SACGASCO LIMITED
ABN 83 114 061 433
FINANCIAL REPORT
For the year ended 31 December 2021
CONTENTS
Sacgasco Limited
Page
Chairman’s Report ...................................................................................................................................... 1
Review of Operations .................................................................................................................................. 3
Directors’ Report ....................................................................................................................................... 27
Auditor’s Independence Declaration ......................................................................................................... 41
Consolidated Statement of Profit or Loss and Other Comprehensive Income .......................................... 43
Consolidated Statement of Financial Position ........................................................................................... 44
Consolidated Statement of Changes in Equity .......................................................................................... 46
Consolidated Statement of Cash Flows .................................................................................................... 48
Notes to the Consolidated Financial Report .............................................................................................. 49
Directors’ Declaration ................................................................................................................................ 98
Independent Auditor’s Report ................................................................................................................... 99
Securities Exchange Information............................................................................................................. 103
Corporate Directory ................................................................................................................................. 105
Chairman’s Report
For the year ended 31 December 2021
Sacgasco Limited
CHAIRMAN’S REPORT
Dear Shareholder,
What a difference a year makes! The 2021 year was one of opportunity and action for Sacgasco and the
resultant achievements form a stable platform for Sacgasco to undertake 2022 drilling activities in Asia and
North America. This is very exciting for shareholders.
A powerful driver for growing a small company is to have funding from production to be able to find and drill
valuable exploration, appraisal, and development prospects.
I highly recommend shareholders read through the details in this Annual Report to more fully understand
the opportunity that investment in Sacgasco now presents.
This year Sacgasco diversified by expanding its exploration and production opportunities with the purchase of a 30%
working interest in producing oil fields at Red Earth and 20% working interest in re-activated Alberta Plains oil and
gas fields in Alberta, Canada.
The company then acquired 4 offshore Service Contracts in the prolific Palawan Basin, Philippines. These service
contract areas contain oilfields and oil discoveries that can be developed for valuable production along with high
potential oil and gas exploration prospects in a country that is hungry for oil and natural gas to sustain its economic
growth.
In combination these acquisitions, at a time of very low oil and natural gas prices, now provide the Company with
free cash flow, production infrastructure and most importantly many opportunities for very valuable future additional
expansion through both exploration and development.
The Company continues to maintain leases with associated gas flows in the Sacramento Basin.
In early 2021 the Borba 1-7 well was drilled to a depth of 8,824ft. The well was a natural gas discovery in the shallower
formations. It is frustrating that somewhat arbitrary changes to third party operating requirements have thwarted
planned economic access to the sales network. However, the company continues to assess alternate ways to get
access to the natural gas sales grid or to find uses for the Borba natural gas, such as the generation of hydrogen for
the local California Hydrogen market or electricity generation for other purposes.
The COVID-19 pandemic still creates challenges to our business management; however, it has provided many
exciting opportunities due to its impact on oil prices.
The Board and management team are committed to growing the Company’s business in the Philippines, Canada
and California. Sacgasco’s low operating costs, enthusiastic and skilled contractors and joint venturers who together
are progressing exploration and increased production, when combined with fundamentals-based higher oil and gas
prices form a compelling platform for shareholder returns.
Oil and Natural Gas are critical components of the world’s energy system. The world will need oil for a long
time to come and little exploration is being done to replace the 100-plus million barrels of oil per day being
consumed around the world.
Sacgasco supports a move to a broader array of fuels to meet the world’s energy needs. Natural gas-fired electricity
will continue for decades to play a critical role in integrating increasing amounts of renewables into the electricity
grid. The Company continues to evaluate opportunities around helium and hydrogen gases as an integral part of our
natural gas business.
Page | 1
Chairman’s Report
For the year ended 31 December 2021
Sacgasco Limited
Fundamentally, the pervasive and irreplaceable broad uses and diverse critical everyday products derived from
natural gas and oil in the world’s economy, and the recent realisation of the importance of energy security provide a
sound basis for Sacgasco’s business model.
I look forward to an exciting year ahead and believe that our planned drilling programmes in the Philippines and
Canada and continued growth in all our assets will reward shareholders handsomely for their support and patience.
Yours faithfully,
Andrew Childs
Chairman
Page | 2
Directors’ Report
For the year ended 31 December 2021
REVIEW OF OPERATIONS
OVERVIEW
Sacgasco Limited
This year together with the subsequent events referred to in this report represent a year in which Sacgasco has
rapidly transformed into a significant Exploration & Production (E&P) company with forward cashflows expected to
underpin production, development and exploration projects in Canada and California, and to help mature
development and exploration projects in the Philippines.
The Company now holds a suite of assets with huge potential in three diverse locations with attractive business cases
in a world becoming pointedly aware of the value of energy security, along with energy diversity.
Sacgasco’s focus is on activity, exploration and development drilling and consequent development options to propel
growth in value, hence providing attractive options for investors.
OPERATIONS HIGHLIGHTS
HIGHLIGHTS
Milestone Year - oil and gas Reserves, Production, plus Exploration Targets
Sacgasco completed the acquisition of 4 Service Contracts covering 1,470,000 hectares including 6 oil
discoveries in the offshore Palawan Basin, Philippines.
SGC Acquired a 30% working interest (“WI”) in Red Earth Oilfield Assets in Alberta, Canada.
SGC Acquired a 20% working interest (“WI”) in Alberta Plains Oilfield Assets in Alberta, Canada.
Improving production and cash flow from Canadian producing assets:
o
95,179 BOE of net production after royalty with associated cash flows.
Drilling and Testing of Borba 1-7 well in the Northern Sacramento Basin, California:
o Drilled to Total Depth of 8,824 feet.
o
Tested 13 feet of Kione Sands at 2.1 million cubic feet of gas per day on ¼” choke.
Acquired 200 Square Miles of proprietary geophysical survey data over North Sacramento Basin to provide
exploration leads for Natural Gases.
