financial assets available for sale
Interest in other corporations
Note
Consolidated
2018 (US$)
-
2017 (US$)
45,238
Total available-for-sale financial assets
-
45,238
Movement in financial assets available-for-sale
Opening balance
Impairment recognised in profit or loss
Closing Balance
45,238
(45,238)
-
45,238
-
45,238
Available-for-sale financial assets comprise investments in the ordinary share capital of
various entities. There are no fixed returns or fixed maturity date attached to these
investments.
Risk exposure
Information about the Group’s exposure to credit risk, foreign exchange risk and price risk
is provided in Note 33.
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Note 14: Controlled Entities
The consolidated financial statements incorporate the assets, liabilities and results of the
following subsidiaries in accordance with accounting policy described in Note 1(a).
Controlled Entities Consolidated
Country of
Incorporation
Percentage Owned (%)
30 June 2018 30 June 2017
Subsidiaries of Range Resources Limited:
Range Resources (Barbados) Limited
SOCA Petroleum Limited
Barbados
Barbados
Trinidad
Range Resources Drilling Services Limited
West Indies Exploration Company Limited Trinidad
Range Resources Trinidad Limited
Range Resources West Coast Limited
Range Resources (Barbados) GY Limited
Range Resources GY Shallow Limited
Trinidad
Trinidad
Barbados
Trinidad
100
100
100
100
100
100
100
100
Range Resources GY Deep Limited
100
Range Resources Upstream Services Limited United Kingdom 100
Trinidad
Range Resources HK Limited
PT Hengtai Weiye Oil and Gas
PT Jasmine Oil and Gas Services (ii)
PT Lubuk Kawai Raya (i)
PT Aceh Timur Kawai Energi (i)
Hong Kong
Indonesia
Indonesia
Indonesia
Indonesia
100
60
60
46.8
42.1
100
100
-
100
100
100
100
100
100
100
100
-
-
-
-
(i) Indirect control of these companies was obtained with the acquisition of 60% of share capital in
PT Hengtai Weiye Oil and Gas.
(ii) Newly established entity.
Note 15a: Business Combinations
On 30th November 2017, Range acquired RRDSL from LandOcean Petroleum Corp. Ltd.
for a consideration of US$5,500,000. Details of the purchase consideration, the net assets
acquired and goodwill are below.
Purchase consideration comprises:
Cash payable
Total consideration
US$
5,500,000
5,500,000
The group has reported provisional amounts for the assets and liabilities acquired as
follows:
Net identifiable assets acquired
2,258,528
Net assets acquired:
Plant and equipment
Deferred tax asset
Cash and cash equivalents
24,739,434
2,544,203
357,940
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Trade and other receivables
Inventory
Trade and other payables
Deferred tax liability
Borrowings
Goodwill
4,013,278
1,470,349
(1,745,851)
(5,289,460)
(23,831,365)
3,241,472
(a)
Goodwill recognition and allocation
On 30th November 2017, Range acqured RRDSL from LandOcean Petroleum Corp. Ltd.
for a consideration of US$5,500,000 which is payable on 30 November 2020.
Goodwill of US$3,241,472 represents the costs savings achieved within the Group now that
RRDSL is part of Range group.
(b)
Revenue and loss contribution
Revenue and net loss before tax of RRDSL included in the consolidated statement of profit
or loss and other comprehensive income from the acquisition date to 30 June 2018 were
US$429,426 and US$(3,015,699).
If the acquisition had occurred on 1 July 2017, revenue and net profit from RRDSL would
have been US$529,002 and US$268,188.
(c)
Purchase consideration – cash outflow
Outflow of cash to acquire subsidiary net of cash acquired US$
Cash consideration
Less cash acquired
Net inflow of cash – investing activities
-
357,940
357,940
Acquisition related costs
Acquisition related costs of $736,881 are included in general and administration expenses
in profit or loss and in operating cash flows in the statement of cash flows.
(d)
Accounting policy
The acquisition method of accounting is used to account for all business combinations,
regardless of whether equity instruments or other assets are acquired. The consideration
transferred for the acquisition of subsidiary comprises the:
(i)
(ii)
fair values of the assets transferred
liabilities incurred to the former owners of the acquired business
(iii)
equity interests issued by the group
fair value of any asset or liability resulting from contingent consideration
(iv)
arrangement, and
(v)
fair value of any pre-existing equity interest in the subsidiary
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Note 15a: Business Combinations (continued)
Identifiable assets acquired and liabilities and contingent liabilities assumed in business
combination are, with limited exceptions, measured initially at their fair values at the
acquisition date.
Acquisition-related costs are expensed as incurred.
The excess of the
(i)
(ii)
consideration transferred,
amount of any non-controlling interest in the acquired entity, and
acquisition-date fair value of any previous equity interest in the acquired entity
(iii)
over the fair value of the net identifiable assets acquired
is recorded as goodwill. If those amounts are less than the fair value of the net identifiable
assets of the subsidiary acquired, the difference is recognised directly in profit or loss as
bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in
the future are discounted to their present value as at the date of exchange. The discount
rate used is the entity’s incremental borrowing rate, being the rate at which similar
borrowing could be obtained from an independent financier under comparable terms
and conditions.
Note 15b: Intangible Assets
Cost
Impairment write down
Net book amount
Year ended 30 June 2018
Opening net book amount
Additions-acquisition
Impairment charge
Closing net book amount
Impairment tests
Note
Consolidated
2018 (US$)
2017 (US$)
3,241,472
28,985,014
-
3,241,472
(28,985,014)
-
15(a)
-
3,241,472
-
3,241,472
28,985,014
-
(28,985,014)
-
During the year ended 30 June 2018, the Group did not record an impairment with
respect to goodwill.
Goodwill has been allocated for impairment testing purposes to one cash-generating unit
(CGU), identified according to operating segments, being Trinidad – oil and gas
production. The goodwill represents the costs savings achieved within the group as a
result of the RRDSL acquisition.
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+ Annual Report 2018
Note 15b: Intangible Assets (continued)
Estimates of the recoverable amount is based on an asset’s fair value less costs to sell
using a discounted cash flow method and is most sensitive to the following key
assumptions:
• Obtaining all required approvals and permissions to undertake waterflood
development;
• Obtaining lease extensions until 2031;
• P1 and P2 Recoverable reserves;
• Commodity price of between US$60 and US$72 per barrel dependent on the year;
• Operating costs at 10%-26% of revenue, depending on oil price and production at
that time;
• Post-tax discount rate of 10.0%.
Economical recoverable reserves represent management’s expectations at the time of
completing the impairment testing and based on the reserves statements and exploration
and evaluation work undertaken by appropriately qualified persons. A summary of the
Company’s Trinidad reserves and resources are published on the Group’s website.
The commodity price for oil was based on mean WTI forecast oil price data from a variety
of different analysts and other sources. Estimates (calendar years) are US$61/bbl in 2018,
US$66/bbl in 2019, US$63/bbl in 2020, US$65/bbl in 2021, US$64/bbl in 2022, US$68/bbl in
2024, US$67/bbl in 2025 and then escalating at 2% per annum for the remainder of the
project.
Operating cost assumptions were based on FY19 budgets, actual costs incurred in FY18
and estimates of additional operating costs for waterflood activities received from Range
Resources Drilling Services Limited. An adverse 20% change to oil prices, production,
operating costs and the discount rate would not result in an impairment.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
72
+ Annual Report 2018
Note 16: Property, Plant & Equipment
Consolidated
Production
equipment
and access
roads
Gathering
station and
field office
Leasehold
improvement
Motor vehicle,
furniture,
fixtures &
fittings
Total
US$
US$
US$
US$
US$
-
-
(28,211)
1,770,165
Year ended 30 June 2017
Opening net book
amount
Foreign currency
movement
Additions
Disposals
Depreciation
charge
Closing net book
amount
At 30 June 2017
Cost
Accumulated
depreciation
Net book amount 1,607,570
1,607,570
6,288,571
(134,384)
(4,681,001)
1,607,570
2,381
Year ended 30 June 2018
Opening net book
amount
Foreign currency
movement
Acquisitions from
business
combination
Additions
Depreciation
charge
Closing net book
amount
At 30 June 2018
Cost
23,742,231
214,331
(1,475,122)
24,091,391
30,265,925
98,119
214,300
246,644
2,329,228
(2,813)
(4,421)
(1,523)
(36,968)
-
-
-
-
4,363
(3,916)
4,363
(3,916)
(7,861)
(25,022)
(103,758)
(271,025)
87,445
184,857
141,810
2,021,682
502,697
529,599
1,134,146
8,455,013
(415,252)
(344,742)
(992,336)
(6,433,331)
87,445
184,857
141,810
2,021,682
87,445
184,857
141,810
2,021,682
127
404
210
3,122
-
-
-
997,203
24,739,434
14,484
228,082
456,897
(11,571)
(18,255)
(226,573)
(1,731,521)
76,001
181,490
1,140,732
25,489,614
496,647
539,886
2,337,172
33,639,630
Accumulated
depreciation
(6,174,534)
(420,646)
(358,396)
(1,196,440)
(8,150,016)
Net book amount 24,091,391
76,001
181,490
1,140,732
25,489,614
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
73
+ Annual Report 2018
Note 17: Exploration assets
Opening balance (ii)
Acquisition (i)
Foreign exchange
Closing net book amount
(i) Asset acquisition
Note
Consolidated
2018 (US$)
632,176
6,077,873
34,948
6,744,997
2017 (US$)
645,801
-
(13,625)
632,176
On 30th October 2017, Range Resources Limited acquired through Range Resources HK
Limited, 60% of the shares of PT Hengtai Weiye Oil and Gas ("Hengtai"), resulting in an
indirect interest of 42% (a 23% indirect equity interest and further 19% indirect economic
interest) in the Perlak field, Indonesia. Control has been obtained through the shareholder
agreements in place at each entity level.
Details of the fair value of the assets acquired are as follows:
Purchase consideration comprises:
Cash
Total cash paid
Total consideration
Net assets acquired:
Exploration and evaluation assets
Less: non-controlling interests
Total
Put option agreement
US$
2,560,000
2,560,000
2,560,000
US$
6,077,873
(3,517,873)
2,560,000
The vendor has agreed to provide Range with a put option, whereby Range has the
option to enforce a buyback of its full 60% interest in Hengtai should agreed milestones
not be achieved, therefore providing protection to Range's investment. These milestones,
amongst others, include achieving minimum production of 800 bopd from Perlak field
over a continuous 90-day period, as well as proving up independently audited 1P reserves
of at least 10 mmbbl within a three-year period. On acquisition, a cash consideration of
US$2,560,000 was paid. No value has been recognised for this option as there is no
evidence that the milestones will not be achieved.
Asset acquisition accounting policy
The transaction is not deemed a business combination as the assets acquired did not
meet the definition of a business. When an asset acquisition does not constitute a business
combination, the assets and liabilities are assigned a carrying amount based on their
relative fair values in an asset purchase transaction and no deferred tax will arise in
relation to the acquired assets and assumed liabilities as the initial recognition exemption
for deferred tax under AASB 112 applies. No goodwill arose on the acquisition and
transaction costs of the acquisition will be included in the capitalised cost of the asset. The
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
74
+ Annual Report 2018
Note 17: Exploration assets (continued)
non-controlling interest is recognised at fair value. All the other expenses in relation to
Indonesia are expensed in exploration costs in the Income Statement.
(ii) Trinidad
At 30 June 2018, US$667,124 (30 June 2017: US$632,176) capitalised exploration and
evaluation expenditure relates to the interests of the Group in the Guayaguayare and St
Mary’s Blocks in Trinidad.
Note 18: Producing assets
Cost
Accumulated amortisation
Net book value
Note
Consolidated
2018 (US$)
152,711,418
(43,619,768)
109,091,650
2017 (US$)
150,555,891
(42,208,436)
108,347,455
Opening net book amount
108,347,455
95,077,882
Foreign currency movement
Additions
Amortisation charge
Closing net book amount
88,034
3,875,306
(3,219,145)
109,091,650
(761,346)
20,049,219
(6,018,300)
108,347,455
Refer to Note 15 for the assessment of the recoverable amount of the producing assets.
Note 19: Trade and other payables
a: Current
Trade payables
Sundry payables and accrued expenses
Total
b: Non-Current
Interest bearing trade payables
Accrued expenses
Other payables – interest bearing
Other payables – non-interest bearing
Total
Risk exposure
Note
Consolidated
2018 (US$)
2017 (US$)
1,416,480
8,513,026
9,929,506
41,359,805
5,796,050
3,242,977
42,947
50,441,779
381,237
1,232,262
1,613,499
40,851,038
10,539,050
-
-
51,390,088
Trade payables are non-interest bearing. Interest bearing other payables are amounts
due to LandOcean and are not payable until April 2020. Interest charged at 6%. Other
interest-bearing payables relate to the consideration due to LandOcean Petroleum Corp
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
75
+ Annual Report 2018
Note 17: Exploration assets (continued)
Ltd for RRDSL acquisition, interest bearing at 6% on net balance outstanding which is due
to be paid in November 2020. LandOcean payables are unsecured.
Information about the Group’s exposure to credit risk, foreign exchange risk and price risk
is provided in Note 33.
Note 20: Borrowings
Current borrowings
Interest on convertible note
Option liability
Total current borrowings
Non-current borrowings
Borrowings at amortised cost
Convertible note
Total non-current borrowings
a: Borrowings
Principal
Interest due on outstanding balance
Closing net book amount
Note
20c
20b
20a
20c
Note
Consolidated
2018 (US$)
2017 (US$)
1,600,000
33,345
1,633,345
-
341,618
341,618
24,481,224
17,958,382
42,439,606
-
21,071,631
21,071,631
Consolidated
2018 (US$)
2017 (US$)
15,640,024
8,841,200
24,481,224
-
-
-
These are unsecured payables to EPT, Unionpetro, GPN and LO Petroleum, which all
belong to the LandOcean group of companies. Interest is charged at 6% on net balance
outstanding, with the amounts being payable within three years.
Note
Consolidated
2018 (US$)
2017 (US$)
b: Option liability
Option liability at fair value through profit
or loss
Closing net book amount
During 2018, no options were exercised (2017: 0).
33,345
33,345
341,618
341,618
Total fair value movement recognised in the Statement of Profit and Loss was a gain of
US$308,273 (2017: US$494,096).
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
76
+ Annual Report 2018
Note 20: Borrowings (continued)
c: Convertible note
Convertible note liability element
Convertible note derivative element
Interest due on outstanding balance –
non-current
Interest due on outstanding balance-
current
Note
Consolidated
2018 (US$)
2017 (US$)
16,507,750
384,007
16,507,750
2,692,563
1,066,625
271,318
1,600,000
1,600,000
Closing net book amount
19,558,382
21,071,631
In 2017, Range signed an agreement with LandOcean Energy Services Co. Limited. for the
issuance of a US$20,000,000 convertible note.
The terms of the convertible note are as follows:
Issuer
Noteholder
Amount
Tenor
Repayment
Interest
Security
Range Resources Limited
LandOcean Energy Services Co. Limited
US$20,000,000
Three years, maturity date 28 November 2019
Bullet at maturity date
8% per annum, payable annually in arrears (i)
None
Conversion price
0.88p per share
Lender Conversion Right
At any time, in a minimum amount of US$10,000,000
(i) The next interest payment of US$1,600,000 is due on 28 November 2018 and annually thereafter.
The proceeds from this convertible note were utilised solely to replace a portion of the
outstanding payable balance due to LandOcean under the terms of the Integrated
Master Services Agreement ("IMSA").
Note 21: Provision for rehabilitation
The Group records the present value of the estimated cost of legal and constructive
obligations to restore operating locations in the period in which the obligation arises. The
nature of restoration activities includes removal of facilities, abandonment of wells and
restoration of affected areas.