Reviewing new opportunities among and near SE Asia, Canada, and Sacramento Basin portfolio of projects
to add exploration drilling targets
Continuing evaluation of Helium and Hydrogen gas potential as an integral part of ongoing Oil and Gas
business.
Offshore Philippines - Exploration, Appraisal and New Ventures
Acquired Philippines Service Contracts
The Company completed the purchase of BCP Energy International PTE. LTD. (“BCPE”). This included BCPE’s fully
owned subsidiary Nido Petroleum Philippines Pty Ltd (“Nido”), its associated working interests in four Philippine
Service Contracts in the Palawan Basin and its local team. This transaction closed on 1 July 2021 for a cash
consideration of one dollar. The acquisition included all rights and obligations of Nido in the Philippines Service
Contracts (“SC”) that Nido is a party to either as Operator or Joint Venture Participant.
BCPE was renamed Sacgasco SG Pte Ltd.
Page | 3
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
The acquired Service Contracts cover a total of 1,470,000 Hectares in the highly prospective, underexplored offshore
Palawan Basin, Philippines. The data in these SC includes 2D & 3D seismic defining world-class exploration
prospects. Exploration in the SC has resulted in six oil discoveries with further Exploration and Development (E&D)
potential. Nido also already had a highly experienced local Filipino team.
Sacgasco’s wholly owned subsidiary Nido is Operator for two of the Service Contracts and Technical Operator for
another. In this report, reference to Sacgasco shall include reference to its wholly owned subsidiaries and vice versa.
Offshore Palawan Exploration and Production Components
Table 1: Sacgasco (Nido) Philippines Service Contracts as of 31 March 2022
Service Contract
SC 54A
Fields / Discoveries
Tindalo, Yakal, Nido 1X1, Nandino
Exploration
% Interest
72.5%; reduces to
36.25% after farmout ₂
Operator
Nido (SGC)
SC 14C2
SC 58
SC 6B
West Linapacan A Field; West
Linapacan B appraisal and
Redevelopment
22.88%
Philodrill
Palawan basin big hit Exploration
50% ₃
NIDO (SGC)
Cadlao, near field Exploration
72.727% ₁
Philodrill;
Nido (SGC)
Technical
Operator
SC 14A, SC 14B,
SC 14D
Filed for relinquishment
22.28% before
relinquishment; Nil after
Philodrill
₁Subject to Philippines DOE approval of SC 6B Farmin
₂Subject to Philippines DOE approval of SC 54 Farmin
₃Subject to satisfying Sub Phase 3 SC 5B commitments
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Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Sacgasco (Nido) Acreage in the Palawan Basin, Philippines
Sacgasco, through Nido, is planning a two-well drilling program including an exploration well, (Nandino) in SC 54
and an extended well test (EWT) at the Cadlao oil field in SC 6B in 2022.
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Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Sacgasco Group Structure for Philippines Activities
Sacgasco
Limited
Sacgasco SG
Pte Ltd
Nido Petroleum Pty
Ltd
Nido Petroleum
Philippines Pty Ltd
Yilgarn Petroleum
Philippines Pty Ltd
Service Contract SC 54 (Nido (SGC) 72.5% (36.25 %* After Farmin) - Operator)
Sacgasco acquired BCPE on 1 July 2021 and its fully owned subsidiary Nido. Nido had a 42.40% Participating
Interest in SC 54 and is the Operator.
On 3 September 2021, Sacgasco executed an agreement with IMC Investments Capital Pte Ltd (“IMC”) to acquire
its wholly owned subsidiary Yilgarn Petroleum Philippines Pty Ltd (“Yilgarn”). Yilgarn which owns 30.1% Participating
Interest in SC 54 was acquired for consideration of A$1 (one dollar), plus a future payment up to a maximum royalty
of US$1.5 million which is to be paid after commercial production is achieved. The royalty will be paid at the rate of
30.1% of the contractor share of net proceeds from SC 54. The acquisition is subject to the usual regulatory
approvals. Subsequently, Nido’s Working Interest in SC 54 will increase to 72.5% with Nido (Sacgasco) as Operator.
Sacgasco executed an agreement on 29 November 2021 with TG World Energy Corp to acquire its wholly owned
subsidiary TG World (BVI) Corporation (TG World) which has a 12.5% participating Interest in SC 54. Consideration
of A$1 (one dollar) was paid along with an up to a maximum net royalty of circa US$530,000 paid after commercial
production is achieved. The royalty will be paid at the rate of 12.5% of the contractor share of Net Proceeds from SC
54 production until the maximum net royalty is reached. Net Proceeds are calculated after cost recovery for current
and historical expenditures on SC 54.
In November 2021, Nido secured an extension of the current Sub-Phase 6 of Service Contract 54 to August 2022
from the Department of Energy of the Philippines primarily for reasons related to COVID-19. All commitments have
been completed for the current Sub-Phase 6 of SC54. Subject to Nido electing to proceed, Sub-Phase 7 will be for
a period of 1 year and include a commitment to drill one well.
On 20 December 2021, Sacgasco sold 12.5% working interest held by TG World (BVI) Corporation in Service
Contract 54, and granted a Farmin Option to Blue Sky International Holding Inc. (Blue Sky) for a consideration of
C$200,000 (approximately A$220,000).
The Farmin Option was exercised by Blue Sky on 4 March 2022. Subject to regulatory approval and rig availability,
Blue Sky will pay Sacgasco’s 72.5% working interest share of the Nandino Prospect well cost up to and including
wireline logging on a 2 for 1 basis to earn 36.25% participating interest when the farmin obligations are fulfilled. Blue
Sky also has a 12.5% participating interest in SC 54 via its acquisition of TG World.
Planned Work Program SC 54
The SC54 Joint Venture is utilising carbonate facies modelling to identify reservoir sweet spots and confirm the
proposed drilling location for the Nandino Prospect located updip from Tindalo, North Nido and Yakal oil discovery
wells.
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Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Nido as Operator submitted a preliminary drilling proposal for the Nandino Prospect for review and approval by the
Philippines Department of Energy (DOE). The plan is to drill the Nandino well as soon as practicable in 2022 subject
to DOE approval.
Nandino Prospect‐ Top Nido Limestone map
Nandino Prospective Resources SC 54
The Prospective Resources for the Nandino Prospect have been endorsed by RISC Advisory (RISC) (ASX
Announcement dated 3 March 2022).
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Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
The Nandino Prospect is targeting 27 million barrels of recoverable oil (mean unrisked Prospective Resource):
• Nandino lies updip and on-trend with 4 oil discoveries within SC 54 (SGC 72.5% WI).
• 119m+ oil column (Tindalo) and strong oil shows interpreted (North Nido) in two previous tests of the
greater Nandino structure.
Nandino Prospective
Resources (100%
P90 (million barrels)
P50 (million barrels)
P10 (million barrels)
Mean (million barrels)
Oil in Place
Recoverable Oil
24.2
75.3
175.0
91.0
6.6
21.9
54.2
27.3
Net to SGC
(Nido) 72.5%
After farmout - net
to SGC (Nido)
36.25%
4.8
15.9
39.3
19.8
2.4
7.95
19.65
9.9
Note 1: The estimated quantities of hydrocarbons that may potentially be recovered by the application of a future
development project relate to undiscovered accumulations. These estimates have both an associated risk of
discovery and a risk of development. Further exploration, appraisal and evaluation is required to determine the
existence of a significant quantity of potentially movable hydrocarbons.
Note 2: The resource estimates have been prepared using the probabilistic method and are presented on an
unrisked basis. In a probabilistic resource distribution, P90 (Low), P50 (Best), P10 (High) estimates represent
the 90%, 50% and 10% probability respectively that the quantity recovered will equal or exceed the estimate
assuming a success case in the prospect.
Note 3: The resource estimates are reported as at an evaluation date of March 2022.
Note 4: The Nandino Prospect lies wholly within SC 54 where Sacgasco (Nido) owns a consolidated 72.5%
participating interest. Subject to DOE approval, the Company granted, and Blue Sky has exercised a 2:1 farmin
option on Nandino over its current working interest which will reduce SGC (Nido) participating interest to 36.25%
when the farmin has been approved and farmin terms satisfied.
A drilling site survey and well proposal submission is planned for early April 2022.
Service Contract SC 6B Cadlao (SGC 9.09%, 72.727% after Farmin) (Technical Operator)
On 15 December 2021, Sacgasco’s subsidiary Nido secured a Sale and Purchase Agreement in relation to Service
Contract Block 6B (“SC 6B”) designed to accelerate the anticipated redevelopment of the Cadlao Oilfield and
exploration of nearby East Cadlao oil prospect.
Under the Agreement, Nido paid A$250,000 to the previous operator of SC 6B (Manta Oil Company Limited, “MOCL”)
upon their withdrawal from SC 6B in return for their proprietary database. The database will enhance and accelerate
the planned development activities on SC 6B. This consideration is intended to be cost recovered out of any future
Production Revenues from SC 6B.
Planned Work Program SC 6B
The Cadlao Field previously produced 11.1 million barrels of oil between 1981 and 1991 and at the time production
ceased the field was still producing 950 bopd (separated from 5,900 barrels of produced liquid per day) from 2 subsea
wells. Initial production from the discovery well, Cadlao-1A, was over 6,000 bopd.
A proposal to drill a new well aimed to recover oil updip from the prolific Cadlao 1 well and to then conduct an
Extended Well Test (“EWT”) to maximize reservoir knowledge and reduce risks associated with redevelopment of
the field, as well as provide early cashflow is being prepared for submission to Joint Venture partners and the DOE.
A Plan of Development (POD) is also being prepared which will be subject to the EWT confirming the commerciality.
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Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
In recognition of Sacgasco’s (including Nido) expertise and in-country history and reputation, the SC 6B Joint Venture
has agreed to appoint its wholly owned subsidiary, Nido, as the technical operator for SC 6B to design, manage and
execute the drilling, subsequent EWT, and a consequent POD.
Cadlao Oil Field Redevelopment Plan
Cadlao Oil Field Near Top Nido Limestone Map
Given its close proximity to Cadlao, there is also the opportunity to drill the East Cadlao Prospect from a Cadlao
EWT location, subject to further maturing of the prospect to drill ready status.
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Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
An independent oil reserves review has been commissioned for Cadlao and is expected to be completed in
April 2022.
Service Contract SC 58 (Nido (SGC) 50%, Operator)
In November 2021, Nido secured an extension of Service Contract 58 (“SC 58”) from the Department of Energy of
the Philippines primarily for reasons related to COVID-19.
Service Contract 58 is Nido operated with a 50% participating interest. Nido is paying 100% of all Sub-Phase 3 costs
under the Service Contract.
The current Sub-Phase 3 of SC 58 (which includes a commitment well) will be restarted at either the 16 October
2022 or the lifting of the state of public health emergency in the Philippines, whichever comes later. SGC’s paying
interest will revert to 50% when Sub-Phase 3 is completed.
SC 58 covers 13,440 square kilometres and Nido has mapped more than 10 prospects on 3D and 2D seismic.
Prospect and lead outlines are shown in green in the map below:
SC 58 Prospects and Leads
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Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Balyena Prospect is a highly prospective example with multiple stacked targets accessible in a single exploration
well located outboard of the 3.2 Tcf Malampaya Gas Field which is connected by underutilized pipeline to energy
hungry Manila.
Balyena Prospect‐ 4 Stacked Targets
Balyena Prospect Stacked Targets
Nido will undertake development concept and screening studies to assess the potential economic value of a notional
gas discovery in SC 58, including the opportunity to access the Philippine energy market via the Malampaya pipeline
to Luzon.
Page | 11
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
SC 14C2 West Linapacan (Nido (SGC) 22.28%, Non-Operator)
The West Linapacan Field previously produced 8.5 mmstb and was shut in in 1996 due to facility constraints and a
corresponding low oil price environment. Nido is considering development and funding options for the redevelopment
of the West Linapacan Field.