Provision for rehabilitation
Note
Consolidated
2018 (US$)
2017 (US$)
811,737
784,316
Movement in the provision for rehabilitation during the financial year are set out below:
Carrying amount at the start of the year
Additional provision recognised
784,316
27,420
811,737
740,268
44,048
784,316
Carrying amount at the end of the year
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
77
+ Annual Report 2018
Note 22: Deferred taxes
Accrued
interest
Total
Deferred tax asset US$ US$
Movements: Year ended 30 June 2018
Opening balance
Charged/(credited) - to profit or loss
Acquisition of subsidiary
Closing net book amount
6,853,135
4,120,193
2,544,203
13,517,531
6,853,135
4,120,193
2,544,203
13,517,531
Fair value
uplift on
business
combination
Accelerated
depreciation
Total
Deferred tax liability US$ US$ US$
Movements: Year ended 30 June 2017
Opening balance
Foreign currency movement
Charged/(credited) - to profit or loss
30,046,205
-
(1,713,279)
17,515,407
(1,007,041)
9,658,852
26,167,218
47,561,612
(1,007,041)
4,872,363
54,500,144
Closing net book amount
28,332,926
Movements: Year ended 30 June 2018
Opening balance
Foreign currency movement
Charged/(credited) - to profit or loss
Acquisition of subsidiary
Closing net book amount
28,332,926
-
96,259
-
28,429,185
26,167,218
(567,580)
5,443,659
5,289,460
36,332,757
54,500,144
(567,580)
5,539,918
5,289,460
64,761,942
As a result of business combination, at the date of acquisition a deferred tax liability has
been recognised in relation to the difference between the carrying amount of the
deferred exploration and development costs for accounting purposes and the cost base
of the asset for tax purposes in accordance with the requirements of Australian
Accounting Standard AASB 112 Income Taxes. The Group does not have a tax payable in
relation to the deferred tax liability at 30 June 2018 and it is anticipated that the deferred
taxation liability will be reduced in the future as the deferred exploration and
development costs are amortised in future periods.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
78
+ Annual Report 2018
Note 23: Other non-current liabilities
Employee service benefits
Total
Risk exposure
Note
Consolidated
2018 (US$)
2017 (US$)
731,350
731,350
340,289
340,289
Information about the Group’s exposure to credit risk, foreign exchange risk and price risk
is provided in Note 33.
Note 24: Contributed equity
7,595,830,782 (2017: 7,595,830,782) fully
paid ordinary shares
Share issue costs
Total contributed equity
Note
Consolidated
2018 (US$)
2017 (US$)
404,910,284
404,910,294
(20,991,887)
383,918,397
(20,991,897)
383,918,397
2018 No.
2018 (US$)
2017 No.
2017 (US$)
Consolidated
a: Fully paid ordinary shares
At the beginning of
reporting period
7,595,830,782
404,910,284
7,589,790,100
404,874,079
Shares issued during year
Total contributed equity
-
7,595,830,782 404,910,284
-
6,040,682
7,595,830,782 404,910,284
36,205
Ordinary shares entitle the holder to participate in dividends and the proceeds on
winding up of the Company in proportion to the number of and amounts paid on the
shares held.
On a show of hands every holder of ordinary shares present at a meeting of the
Company, in person or by proxy, is entitled to one vote and upon a poll each share is
entitled to one vote.
b: Options
At the beginning of reporting period
Options issued during year (refer Notes 20 and 30)
Options expired
Options exercised during year
Total options
Consolidated
2018 No.
2017 No.
808,844,977
-
(27,000,000)
-
781,844,977
903,055,747
8,000,000
(102,210,771)
-
808,844,977
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
79
+ Annual Report 2018
Note 24: Contributed equity (continued)
At 30 June 2018, the unissued ordinary shares under option are as follows:
Date of expiry
14 July 2018
14 July 2018
31 August 2018
3 September 2019
3 September 2019
30 March 2020
Total number under option:
Exercise price
Number under option
£0.01
£0.02
£0.01
£0.01
£0.02
£0.01
161,472,247
118,729,593
14,000,000
194,585,862
172,557,275
120,500,000
781,844,977
The holders of these options do not have any rights under the options to participate in any
share issues of the company.
During the year ended 30 June 2018, no ordinary shares of Range were issued on the
exercise of options (2017: nil).
Note 25: Reserves
a: Share-based payment reserve
Balance 1 July 2017
Share based payment expenses (Note 30)
Expired options reclassified to retained
earnings
Balance 30 June 2018
Note
Consolidated
2018 (US$)
2017 (US$)
8,516,837
(92,466)
8,549,023
(32,186)
-
-
8,424,371
8,516,837
The share based payment reserve records items recognised as expenses on the fair
valuation of shares and options issued as remuneration to employees, directors and
consultants.
b: Option premium reserve
Balance 1 July 2017
Fair value movement of exercised options that
were originally classified as a derivative liability
Balance 30 June 2018
Note
Consolidated
2018 (US$)
2017 (US$)
12,057,363
12,057,363
-
-
12,057,363
12,057,363
The option premium reserve is used to recognise the grant date fair value of options.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
80
+ Annual Report 2018
Note 25: Reserves (continued)
c: Foreign currency translation reserve
Balance 1 July 2017
Currency translation differences arising during
the year
Balance 30 June 2018
Note
Consolidated
2018 (US$)
2017 (US$)
5,765,111
3,620,738
(1,423,892)
2,144,373
4,341,219
5,765,111
The foreign currency translation reserve is used to record exchange differences arising
from the translation balances of foreign subsidiaries.
Total reserves at 30 June 2018
24,822,953
26,339,311
Note 26: Commitments
Expenditure and Capital commitments
Not later than 1 year
Total
Note
Consolidated
2018 (US$)
2017 (US$)
-
-
5,509,200
5,509,200
Note 27: Contingent liabilities and contingent assets
Geeta Maharaj
Range received an invoice from Geeta Maharaj, a Trinidad based attorney seeking
payment for legal services in the amount of approximately US$1.9 million. The invoice
purports to relate to legal work undertaken during mid-2014 including the preparation of
inter-company loan agreements. Range strongly refutes the amount of this purported
invoice and considers it to be vastly excessive and therefore not payable. A claim has
been filed by Ms Maharaj seeking the sum of TT$12,019,573 (approximately US$1.9 million)
plus interest and costs. Range filed a notice of application to strike out this claim on 14
July 2017. An initial hearing on this application was held on 29 September 2017 at which
the parties were ordered to file and exchange written submissions by 20 October 2017
with replies, if any, to be filed by 30 October 2017. Both parties filed and exchanged
written submissions and responses by the requested dates and a further hearing was
scheduled for 1 December 2017. This hearing was rescheduled by the court and the
Company is awaiting notification of a rescheduled date.
Separately, Range has received further correspondence from Ms Maharaj on a related
matter claiming damages of TT$6,000,000 (approximately US$890,000) on the basis of a
conspiracy designed to damage Ms Maharaj's reputation. Again, Range firmly refutes the
allegation and in conjunction with its legal counsel in Trinidad has responded to this
demand. A claim has been filed by Ms Maharaj seeking damages of TT$6,000,000
(approximately US$890,000) plus interest and costs. The Company, in conjunction with its
legal counsel, has filed a defence in respect of this claim and a preliminary hearing was
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
81
+ Annual Report 2018
Note 27: Contingent liabilities and contingent assets (continued)
scheduled for 1 December 2017. This hearing was rescheduled by the court and the
Company is awaiting notification of a rescheduled date.
While the Company, having taken legal advice, considers the probability of Ms Maharaj
succeeding in either of her claims to be remote, there can be no guarantee that there
will be a favourable outcome for the Company.
Indonesia acquisition
Range completed the acquisition of an indirect interest in an established oil block in
Indonesia on 30 October 2017. As per terms of the acquisition, the Company has
acquired an indirect 42% interest (a 23% indirect equity interest and further 19% indirect
economic interest) in the Perlak field located in a mature hydrocarbon province of
Northern Sumatra. Please refer to Operations section for further details on the asset.
The remaining consideration of US$0.64 million will be payable upon completion of the
minimum work obligation.
Colombian exploration licences
In January 2016, Range received notification from Agencia Nacional de Hidrocarburos
(“ANH”) in Colombia advising that the E&P licences over three exploration blocks (PUT-5,
VSM-1 and VMM-7) had been revoked. The licences had been awarded to a Consortium
of Optima Oil Corporation (“Optima”) and the Company in December 2012. ANH alleges
that various obligations and commitments agreed within the exploration licences have
not been complied with and also that invalid letters of credit had been presented to ANH
by Optima to support the minimum work obligations. The effect of revocation of the
licences by ANH is: (i) expiry of the contracts, (ii) Range would be unable to enter into any
further agreement with Colombian State for a period of 5 years, (iii) final settlement and
liquidation of the licences, and (iv) joint and several liability of the Consortium partners to
ANH for all sums due to ANH and for potential damages claim of up to the aggregate
financial value of the work commitments of the Consortium for the three licences which
totalled approximately US$53 million. The value of the allegedly invalid letters of credit
provided was approximately US$11 million.
On 1 September 2016, Range received a demand notice from ANH addressed to the
Consortium seeking payment of the full amount of the outstanding obligations due to
ANH totalling up to approximately US$53 million. The deadline for making the payment, or
otherwise responding to ANH with a defence against the action, was 7 September 2016. A
comprehensive response was subsequently submitted to ANH by the consortium on this
date. This response addressed the numerous areas in which Range and the consortium
object to the demand which was received from ANH.
A Joint Operating Agreement (“JOA”) is in place amongst the Consortium partners.
Under the terms of the JOA it was agreed between the Consortium that it was the sole
responsibility of Optima to complete the minimum work obligations and to provide all
necessary funding, including the provision of valid letters of credit in favour of ANH. Under
the JOA, Range has an indemnity to recover from Optima any payment incurred by
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
82
+ Annual Report 2018
Note 27: Contingent liabilities and contingent assets (continued)
Range for any contractual obligations under the licences which were not paid by
Optima. Range has engaged legal advisers in Colombia.
Range has no material assets in Colombia.
In addition to the ongoing work with legal advisers in Colombia, Range has sought advice
from its Australian advisers regarding the ability of ANH to try and enforce a claim against
Range in Australia (where Range is incorporated). The Company's legal advisers confirm
that there is no provision in Australian law to enable either judgments of Colombian
courts, or administrative orders of ANH to be recognised in Australia. If ANH did seek to
make any claim in Australia it would be required to commence court proceedings in the
Australian courts and to prove its entitlement to such claim. Range would have the right
to defend such claim. Range has not received any claim from ANH in Australia and would
defend itself against any such claim if ever received.
During the year, the Company reached an agreement with ANH to settle all outstanding
historic claims and disputes between ANH and the Consortium. The key terms of the
settlement arrangement are that ANH confirms that Range (and the Consortium) has no
liability for any payments or debts, all proposed penalties have been lifted, the
Consortium agrees to waive all potential claims against ANH and the consortium agrees
to the termination of the exploration licences. The agreement between the Consortium
and ANH is subject to court approval in Colombia.
The Directors are not aware of any further contingent liabilities or contingent assets as at
30 June 2018.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
83
+ Annual Report 2018
Note 28: Segment reporting
30 June 2018
Segment revenue
Total segment revenue
Intersegment revenue
Revenue from external
customers
Other income
Segment result
Depreciation
Interest income/(expense)
Other segment expenses
Loss before income tax
Income tax
Loss after income tax
Segment assets
Segment assets
Total assets
Segment liabilities
Segment liabilities
Total liabilities
30 June 2017
Segment revenue
Revenue from continuing
operations
Other income
Total revenue
Segment result
Segment expenses
Loss before income tax
Income tax
Loss after income tax
Segment assets
Segment assets
Total assets
Segment liabilities
Segment liabilities
Total liabilities
Trinidad –
Oil & Gas
Production
US$
Trinidad –
Oilfield
Services
US$
Indonesia
US$
Unallocated
US$
Total
US$
12,629,996
3,561,259
-
(3,131,833)
12,629,996 429,426
161,828
15,060
-
-
-
-
-
-
-
16,191,255
(3,131,833)
13,059,422
245,009
421,897
(2,374,508)
103,187
(12,044,090)
(2,576,158)
(498,435)
(4,874,421)
-
-
(1,253,329)
-
(2,704,172)
(3,247,456)
(4,950,666)
(3,099,420)
(21,419,296)
(1,523,587)
(1,827,521)
(3,351,108)
(7,504,498)
285,317
(7,219,181)
(1,253,329)
-
(1,253,329)
(5,706,619)
-
(5,706,619)
(15,988,033)
(1,542,204)
(17,530,237)
127,047,106
127,047,106
34,469,110
34,469,110
6,077,873
6,077,873
7,896,015
7,896,015
175,490,104
175,490,104
68,336,505
68,336,505
37,226,190
37,226,190
-
-
65,433,487
65,433,487
170,996,182
170,996,182
Trinidad –
Oil & Gas
Production
US$
Trinidad –
Oilfield
Services
US$
Indonesia
US$
Unallocated
US$
Total
US$
8,435,309
96,347
8,531,656
(54,452,224)
(45,920,568)
(4,999,950)
(50,920,518)
132,921,505
132,921,505
103,755,172
103,755,172
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78,020
78,020
8,435,309
174,367
8,609,676
(3,520,381)
(3,442,361)
-
(3,442,361)
(57,972,605)
(49,362,929)
(4,999,950)
(54,362,879)
17,425,944
17,425,944
150,347,449
150,347,449
26,569,633
26,569,633
130,324,805
130,324,805
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
84
+ Annual Report 2018
Note 28: Segment reporting (continued)
(i) Unallocated assets
Segment assets
Cash
Other
Total segment assets
a: Other segment information
Segment other revenue – all other segments
Other income
Total unallocated segment revenue
Segment result – all other segments
Directors’ and officers’ fees and benefits
Share based payments – employee and
onsultant shares
Discontinued operations
Finance costs
Other general and administration expenses
Total unallocated segment expenses
Accounting policies
30 June 2018
US$
30 June 2017
US$
3,000,847
4,895,168
7,896,015
17,254,360
171,584
17,425,944
Note
Consolidated
2018 (US$)
2017 (US$)
245,009
245,009
78,020
78,020
Note
Consolidated
2018 (US$)
2017 (US$)
939,802
1,069,490
(92,466)
(32,187)
-
2,393,872
2,895,353
6,136,561
1,250,000
792,362
1,510,206
4,589,871
AASB 8 requires operating segments to be identified on the basis of internal reports about
components of the Group that are regularly reviewed by the chief operating decision
maker in order to allocate resources to the segment and to assess its performance. The
chief operating decision maker is the Chief Executive Officer and through this role the
Board of Directors.
Following the adoption of AASB 8, the identification of the Group’s reporting segments has
changed since the prior period, with management allocating resources to “Trinidad – Oil
& Gas Production” and “Trinidad – Oilfield Services” segments.
Information regarding these segments is presented above. The accounting policies of the
reportable segments are the same as those of the Group. Segment information is
prepared in conformity with the accounting policies of the entity as disclosed in Note 1.
Segment revenues and expenses are those directly attributable to the segments and
include any joint revenue and expenses where a reasonable basis of allocation exists.
Segment assets include all assets used by a segment and consist principally of cash,
receivables, plant and equipment, exploration expenditure capitalised and development
assets net of accumulated depreciation and amortisation. While most such assets can be
directly attributed to individual segments, the carrying amount of certain assets used
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
85
+ Annual Report 2018
Note 28: Segment reporting (continued)
jointly by two or more segments is allocated to the segments on a reasonable basis.
Segment disclosures do not include deferred income taxes.
Revenue from Trinidad – Oil & Gas Production segment of US$12,629,996 (2017:
US$8,435,309) is derived from the subsidiary’s sole customer, which is Petroleum Company
of Trinidad and Tobago Limited.
Intersegment transfers
Segment revenues, expenses and results do not include any transfers between segments.