SC 14C2 West Linapacan A and B Field Redevelopment Opportunities
The SC 54 focused Carbonate facies modelling study referred to earlier will also evaluate sweet spots within the
discovered fields and other prospects within the various Service Contracts for future assessment.
Future Philippines Oil Sales Agreement
On 3 September 2021, Sacgasco executed an offtake agreement for its future Philippines crude oil production with
a Bangchak Corporation (“Bangchak”) subsidiary. Bangchak owns and operates a 120,000 bopd oil refinery in
Thailand. The offtake price will be determined and agreed for each production asset and will be dependent upon
criteria including oil quality and cargo size. Sacgasco retains the right to sell any oil produced to other parties at more
favourable terms in the event Sacgasco and BCP cannot reach agreement on pricing.
Page | 12
Directors’ Report
For the year ended 31 December 2021
ONSHORE CANADA - Province of Alberta
Sacgasco Limited
Sacgasco has Working Interests (“WI”) in two groups of Non-Operated Onshore Assets in Alberta, Canada - Red
Earth and Alberta Plains.
SACGASCO CANADA TENEMENT TABLE (as at 31 December 2021)
Project Names
Leases, Related Gas Field
(HBP Leases); of key well
Project Type
Working
Interest (WI)*
Red Earth Assets
(Canada)
Alberta Plains Assets
(Canada)
Oil and gas Mineral Leases and
wells and associated
Infrastructure
Oil and gas Mineral Leases and
wells and associated
Infrastructure
Production
Production
30%
20%
Location of SGC Assets in Alberta and British Columbia
Red Earth Assets
Red Earth WI 30% (Non-Operated)
On 25 March 2021 Sacgasco settled the purchase of 30% WI in the Red Earth Asset consisting of 6 oilfields and
associated infrastructure, located 450 km north of Edmonton.
Cumulative sweet light oil (average oil quality of 39o API) oil production from the assets over 30 years to date has
been around 63 million barrels with a low 10% base decline rate.
Opportunities exist to return currently idled wells to production.
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Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Large Treater on Red Earth Asset
Alberta Plains WI 20% (Non-Operated)
Sacgasco announced on 28 January 2021 the acquisition of a 20% Working interest (WI) in oil and gas producing
assets (“Alberta Plains Assets”) in southern Alberta, Canada. The Assets consists of oil and gas fields and
associated production equipment, located between Edmonton and the USA border.
Canadian Assets Reserve Reports
Independent Reserves Reports were undertaken by GLJ Limited on Sacgasco’s Red Earth properties and by
McDaniel on the Alberta Plains properties. The Reserve Reports were based on 31 December 2021 data.
Sacgasco Net Reserves on 31 December 2021
Independent Reserves Reports were undertaken by GLJ Limited on Sacgasco’s Red Earth properties and by
McDaniel on the Alberta Plains properties. The Reserve Reports were based at 31 December 2021.
The tables below identify regional Reserves net to Sacgasco in Alberta, Canada, Before and After Royalty
adjustments. The totals may not add exactly due to rounding effects.
Sacgasco Canada Net Reserves on 31 Dec 2021:
Red Earth Reserves Table –
31 Dec 2021
GLJ Limited
Barrels of Oil Equivalent (BOE)
Proved Producing (PDP)
Proved Developed Not Producing (PDNP)
Proved Undeveloped (PUD)
Total Proved (1P) Reserve
Probable Reserves (Prob.)
SGC
WI
30%
30%
30%
30%
Total Proved plus Probable (2P) Reserves
Note – Conversion Factor: 6 mcf gas equals 1 BOE.
SGC Reserves
Red Earth
Before Royalty
31 Dec 2021
SGC Reserves
Red Earth
After Royalty
31 Dec 2021
629,000
598,000
91,000
1,302,000
654,000
1,956,000
572,000
553,000
79,000
1,204,000
598,000
1,801,000
Page | 14
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Alberta Plains Reserves Table –
31 Dec 2021
McDaniel
Barrels of Oil Equivalent (BOE)
Proved Producing (PDP)
Proved Developed Not Producing (PDNP)
Proved Undeveloped (PUD)
Total Proved (1P) Reserve
Probable Reserves (Prob.)
Total Proved plus Probable (2P) Reserves
SGC
WI
20%
20%
20%
20%
Canada - TOTAL Reserves Table
31 Dec 2021
Barrels of Oil Equivalent (BOE)
Proved Producing (PDP)
Proved Developed Not Producing (PDNP)
Proved Undeveloped (PUD)
Total Proved (1P) Reserve
Probable Reserves (Prob.)
Total Proved plus Probable (2P) Reserves
Refer to additional Information below.
SGC Reserves
Alberta Plains
Before Royalty
31 Dec 2021
SGC Reserves
Alberta Plains
After Royalty
31 Dec 2021
362,356
54,000
20,089
436,500
195,822
632,200
333,956
49,778
18,311
402,000
178,089
580,200
SGC Reserves
Canada
Before Royalty
31 Dec 2021
SGC Reserves
Canada
After Royalty
31 Dec 2021
991,356
652,000
111,089
1,738,500
849,822
2,588,200
905,956
602,778
97,311
1,606,000
776,089
2,381,200
At Red Earth, 100% of the Proved Plus Probable Reserves are light oil.
At Alberta Plains, 84% of the Proved plus Probable (2P) reserves are oil and 16% are Natural Gas and Natural Gas Liquids.
The following table and associated reconciliation notes identify and explains the changes in gross (100%) reserves between
reporting dates for the Gross Reserves in the Alberta Canada producing assets in which Sacgasco has a working interest.
Canada 100% Reserves for Red Earth and
Alberta Plains Reconciliation
Barrels of Oil Equivalent (BOE)
Proved Producing (PDP)
Proved Developed Not Producing (PDNP)
Proved Undeveloped (PUD)
Total Proved (1P) Reserve
Probable Reserves (Prob.)