Note 29: Cash flow information
Note
Consolidated
2018 (US$)
2017 (US$)
Reconciliation of cash flow from operations with loss after income tax
Loss after income tax
Non-cash flows in profit
Depreciation, depletion and amortisation
Share based payment- consultants and
employees
Impairment of non-current assets
Finance costs (non-cash)
(92,466)
4,950,666
(17,530,237)
(54,362,879)
6,289,324
(32,187)
28,985,014
3,723,917
1,362,426
1,250,000
-
-
193,079
-
Foreign exchange (gain)/loss
Impairments recognised on held for sale
assets
Fair value movement of derivative
Other non-cash items
Decrease in other current assets
Decrease/(increase) in trade and other
receivables
(Increase)/decrease in deferred tax asset
(Decrease)/increase in trade and other
payables
Decrease in income tax payable
Increase in deferred tax liabilities
(Decrease)/increase in provisions
Increase/(decrease) in borrowings
(Decrease)/Increase in non-current operating
payables
Net cash outflow (from)/to operations
4
(2,308,556)
(494,096)
(1,854,276)
(2,408,126)
5,479,970
(7,986,854)
(6,664,396)
(2,893,332)
7,367,699
(11,433,731)
-
10,261,798
27,420
-
(3,503)
7,946,065
44,048
21,071,631
(2,302,185)
10,345,663
(2,471,484)
1,403,350
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
86
+ Annual Report 2018
Note 29: Cash flow information (continued)
Financial liability reconciliation
2017
Cash
Flows
Non-cash changes
Fair value
changes
Interest
accrued
Acquisition
2018
Borrowings
Convertible
note
Total liabilities
from financing
activities
-
-
23,831,365
-
649,860
24,481,225
21,071,631
(1,600,000)
-
(2,308,556)
2,395,307
19,558,382
21,071,631
(1,600,000) 23,831,365
(2,308,556)
3,045,167
44,039,607
Note 30: Share based payments
No options were issued to key management personnel. The expense reversal is due to the
change in the probability of meeting the vesting conditions as explained below.
Probability of meeting the 1,500 barrels of oil per day for a continuous 15-day period in
Trinidad vesting condition is 100%.
Probability of meeting the 2,500 barrels of oil per day for a continuous 15-day period in
Trinidad vesting condition is 0%.
Probability of meeting the 4,000 barrels of oil per day for a continuous 15-day period in
Trinidad vesting condition is 0%.
The following share-based payment arrangements occurred during the financial year
ended at 30 June 2017:
Quantity
Security
US$ Value
Purpose
8,000,000(i)
Unlisted options
7,096
Options issued to key mangement
personnel
(i) The value of options have been expensed to the profit or loss on a proportionate basis for each
financial year from grant to vesting date.
Employee option plan
Year ended 30 June 2018
No options were issued to key management personnel, employees and consultants.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
87
+ Annual Report 2018
Note 30: Share based payments (continued)
Year ended 30 June 2017
The following options were issued to key management personnel, employees and
consultants:
Name
Number of options Grant date
Expiry date
Key management personnel
8,000,000
29 September
2016
30 March 2020
The value of options have been expensed to the profit or loss on a proportionate basis for
each financial year from grant to vesting date.
Quantity
Security
US$ Value
Purpose
19,987,481
42,742,654
75,000,000
Fully paid ordinary
shares
Unlisted options
Unlisted options
580,406
1,176,524
85,464
7,500,000
Unlisted options
895,049
Shares issued to employees and
consultants
Options issued in lieu of consulting fee
Options issued to Directors in period
Options issued in lieu of consulting
fees
The fair value at grant date of unlisted options is independently determined using a Black
Scholes option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility
of the underlying share, the expected dividend yield and the risk free interest rate for the
term of the option.
Options granted 1 September 2015
The value per option at the grant date was 0.56 cents for key management personnel
options and 0.45 cents for employee options, determined using the Black Scholes option
price model using the following key inputs:
Volatility:
Risk free rate:
100%
1.92%
Probability of meeting vesting
conditions:
Exercise price
USD/GBP exchange rate
0. 6509
Share price on grant date
100%
£0.01
£0.0057
Options granted 25 May 2016
The fair value of options to be granted have been estimated at 30 June 2016 at 0.30 cents
using the Black Scholes options pricing model using the following key inputs:
Volatility:
Risk free rate:
100%
1.92%
Probability of meeting vesting
conditions:
Exercise price
USD/GBP exchange rate
0. 7468
Share price on grant date
100%
£0.01
£0.0037
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
88
+ Annual Report 2018
Note 30: Share based payments (continued)
Expenses recognised in the profit or loss
During the year, share-based payments recognised in profit or loss amounts to a reversal
of US$92,466 (2017: reversal of US$32,187).
2018 No.
788,844,977
Average
exercise
price (US$)
0.019
2017 No.
883,055,747
Average
exercise
price (US$)
0.019
-
(27,000,000)
-
761,844,977
-
0.025
-
0.023
0.021
-
8,000,000
-
(102,210,770) 0.028
0.023
788,844,977
701,845,000
0.025
728,845,000
0.023
153 days
518 days
As at 1 July
Granted during year:
Other
Expired
Forfeited
As at 30 June
Vested and exercisable at
30 June
Weighted average
remaining contractual life
options outstanding at end
of period
Note 31: Related party transactions
(a) Parent entity
The ultimate Parent Entity and ultimate Australian Parent Entity within the Group is Range
Resources Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 14.
(c) Transactions with Key Management Personnel
The following transactions occurred during the year with Key Management Personnel or
their related parties:
Consulting fees paid or payable to Kaiyuan Guosen
Management Consulting Limited, a company owned by Mr Gu
Consulting fees paid or payable to Plentiful Wise Holdings
Limited, a company owned by Ms Wang
Consulting fees paid or payable to Ten Faye Limited, a
company owned by Mr L Liu
Balances at year end to related parties
Lijun Xiu and related entities
2018
US$
2017
US$
195,000
195,000
112,500
75,000
25,740
39,660
42,000
42,000
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
89
+ Annual Report 2018
Note 31: Related party transactions (continued)
d: Key Management Personnel compensation
Short–term benefits
One-off payments
Post-employment benefits
Termination benefits
Share based payments
Total
Note 32: Parent entity information
Note
Consolidated
2018 (US$)
2017 (US$)
884,847
-
39,737
-
(83,985)
840,599
906,725
104,000
33,315
38,750
14,239
1,097,029
The following details information related to the Parent Entity Range Resources Limited, at
30 June 2018. The information presented here has been prepared in accordance using
consistent accounting policies as presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Accumulated losses
Reserves
Total equity
Loss for the year from continuing operations
Loss for the year from discontinued
operations
Note
Consolidated
2018 (US$)
2017 (US$)
5,823,790
64,091,154
69,914,944
16,760,518
29,029,801
45,790,319
2,176,682
63,244,340
65,421,022
2,852,384
23,245,915
26,098,299
383,918,396
(402,977,948)
23,553,474
4,493,922
383,918,396
(387,637,292)
23,410,916
19,692,020
(15,352,002)
(51,299,139)
-
(1,250,000)
Total comprehensive loss for the year
(15,352,002)
(52,549,139)
The contingent liabilities of the parent are included within those of the Group as disclosed
in Note 27.
The contractual commitments of the parent are included within those of the Group as
disclosed in Note 27.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
90
+ Annual Report 2018
Note 33: Financial risk management
The Group has exposure to the following risks from their use of financial instruments:
• Credit risk
Liquidity risk
•
• Market risk
This note presents information about the Group’s exposure to each of the above risks, their
objectives, policies and processes for measuring and managing risk, and the
management of capital. Further quantitative disclosures are included throughout these
financial statements. The Board of Directors has overall responsibility for the establishment
and oversight of the risk management framework.
Risk management policies are established to identify and analyse the risks faced by the
Group, to set appropriate risk limits and controls, and to monitor risks and adherence to
limits. Risk management policies and systems are reviewed to reflect changes in market
conditions and the Group’s activities. The Group, through training and management
standards and procedures, aims to develop a disciplined and constructive control
environment in which all consultants and agents understand their roles and obligations.
Credit risk
Credit risk is the risk of financial loss to the Group if counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from the Group’s
receivables and cash held at financial institutions.
Credit risk is managed on a group basis. Individual risk limits are set based on internal or
external ratings in accordance with limits set by the board. There are no significant
concentrations of credit risk, whether through exposure to individual customers, specific
industry sectors and/or regions.
The credit quality of financial assets that are neither past due or impaired can be assessed
by reference to external credit ratings (if available) or to historical information about
counterparty default rates.
Note
Consolidated
2018 (US$)
2017 (US$)
Cash at bank, restricted deposits and short-term bank deposits (S&P ratings)
AAA -
AA-
A+
BBB+
BBB-
Not rated
Total
2,509,501
490,986
-
945,196
-
-
3,945,683
9
15,971,560
571,294
708,744
-
2,762
-
17,254,360
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
91
+ Annual Report 2018
Note 33: Financial risk management (continued)
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit
exposure. The Group’s maximum exposure to credit risk at the reporting date was:
Trade and other receivables – non-current (i)
Trade and other receivables – current (i)
Cash and cash equivalents
Total
(i) Counterparties without an external credit rating.
Loans and receivables
Note
10
10
9
Consolidated
2018 (US$)
2017 (US$)
2,251,384
4,875,766
3,945,683
11,072,833
6,866,394
5,740,726
17,254,360
29,861,480
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of
each debtor. No collateral was held in relation to these receivables.
Impairment losses
No impairment loss was recognised in relation to other receivables respectively in the prior
year.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as
they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its liabilities when due, under both
normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Group’s reputation.
The Group uses activity-based costing to cost its activities, which assists in monitoring cash
flow requirements and optimising its cash return on investments. Typically, the Group
ensures that it has sufficient cash on demand to meet expected operational expenses for
a period of 12 months; this excludes the potential impact of extreme circumstances that
cannot reasonably be predicted, such as natural disasters.
Group 2018
Carrying
amount
Contractual
cash flows
Within one
year
1-2 years
2-5 years
Financial liabilities at amortised cost
Trade and other
payables
Borrowings
Total
44,039,606
102,810,891
60,371,285
60,371,285
42,439,605
102,810,890
9,929,506
50,441,779
1,600,000
42,439,606
11,529,506 91,281,385
-
-
-
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
92
+ Annual Report 2018
Note 33: Financial risk management (continued)
Group 2017
Carrying
amount
Contractual
cash flows
Within one
year
1-2 years
2-5 years
Financial liabilities at amortised cost
Trade and other
payables
Borrowings
Total
21,071,631
74,075,218
53,003,587
54,491,940
24,800,000
79,291,940
11,475,641
-
1,600,000
13,075,641
-
43,466,299
21,600,000
65,066,299
Market risk
Market risk is the risk that changes in market prices, such as interest rates and equity prices
will affect the Group’s income or the value of its holdings of available for sale assets. The
objective of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising the return.
Equity price risk
The Group is exposed to equity securities price risk. This arises from investments held by the
Group and classified on the statement of financial position as available for sale as well as
from the option liability held as a current liability. A 10% increase in Range’s share price
would result in an increase to the option liability of US$3,335. A decrease would have had
the equal but opposite effect.
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from
various currency exposures, primarily with respect to the US dollar, AU dollar, TT Dollar and
British pound. Foreign exchange risk arises from future commercial transactions and
recognised assets and liabilities denominated in a currency that is not the entity’s
functional currency. The risk is measured using sensitivity analysis and cash flow
forecasting.
The Group’s treasury risk management policy is to closely monitor exchange rate
fluctuations. To date, the Group has not sought to hedge its exposure to fluctuations in
exchange rates, however this policy will be reviewed on an ongoing basis.
The Group’s exposure to foreign currency risk at the reporting date was as follows:
Cash
Amount payable to other
entities
Total
2018 AUD
2017 AUD
2018 GBP
206,996
327,374
60,911
2017 GBP
268,079
(73,269)
(104,555)
(50,550)
(361,758)
133,727
222,819
10,361
(93,679)
Consolidated
Sensitivity
Based upon the amounts above, had the Australian dollar strengthened by 10% against
the US dollar with all other variables held constant, the Group post-tax loss for the year on
current amounts receivable/payable would have been US$18,064 higher (2017: US$32,164
higher), mainly as a result of foreign exchange gains/losses on translation of AUD
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
93
+ Annual Report 2018
Note 33: Financial risk management (continued)
denominated payables as detailed in the table above. A 10% weakening of the
Australian dollar against the above currencies at 30 June would have had the equal but
opposite effect, on the basis that all other variables remain constant.
The Trinidad entities are minimally exposed to foreign exchange risk arising from various
currencies, primarily with respect to the United States Dollar.
Interest rate risk
The group’s main interest rate risk arises from non-current receivables. Non-current
receivables issued at fixed rates expose the group to fair value interest rate if the loans are
carried at fair value. During 2018 and 2017, the group loan receivables were
denominated in Australian Dollars, British Pounds and US Dollars.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
94
+ Annual Report 2017
Note 33: Financial risk management (continued)
Profile
At the reporting date, the interest rate profile of the Group’s financial instruments which exposes the group to cash flow interest rate risks are:
Weighted
Average
Effective Interest
Rate
Floating Interest
Rate
Fixed Interest Maturing Non-interest bearing
Total
2018
2017
%
%
2018
US$
2017
US$
2018
US$
2017
US$
2018
US$
2017
US$
2018
US$
2017
US$
Financial Assets:
Cash and cash equivalents 1.8%
0.4%
3,945,683
17,254,360
Trade and other
receivables
Available for sale financial
assets
Total financial assets
-
-
-
-
-
-
-
-
3,945,683
17,254,360
-
-
-
-
-
-
-
-
-
-
3,945,683
17,254,360
7,127,150
12,607,120
7,127,150
12,607,120
-
45,238
-
45,238
7,127,150
12,652,358
11,072,833
29,906,718
Financial Liabilities:
Trade and other payables
Borrowings
Total financial liabilities
10%
6%
-
9.3%
8%
-
-
-
-
-
-
-
44,602,782 40,851,038 15,768,503
44,039,606 21,071,631
88,642,388 61,922,669 15,768,503
-
12,152,549
-
12,152,549
60,371,285
44,039,606
104,410,891
53,003,586
21,071,631
74,075,217
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
95
+ Annual Report 2018
Note 33: Financial risk management (continued)
Sensitivity analysis for variable rate instruments
The sensitivity on interest rates for 2018 and 2017 assumes a change of 100 basis points in
the interest rates at the reporting date and would have increased / (decreased) profit or
loss by the amounts shown. Both analyses for each year assume that all other variables, in
particular foreign currency rates, remain constant.
Group
Variable rate instruments
Financial assets (cash and
cash equivalents)
Financial assets (loan and
receivables)
Weighted
Average
Interest
Rate
%
2018
2018
+100
bps
US$
-100
bps
US$
Weighted
Average
Interest Rate
%
2017
2017
+100
bps
US$
-100
bps
US$
1.8%
-
-
-
-
-
0.4%
-
-
-
-
-
Fair values versus carrying amounts
The fair value of financial assets and liabilities, together with the carrying amounts shown
in the statement of financial position, are as follows:
Group
Available-for-sale
financial assets
Trade and other
receivables
Cash and cash
equivalents
Trade and other
payables
Borrowings
Total
30 June 2018
US$
Carrying amount
Fair value
30 June 2017
US$
Carrying
amount
-
-
45,238
Fair
value
45,238
7,127,150
7,127,150
12,607,120
12,607,120
3,945,683
3,945,683
17,254,360
17,254,360
(60,371,285)
(60,371,285)
(53,003,587)
(53,003,587)
(44,039,606)
(44,039,606)
(21,071,631)
(21,071,631)
(93,338,058)
(93,338,058)
(44,168,500)
(44,168,500)
The basis for determining fair value is disclosed in Note 1(n).
Other price risks
The Group is not exposed to any other price risks.
Capital management
The entity’s objectives when managing capital is to safeguard its ability to continue as a
going concern, so that it can continue to provide returns for shareholders and to maintain
an optimal capital structure to reduce the cost of capital.