100% Reserves
Canada
After Royalty
31 Dec 2019*
5,807,800
1,683,400
543,400
8,034,600
3,660,700
Total Proved plus Probable (2P) Reserves
11,695,300
100% Reserves
Canada
After Royalty
31 Dec 2021
Difference between
100% Reserves
Canada between
Reserves Report
Dates
3,576,447
2,092,223
354,888
6,023,558
2,883,823
8,907,382
(2,231,353)
408,823
(188,512)
(2,011,042)
(776,877)
(2,787,918)
Notes: * Reserves are for 100% of Non-Operated Alberta Producing Properties based on details available in ASX announcement
platform releases “Sacgasco to acquire 300 BOPD in Producing Oil Fields” dated 20 November 2020 and “Sacgasco to Acquire
100 BOEPD in reactivated Oil Fields” dated 28 January 2021.
The Differences between Reserves on the reporting dates in the table above are:
Proved Producing (PDP) reserves on 31 December 2021 are reduced by Production in 2021 (approximately 650,000 BOE). Note
the assets were acquired by the Sacgasco venture in February and March 2021; and reserves were further reduced by Production
attributable to third parties which owned the assets from 1 January 2020, until the February and March 2021 acquisition by the
Sacgasco venture; together with adjustments based on well performances and reduced prices in the pricing strip used for 31
December 2021 reserves estimation.
Other Proved (PDNP, PUD) and Probable Reserves are adjusted to reflect updated inputs including offsetting well performance,
technical inputs, and future pricing strip.
Page | 15
Directors’ Report
For the year ended 31 December 2021
Reserves Table Notes
Sacgasco Limited
Additional Information Required under Chapter 5 of the ASX Listing Rules to be read as Notes to Reserve
Table:
1. The Reserves were estimated by qualified Independent Reserve Auditor GLJ Limited (Red Earth) and McDaniel
& Associates Consultants Ltd (Alberta Plains) both of Calgary, Alberta, Canada; and have been classified in
accordance with SPE-PRMS. They have been reviewed in detail by SGC’s Competent Person, Mr Gary Jeffery.
Mr Jeffery has more than 50 years technical, commercial and management experience in exploration appraisal
and development of oil and gas. Mr Jeffery is a member of the American Association of Petroleum Geologists.
Mr Jeffery has reviewed the information and supporting documentation referred to in this announcement and
considers the reserve estimates to be fairly represented and consents to its release in the form and context in
which it appears. His academic qualifications and industry memberships appear on the Company's website and
Mr Jeffery is qualified in accordance with ASX listing rule 5.41. Terminology and standards adopted by the
Society of Petroleum Engineers "Petroleum Resources Management System" have been applied in producing
this document.
The Reserves Estimates compiled from data and information supplied by the Operator of the Red Earth and
Alberta Plains Properties, Blue Sky Resources Limited under the supervision of Matthew Mazuryk. Mr Mazuryk
has a Bachelor of Engineering Degree in Petroleum Engineering from Montana Technological University; he is
a Registered Professional Engineer in the Province of Alberta and is qualified in accordance with ASX listing
rule 5.41
2. QUALIFIED PETROLEUM RESERVES AND RESOURCE EVALUATOR REQUIREMENTS:
Red Earth Properties:
The reserves and resources information in this Australian Stock Exchange (“ASX”) document relating to oil fields
in the Red Earth Properties are based on, and fairly represent information prepared by, or under the supervision
of Ryan F Campbell and Trisha S MacDonald from GLJ Limited (“GLJ”).
Ryan Campbell is an employee of GLJ and has a Bachelor of Science Degree in Chemical Engineering from
Calgary University. Mr Campbell is a Registered Professional Engineer in the Province of Alberta and is qualified
in accordance with ASX listing rule 5.41.
Trisha S Macdonald is an employee of GLJ and has a Bachelor of Science Degree in Oil and Gas Engineering
from Calgary University and is a Registered Professional Engineer in the Province of Alberta and is qualified in
accordance with ASX listing rule 5.41.
GLJ and its named employees have consented to be named in this manner in this release.
Alberta Plains Properties:
The reserves and resources information in this Australian Stock Exchange (“ASX”) document provided to
McDaniel & Associates Consultants Ltd (McDaniel) relating to oil fields in the Alberta Plains Properties are
based on, and fairly represent information prepared by, or under the supervision of Mike Verney.
Mike Verney is an employee of McDaniel and has a Bachelor of Applied Science and a Bachelor of Arts
(Economics) from Queen’s University. Mr Verney is a Registered Professional Engineer in the Province of
Alberta and is qualified in accordance with ASX listing rule 5.41.
McDaniel and its named employees have consented to be named in this manner in this release.
3. Production trends and operating cost trends are well established, enabling the reliable prediction of future
production by decline curve analysis, the estimation of future revenue from oil and gas sales as well as the
forecasting of future costs. Economic life of reserves takes into account oil and gas revenues based on prevailing
commodity pricing as well estimated operating costs, capital costs, royalties and mineral taxes.
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Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
4. The reserves are estimated at 31 December 2021 using Deterministic Methods based on estimates of future oil
production using technical and economic data. The Reserves have been summed arithmetically and have not
been adjusted for risk. Remaining oil production, based on analysis of well logs, geologic maps, seismic data,
well test data, production data and property ownership information is multiplied by oil prices determined from a
‘3 Consultants Average’ Price Deck (based on extensive market information and professional experience and
expertise) at December 31, 2021, and which is part of a regular releases on the GLJ and McDaniel websites
(Pricing Strip Tables included below for reference). These prices are adjusted for individual field related imposts
to estimate future revenues. Operator supplied field Operating Costs based on actual and projected costs are
deducted from revenues on a yearly basis to determine the economic limit of the wells and summed by individual
field. Royalty payments are treated as Operating Cost deductions. Estimated individual field lives based on the
above methods and 2P reserves ranged from 5 to 25 years. These will vary over times due to oil prices,
operating costs, and other related imposts.
5. As in all aspects of oil and gas evaluation, there are uncertainties inherent in the interpretation of engineering
and geoscience data; therefore, conclusions necessarily represent only informed professional judgement.