The entity’s overall strategy remains unchanged from 2017.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
96
+ Annual Report 2018
Note 33: Financial risk management (continued)
The capital structure of the group consists of cash and cash equivalents and equity
attributable to equity holders of the Company, comprising issued capital, reserves and
accumulated losses as disclosed in Notes 24 and 25 respectively. None of the entities
within the group are subject to externally imposed capital requirements.
Gearing ratio
The Board reviews the capital structure on an annual basis. As a part of this review the
Board considers the cost of capital and the risks associated with each class of capital.
Financial assets
Cash and cash equivalents
Other financial assets
Financial liabilities
Trade and other payables
Borrowings
Net debt
Equity
Net debt to equity ratio
Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables – non-current
Trade and other receivables – current
Available-for-sale financial assets
Financial liabilities
Trade and other payables
Borrowings
Option liability
Total
Note
Consolidated
2018 (US$)
2017 (US$)
3,945,683
2,800,000
17,254,360
-
(60,371,285)
(44,602,782)
(98,228,384)
4,443,822
(53,003,587)
(21,071,631)
(56,820,858)
20,022,644
2,197.8%
283.8%
Note
Consolidated
2018 (US$)
2017 (US$)
3,945,683
2,251,384
4,875,766
-
11,072,833
17,254,360
6,866,394
5,740,726
45,238
29,906,718
60,371,285
44,039,606
33,345
104,444,236
52,326,678
21,071,631
341,618
73,739,927
The carrying amount reflected above represents the Group’s maximum exposure to credit
risk for such loans and receivables.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
97
+ Annual Report 2018
Note 34: Fair value measurement of financial instruments
(a) Fair value hierarchy
AASB 13 requires disclosure of fair value measurements by level of the following fair value
measurement hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),
(b) Inputs other than quoted prices included within level 1 that are observable for the
asset or liability, either directly or indirectly (level 2), and
(c) Inputs for the asset or liability that are not based on observable market data
(unobservable inputs (level 3).
The following table presents the Group’s financial assets and financial liabilities measured
and recognised at fair value at 30 June 2018 and 30 June 2017 on a recurring basis.
At 30 June 2018
Assets
Available for sale financial assets
Equity securities
Total assets
Liabilities
Option liability at fair value through
profit or loss
Derivative liability at fair value
through profit or loss
Total liabilities
At 30 June 2017
Assets
Available for sale financial assets
Equity securities
Total assets
Liabilities
Option liability at fair value through
profit or loss
Derivative liability at fair value
through profit or loss
Total liabilities
Level 1
US$
Level 2
US$
Level 3
US$
Total
-
-
-
-
-
Level 1
US$
-
-
33,345
384,007
417,352
Level 2
US$
-
-
-
-
-
Level 3
US$
-
-
33,345
384,007
417,352
Total
-
-
-
-
-
-
-
45,238
45,238
45,238
45,238
341,618
2,692,563
3,034,181
-
-
-
341,618
2,692,563
3,034,181
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy
levels as at the end of the end of the reporting period. There were no transfers between
the levels of the fair value hierarchy during the year ended 30 June 2018.
(b) Fair values of other financial instruments
The Group has financial instruments which are measured at amortised cost in the
consolidated statement of financial position.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
98
+ Annual Report 2018
Note 34: Fair value measurement of financial instruments
(continued)
Due to their short-term nature, the carrying amounts of the current receivables, current
payables, current borrowings, and current other financial liabilities is assumed to
approximate their fair value.
(c) Fair values of non-current receivables, payables and borrowings
For non-current receivables, payables and borrowings, the fair values are not materially
different to their carrying amounts since the interest on these balances is close to current
market rates.
Note 35: Events after the reporting date
Completion of US$1.3m subscription
Subsequent to the year end, Range announced a subscription for new ordinary shares to
raise US$1,300,000 million before expenses (the "Subscription"). Pursuant to the
Subscription, the Company issued 909,090,910 new ordinary shares at a price of 0.11
pence per new ordinary share. The Company intends to use the proceeds from the
Subscription to fund sales infrastructure upgrade, as well as other general investment in
asset upgrades in Trinidad.
Georgia update
Subsequent to the year end, Range signed an agreement to acquire Georgian Oil Pty Ltd
(20% interest holder in SOG) for a nominal upfront sum. Following completion, Range will
hold a 65% interest in SOG. Completion is anticipated to occur in October 2018.
Other than the above, no events occurred after the reporting date.
Note 36: New accounting Standards and interpretations
Australian accounting Standards/amendments released but not yet effective: 30
June 2018 year end
Certain new accounting Standards and Interpretations have been published that are not
mandatory for 30 June 2018 reporting periods and have not been early adopted by the
Group. The Group’s assessment of the impact of these new Standards and Interpretations
is set out below. In all cases the Group intends to apply these standards from the
application date as indicated in the tables below.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
99
+ Annual Report 2018
Note 36: New accounting Standards and interpretations
(continued)
Reference:
Standard application date:
Group application date:
AASB 9
Financial Instruments
Title:
1 January 2018
1 July 2018
Key Requirements
AASB 9 addresses the classification, measurement and derecognition of financial assets
and financial liabilities and introduces new rules for hedge accounting.
In December 2014, the AASB made further changes to the classification and
measurement rules and also introduced a new impairment model. These latest
amendments now complete the financial instruments standard.
Impact
Management is currently assessing the impact of the new rules. At this stage, the Group
is not able to estimate the impact of the new rules on the Group’s financial statements.
The Group will make more detailed assessments of the impact over the next 12 months.
Reference:
Standard application date:
Group application date:
AASB 15
Revenue from Contracts with Customers
Title:
1 January 2018
1 July 2018
Key Requirements
The AASB has issued a new standard for the recognition of revenue. This will replace
AASB 118 which covers contracts for goods and services and AASB111 which covers
construction contracts. The new standard is based on the principle that revenue is
recognised when control of a good or service transfers to a customer, so the notion of
control replaces the existing notion of risks and rewards.
The standard permits a modified retrospective approach for the adoption. Under this
approach entities will recognise any applicable transitional adjustments in retained
earnings on the date of the initial application without restating the comparative period.
Entities will only need to apply the new rules to contracts that are not completed as of
the date of initial application.
Impact
Management is currently assessing the impact of the new rules. At this stage, the Group
is not able to estimate the impact of the new rules on the Group’s financial statements.
The Group will make more detailed assessments of the impact over the next 12 months.
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
100
+ Annual Report 2018
Note 36: New accounting Standards and interpretations
(continued)
Reference:
Standard application date:
Group application date:
AASB 16
Leases
Title:
1 January 2019
1 July 2019
Key Requirements
The key features of AASB 16 are as follows:
Lessee accounting
•
Lessees are required to recognise assets and liabilities for all leases with a term of
more than 12 months, unless the underlying asset is of a low value.
• A lessee measures right-of-use assets similarly to other non-financial assets and
lease liabilities similarly to other financial liabilities.
• Assets and liabilities arising from a lease are initially measured on a present value
basis. The measurement includes non-cancellable lease payments, and also
includes payments to be made in optional periods if the lessee is reasonably
certain to exercise an option to extend the lease, or not to exercise an option to
terminate the lease.
• AASB 16 contains disclosure requirements for leases.
Lessor accounting
AASB 16 substantially carries forward the lessor accounting requirements in AASB 117.
Accordingly, a lessor continues to classify its leases as operating leases or finance
leases, and to account for those two types of leases differently. AASB 16 also requires
enhanced disclosures to be provided by lessors that will improve information disclosed
about a lessor’s risk exposure, particularly to residual value risk.
Impact
Management is currently assessing the impact of the new rules. At this stage, the Group
is not able to estimate the impact of the new rules on the Group’s financial statements.
The Group will make more detailed assessments of the impact over the next 12 months.
There are no other standards that are not yet effective and that would be expected to
have a material impact on Range in the current or future period and on foreseeable
future transactions.