6. The Canadian Properties are non-operated.
7. Conversion factor for Natural gas: 6 mcf equals 1 Barrel of Oil Equivalent (BOE).
8. The Producing Reservoirs are predominantly conventional sandstone and limestone reservoirs.
9. Leases are Crown (Government awarded) Leases. Many leases are Held By Production (HBP); annual rentals
are paid on leases that are not HBP.
10. Royalty paid to the Government based upon a formula where lower producing wells attract lower royalty. Based
upon the current gross production, the production royalty averages around 12%.
11. Reserves are mostly based on normal oilfield primary recovery methods using predominantly bottom hole rod
insert pumps with conventional pumpjacks; 3 wells use electric submersible pumps (ESP) Some areas of the
Red Earth and Alberta Plains fields are under secondary recovery using waterflood and similar techniques.
12. Based on local reservoir experience further fracture stimulation and waterflooding may significantly increase
reserves over time. The economic benefit and use of these techniques will be determined by economic analysis
in the future.
13. No specialised processing of the oil is required.
14. Undeveloped Reserves are based on assumptions using the local cost of development wells to access the
reserves, offset and analogue producing well performance and operating costs.
15. The production is transported by tankers and owned gathering pipelines to third party access pipelines to various
markets in Canada, primarily local refineries. Oil prices received are local free market prices.
Page | 17
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
PRMS Reserves Classifications used in this Release:
1P Denotes low estimate of Reserves (i.e., Proved Reserves). Equal to P1.
2P Denotes the best estimate of Reserves. The sum of Proved plus Probable Reserves.
Proved Reserves are those quantities of Petroleum that, by analysis of geoscience and engineering data, can be
estimated with reasonable certainty to be commercially recoverable from known reservoirs and under defined
technical and commercial conditions. If deterministic methods are used, the term “reasonable certainty” is intended
to express a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there
should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate.
Probable Reserves are those additional Reserves which analysis of geoscience and engineering data indicate are
less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. It is
equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated
Proved plus Probable Reserves (2P). In this context, when probabilistic methods are used, there should be at least
a 50% probability that the actual quantities recovered will equal or exceed the 2P estimate.
Developed Reserves are quantities expected to be recovered from existing wells and facilities.
Developed Producing Reserves are expected to be recovered from completion intervals that are open and
producing at the time of the estimate.
Developed Non-Producing Reserves include shut-in and behind-pipe reserves with minor costs to access.
Undeveloped Reserves are quantities expected to be recovered through future significant investments.
Page | 18
Directors’ Report
For the year ended 31 December 2021
Pricing Strip Tables used in Reserves reporting
Sacgasco Limited
Page | 19
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Representative Asset Oilfield Production Facilities (Little Bow Oilfield Battery)
Canada Oil and Gas Production
Canada Oil and Gas Production
(BOE)1
SGC Production
SGC Production after Royalty
2021 Year ending
December 2021
2020 Year ending
December 2020
108,928
95,179
0
0
Note 1: Gas converted to BOE using 6:1 ratio
Canadian Producing Assets acquired by SGC in February and March 2021
Sacgasco’s share of Alberta production at the end of the reporting period (31 December 2022) was 322 BOE per
day.
Sacgasco’s share of current Alberta production on 26 March 2022 is 423 BOE per day.
Hydrogen and Helium Potential
A multi-spectral satellite imagery study over Sacgasco’s Canadian assets in 2021 identified several significantly
above-background hydrocarbon, hydrogen, and helium anomalies. The results of the study are being integrated with
the extensive subsurface well control and other geophysical data including seismic to define potential exploration
targets within the areas of operations. There is considerable interest and activity in Hydrogen and Helium production
in Alberta and adjoining provinces.
2022 Planned Drilling Program
Alberta Plains Development Drilling
Sacgasco will participate (20% WI) in a three-well program to drill three oil development wells in the Alberta Plains,
Canada. Sacgasco plans to fully fund its share of the drilling program from the Company’s net operating cashflow.
Page | 20
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Alberta Plains development wells
The total cost of the three well development program is estimated at A$2.7 million (gross), which will be A$540,000
net to Sacgasco.
The Company anticipates a production increase of 200 BOEPD (gross) which equates to 40 BOEPD (primarily oil)
net to SGC. Given the current reference oil price exceeding US$90/bbl, production from these wells is projected to
pay back the capital and operating expenditure in less than 12 months.
Drilling licences have been received from the Alberta Energy Regulator (AER). The Operator, Blue Sky Resources,
has contracted a rig and purchased long lead items and will mobilise to drill the wells as soon as weather conditions
allow. Sacgasco anticipates that the program will start in early Q2 2022.
The wells are mapped to be independent of each other and one well will target Proved Undeveloped (“PUD”)
Reserves, and the other two wells will target Probable Undeveloped Reserves.
In October 2021, an auction of oil and gas leases in the Red Earth Area surprised market participants with third-party
winning bids materializing at around 10 times the value of the Sacgasco JV bid for the leases. This is interpreted to
reflect changing perceptions of oil and gas lease values in the Red Earth Area and more broadly in Alberta Province
of Canada. These lease sales effectively have revalued the values of Sacgasco’s extensive oil and gas leases in
Canada.
Page | 21
Directors’ Report
For the year ended 31 December 2021
ONSHORE CALIFORNIA
Sacgasco Limited
Borba Natural Gas Prospect Drilling - Sacgasco 66.67% Working Interest (“WI”)
During 2021, the Borba 1-7 well was drilled to a Total Depth of 8,824ft. After determining sub-commercial gas shows
in the lower formations, the Company tested a total of 13 feet of perforations at approximately 3,900 feet (1,200
metres) in the Kione Formations. These perforations are within an interval of 92 feet of reported gas pay. The well
flowed 2.1 million cubic feet of gas per day on ¼” choke at 1440 psi Flowing Tubing Pressure and a stabilised Shut-
in Tubing Pressure of 1,530 pounds per square inch.