Note 37: Company details
The registered office of the company is:
c/o Edwards Mac Scovell, Level 7, 140 St Georges Terrace, Perth WA 6000
Telephone: +61 8 6205 3012
The principal place of business is:
c/o Edwards Mac Scovell, Level 7, 140 St Georges Terrace, Perth WA 6000
Telephone: +61 8 6205 3012
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
101
+ Annual Report 2018
+ Directors’ Declaration
The directors of the company declare that:
•
•
•
•
The financial statements, comprising the consolidated statement of profit or loss
and other comprehensive income, consolidated statement of financial position,
consolidated statement of cash flows, consolidated statement of changes in
equity, accompanying notes, are in accordance with the Corporations Act 2001
and:
• comply with Accounting Standards and the Corporations Regulations 2001
and other mandatory professional reporting requirements; and
• give a true and fair view of the Group’s financial position as at 30 June
2018 and of its performance for the year ended on that date.
The company has included in the notes to the financial statements an explicit and
unreserved statement of compliance with International Financial Reporting
Standards.
In the directors’ opinion, there are reasonable grounds to believe that the
company will be able to pay its debts as and when they become due and
payable.
The directors have been given the declarations by the chief executive officer and
chief financial officer required by section 295A.
This declaration is made in accordance with a resolution of the Board of Directors and is
signed for and on behalf of the directors by:
Zhiwei Gu
Chairman
28 September 2018
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
102
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Range Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Range Resources Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the Group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Impairment assessment of Trinidad-Oil & Gas Production CGU
Key audit matter
How the matter was addressed in our audit
As disclosed in Notes 15b, 16 and 18, the Group
Our procedures included but were not limited to the
has significant non-current assets relating to the
following:
Trinidad – Oil and Gas Production cash generating
unit (CGU).
Management’s impairment assessment of these
assets was based on the CGU’s fair value less
costs to sell using a discounted cash flow model.
- Assessing the appropriateness of the Group’s
categorisation of its CGU and allocation of assets;
- Assessing the competency of management's expert
who conducted an assessment of the reserves;
- Obtaining an understanding of the discounted cash
The impairment assessment is a key audit matter
flow model and assumptions used, including:
due to the significant judgements and estimates
as disclosed in Note 15b.
(cid:131)
(cid:131)
analysing management’s oil price assumptions
against external data;
assessing the reasonableness of the expected
future operating and production costs and
production forecasts; and
(cid:131)
checking the reasonableness of the discount rate
applied.
We also assessed the adequacy of the related disclosures in
Note 15b to the financial statements.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2018, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 31 to 40 of the directors’ report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of Range Resources Limited, for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 28 September 2018
+ Annual Report 2018
+ ASX additional information
Shareholder information
Additional information required by the Australian Securities Exchange Listing Rules and not
disclosed elsewhere in this Annual Report is set out below.
Top 20 shareholders
The 20 largest shareholders of the Company as at 31 August 2018 are listed below:
Rank Shareholder
Number of shares
Percentage
held (%)
Beijing Sibo Investment Management LP
2,447,620,912
28.8
1.
2.
3.
4.
5.
6.
7.
8.
9.
11.
12.
Abraham Limited
712,377,560
Interactive Investor Services Nominees Limited
682,310,005
Barclays Direct Investing Nominees Limited
558,381,641
Interactive Investor Services Nominees Limited
487,025,885
HSDL Nominees Limited
Hargreaves Lansdown (Nominees) Limited
<15942>
Cantor Fitzgerald Europe
ABN AMRO Bank NV <7KKAVTE>
10.
HSDL Nominees Limited
Hargreaves Lansdown (Nominees) Limited
264,889,797
255,898,910
236,411,453
183,529,411
171,599,095
156,662,973
Hargreaves Lansdown (Nominees) Limited
137,868,385
13. Wealth Nominees Limited
107,266,606
14.
Share Nominees Ltd
15.
HSBC Client Holdings Nominee (UK) Limited
<731504>
88,329,117
87,173,858
16. Citicorp Nominees Pty Limited
71,664,185
17.
J P Morgan Nominees Australia Limited
69,958,438
18. Wealth Nominees Limited
68,415,793
19.
Lawshare Nominees Limited
57,493,956
8.4
8.0
6.6
5.7
3.1
3.0
2.8
2.2
2.0
1.8
1.6
1.3
1.0
1.0
0.8
0.8
0.8
0.7
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
106
+ Annual Report 2018
Rank Shareholder
Number of shares
Percentage
held (%)
20.
James Capel (Nominees) Limited
54,320,377
Total
6,899,198,357
0.6
81.1
Substantial shareholders
An extract of the Company’s register of substantial shareholders (being those
shareholders who held 5% or more of the issued capital on 31 August 2018) is below:
Shareholder
Number of
shares
Percentage held
(%)
Beijing Sibo Investment Management LP
2,447,620,912
28.8
Abraham Limited
Interactive Investor Services Nominees Limited
Barclays Direct Investing Nominees Limited
Interactive Investor Services Nominees Limited
712,377,560
682,310,005
558,381,641
487,025,885
8.4
8.0
6.6
5.7
Distribution of equity securities
There were 2,302 holders of less than a marketable parcel of ordinary shares (being
109,940,038 shares on 31 August 2018).
The number of shareholders by size of holding is set out below:
Size of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of holders
214
332
288
1,136
814
2,784
Number of shares
69,017
1,038,035
2,352,603
53,679,737
8,447,782,300
8,504,921,692
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
107
+ Annual Report 2018
Tenement schedule
The tenement schedule for the Group as at 30 June 2018 is tabulated below:
Location
Tenement Reference
Trinidad
Morne Diablo
Trinidad
South Quarry
Trinidad
Beach Marcelle
St Mary’s Block
Trinidad
Guayaguayare Shallow1 Trinidad
Trinidad
Guayaguayare Deep1
Indonesia
Perlak2
Percentage held (%)
100
100
100
80
65
80
23
Operator
Range
Range
Range
Range
Range
Range
PT Aceh Timur
Kawai Energi
Notes:
1. The Production Sharing Contracts relating to Guayaguayare expired in 2015. Any
renewal will be subject (inter alia) to government and other regulatory approvals.
2. Range’s indirect interest in the Perlak field is held through its 60% shareholding in
Hengtai, which holds a 78% interest in Lukar which in turn holds a 49% interest in PT
Aceh Timur Kawai Energi.
3. Range believes that it holds an interest in the Georgia Production Sharing Contract
over Block VIA (the “Georgia PSC”) through its 45% shareholding in Strait Oil and
Gas Limited (“SOG”). Range believes that it holds an indirect interest in the
hydrocarbons exploration and exploitation contract relating to Block 1-2005
covering the Atzam and Tortugas fields in Guatemala, through its shareholding of
between 10-20% in Latin American Resources Ltd (“LAR”).
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
108
+ Annual Report 2018
+ Corporate Directory
Zhiwei Gu
Non-Executive Chairman
Yan Liu
Executive Director and CEO
Lubing Liu
Executive Director and COO
Juan Wang
Non-Executive Director
Yi Zeng
Non-Executive Director
s
r
o
t
c
e
r
i
D
Company Secretary Nick Beattie and Sara Kelly
Registered office &
principal place of
business
c/o Edwards Mac Scovell, Level 7, 140 St Georges Terrace
Perth WA 6000, Australia
Telephone: +61 8 6205 3012
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace, Perth WA 6000
Telephone: +61 3 9415 4000
Computershare Investor Services plc
PO Box 82, The Pavilions, Bridgwater Road, Bristol, UK BS99 6ZZ
Telephone: +44 370 702 0000
BDO Audit (WA) Pty Ltd, 38 Station Street;
Subiaco WA 6008, Australia
Range Resources Limited shares are listed on the Australian
Securities Exchange (ASX code: RRS) and
Alternative Investment Market of the London Stock
Exchange (AIM code: RRL)
Australia
www.rangeresources.co.uk
Share Registry
(Australia)
Share Registry
(United Kingdom)
Auditor
Stock Exchange
Listing
Country of
Incorporation
Website
Range Resources Ltd and Controlled Entities
ABN 88 002 522 009
109