While the calculated flow from the Borba well at 1300 psi tubing pressure (equivalent to 400# of pressure drawdown)
is 5,000,000 cubic feet of gas per day (5,000 mcfgpd)*, the company believes a prudent initial flowrate to be
3,000 mcfpd from the Borba 1-7 well. These parameters may be varied following initial production depending on
operational outlet pressures and observed reservoir behaviour.
*Note: 1 ‘mcfgpd’ is 1,000 cubic feet of gas per day- approximately 1 sale unit of gas per day
Borba 1‐7 pad Borba 1‐7 during flow testing
Page | 22
Directors’ Report
For the year ended 31 December 2021
Gas Usage review for Borba Gas
Sacgasco Limited
Following on from reviews of pipeline operating incidents, the local pipeline network owner imposed severe volume
restrictions on the previously identified pipeline route for Borba natural gas. This restriction would have resulted in
the Borba production being curtailed indefinitely to below its interpreted flow potential.
As a result, Sacgasco’s team assessed other viable alternatives to monetise Borba’s gas and surrounding prospects.
Local generation of hydrogen to supply the growing Californian market provides a number of advantages over the
alternatives, including:
Excellent technology acceptance by community and support for the development of California’s hydrogen
economy by local legislators.
Established and fast-growing market demand.
Route to market by road, no need for pipelines construction or access.
Limited land use and associated regulatory approvals with hydrogen facilities potentially co-located at well-
site.
Diversify traditional O&G activities into well-supported renewable energy markets.
The Borba well natural gas may also be utilised for on-site generation of electricity, which in turn could be used by
local power consumers.
The Sacgasco JV is developing partnerships with equipment and technology providers to support a natural gas
consuming project at Borba. Sacgasco joined the Californian Hydrogen Business Council (CHBC) as a Silver Member
to further its Hydrogen activities.
Gas Flows in Sacramento Basin
The Company continued to maintain leases in the Sacramento Basin during the quarter. Sacgasco has a working
interest (WI) of between 10% and 100% in oil and gas leases which cover natural gas prospects ranging in size from
5-20 Bcf to Tcf recoverable prospective resources of Natural Gas.
California has an average 7 Bcf per day gas market, importing over 90% of this natural gas from other US States
and Canada.
Current reference natural gas prices for Sacgasco gas sales in Sacramento Basin are around US$6.20 / mcf (almost
AUD $9 /mcf).
California Gas Flows (mcf)1
Gross Production
SGC Production after Mineral
Royalty
2021
144,886
80,330
Note 1: mcf = Thousand Cubic feet gas
2020
166,937
92,205
Page | 23
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
SACGASCO CALIFORNIA TENEMENT TABLE (as at 31 December, 2021)
PROJECT NAMES
Dempsey Area Project
LEASES; RELATED GAS
FIELD (HBP LEASES); OR
KEY WELL
Rancho Capay, Rice Creek,
East Gas Fields - HBP Leases;
Oil and Gas Mineral Leases
PROJECT
TYPE
WORKING
INTEREST
(WI)*
Exploration, Appraisal and
Rework
40-60%
Borba Project
Oil and Gas Mineral Leases
Exploration
66.67%
Los Medanos Project
Los Medanos Gas Field
HBP Leases
Appraisal and Rework
90%
Malton Project
Malton Gas Field HBP Leases
and Oil and Gas Mineral Leases
Exploration, Appraisal and
Rework
45-70%
Dutch Slough Gas
Project
Dutch Slough Gas Field
HBP Leases
Exploration, Appraisal and
Rework
70%
Rio Vista Gas Project
Rio Vista Field Wells
HBP Leases
Gas flow, development, and
Rework
100%
Willows Gas Field
(Non-operated)
Willows Gas Fields
HBP Leases
Gas flow and
Rework
10%
Alvares Project
Oil and Gas Mineral Leases;
Alvares 1 well (P&A Re-entry)
* Approximate WI across the referenced Project
Exploration and Appraisal
50%
Sacgasco is the Operator of all but one of its WI wells and related tenements in California, located in the Sacramento
Basin, onshore northern California.
Changes in Tenement / Project List in Reporting Period:
There have been no significant working interest or tenement changes outside the new tenements in Canada and the
Philippines which were acquired during the current reporting period.
Projects are continuously reviewed for their strategic fit and are expected to be modified over time to reflect local and
industry conditions. Working interest may vary across individual projects and leases and WI above reflects the WI in
the relevant well bores or majority of leased lands.
Leases
USA and Canadian exploration are conducted on leases grant by Mineral Right owners, in SGC’s case primarily
governments, private individuals or groups. Leases can vary in size from very small parcels (part of an acre) to large
landholdings (covering a few square miles).
Leases generally are for 5 years’, and rentals are paid annually. There are no firm work commitments associated
with the leases. Some leases are ‘Held by Production’ and royalties are paid to mineral right owners in lieu of rentals.
SGC has not listed all it leases as it is impractical and not meaningful for potential project value assessment in oil
and natural gas plays. A detailed listing of leases may also lead to a loss of competitive advantage and consequent
reduced value to SGC shareholders.
Philippines leases are issued by the Government of Philippines as Service Contracts with defined conditions that
may be varied from time to time.
Page | 24
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Competent Persons
This document contains forward looking statements that are subject to risk factors associated with the oil and gas
industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected
by many variables which could cause actual results or trends to differ materially. The technical information provided
has been reviewed by Mr Gary Jeffery, Managing Director of Sacgasco Limited. He is a qualified geophysicist with
50 years technical, commercial and management experience in exploration for, appraisal and development, and
transportation of oil and gas. He is a member of The American Association of Petroleum Geologists. Mr Jeffery
consents to the inclusion of the information in the form and context in which it appears.
The timing of future events is subject to the normal industry vagrancies of operational matters and equipment
availability which are outside the control of Sacgasco and its suppliers. Facilities depicted in images on the Sacgasco
website are not necessarily assets of Sacgasco. Some of the images used represent aspects of the oil and gas
industry in which Sacgasco is involved or images of equipment owned by companies providing services to Sacgasco.
Before investing it is recommended that investors conduct their own due diligence and consult financial and technical
advisors and form their own opinions on future events and implications.
The Financial Year
Shares and Options
In May 2020, the Directors of Sacgasco announced the Company has entered into agreements with SGC
shareholders who are sophisticated investors (Section 708) for the subscription and issue of unsecured convertible
notes (“Notes”) to raise $400,500. These notes and payable interest were converted into Common Shares of SGC
in February 2021.
In February 2021, Sacgasco Limited raised $5,000,000 (before costs) via a private placement to new and existing
domestic investors. The Placement issued 76.92 million new fully paid ordinary shares in the Company at an issue
price of $0.065 per share.
Unlisted Options exercisable @ 6 cents by 31 December 2022 18,000,000 were issued to Directors on 22 January
2021.
Issued capital includes 16,750 shares issued as a result of an option conversion in December 2021.
In December 2021, 131,899,719 SCGOA listed options expired, along with 16,000,000 Unlisted options with the
same 4 cent option price.
SACGASCO LIMITED ‐ Capital Structure
Shares
484,157,427
Unlisted Options
Unlisted Options, exercisable at 6c, expiring 31-Dec-22
18,000,000
Page | 25
Directors’ Report
For the year ended 31 December 2021
OTCQB Market listing in North America
Sacgasco Limited
Sacgasco’s application to join the OTCQB Market in the United States was accepted, and the Company’s shares
are now listed for trading under the code SGCSF.
The Company's primary listing will continue to be the Australian Securities Exchange (ASX). The OTCQB Market
has robust financial reporting and corporate governance requirements. All these requirements are effectively satisfied
by Sacgasco through its ongoing compliance with ASX Listing Rules.
Sacgasco sought OTCQB quotation to provide North American investors with enhanced accessibility and liquidity in
trading of the Company’s shares. The quotation delivers Sacgasco access to one of the largest investment markets
in the world at relatively nominal cost (compared to traditional major exchanges) and with minimal additional
compliance requirements.
No new shares in the Company are being issued in connection with commencement of trading on the OTCQB Market.
Existing ordinary shares of Sacgasco may now also be traded on the OTCQB Market and investors can find real-
time quotes and market information on the OTC Markets website (www.otcmarkets.com/stock/SGCSF/overview).
Corporate Activity
On 12 April 2021, the company announced that it had changed its Share Registry Services to Automic Pty Ltd.
Sacgasco held its Annual General Meeting of shareholders on 28 May 2021 where all resolutions were passed.
Board and Management Changes
Joanne Kendrick joined the Board of Sacgasco Limited on 1 June 2021 as Non-Executive Director replacing David
McArthur who resigned as Non-Executive Director but remained in the role of Joint Company Secretary.
Joanne has 25 years’ experience in the oil, gas and helium industries and has held technical or executive roles with
Woodside Petroleum, Newfield Exploration, Gulf Canada, Clyde Petroleum, Nido Petroleum and Blue Star Helium.
Joanne has been directly responsible for managing production operations, exploration drilling and development
projects, capital raisings, land acquisition, asset transactions and joint venture interests throughout her career;
including as Managing Director at Blue Star Helium (3 years) and Deputy Managing Director at Nido Petroleum
(7 years).
Joanne provides consulting services in the oil and gas, helium and hydrogen sectors and is currently a Non-Executive
Director of ASX listed Buru Energy and 88 Energy Limited.
On 28 October 2021, Sacgasco announced that it has contracted Marshall Hood as Asset Manager in the Philippines.
Public Presentations
Sacgasco’s Managing Director, Gary Jeffery, presented to shareholders and investors at the Annual Good Oil
Conference held in Perth, Western Australia (refer ASX Release dated 8 September 2021).
In December 2021, Gary Jeffery also presented to SEAPEX Philippines Forum for Nido Petroleum Philippines Pty
Ltd, its wholly owned subsidiary. The forum provided the opportunity to present the company’s Philippines Asset
base, detailing the 4th Exploration and Production Phase in the offshore Palawan Basin.
Page | 26
Directors’ Report
For the year ended 31 December 2021
DIRECTORS’ REPORT
Sacgasco Limited
The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the ‘group’) consisting of Sacgasco Limited (referred to hereafter as the Company’) and the entities it
controlled at the end of, or during, the year ended 31 December 2021.
DIRECTORS
The names of the Directors who held office during the whole of the financial year and up to the date of this report are
noted below. Directors were in office for the entire period unless otherwise stated.
Information on Directors
Experience, special responsibilities, and other directorships
Name:
Title:
Qualifications:
Appointed:
Experience and expertise:
Andrew Childs
Non-Executive Chairman
BSc.
25 November 2008
Andrew graduated from the University of Otago, New Zealand in 1980 with a
Bachelor of Science in Geology and Zoology. Having started his professional
career as an Exploration Geologist in the Eastern Goldfields of Western
Australia, Mr Childs moved to petroleum geology and geophysics with Perth-
based Range Oil Australia (later named Petroz NL). He gained technical
experience with Petroz as a Geoscientist and later commercial experience as
the Commercial Assistant to the Managing Director. Mr Childs is also
Principal of Resource Recruitment.
Other current public directorships:
Non-executive Director of ADX Energy Limited since 11 November 2009
Former directorships (past 3 years):
None
Special responsibilities:
Member of the Audit and Risk Management Committee
Interests in shares:
Interests in options:
7,972,975
6,000,000
Page | 27
Directors’ Report
For the year ended 31 December 2021
DIRECTORS (continued)
Sacgasco Limited
Information on Directors
Experience, special responsibilities, and other directorships
Name:
Title:
Qualifications:
Appointed:
Experience and expertise:
Gary Jeffery
Managing Director
BSc.
24 October 2013
Gary has over 48 years of project development, operations and exploration
experience in the oil, gas and mining and energy utilities industries, having
worked for both large and small organisations in over thirty countries
worldwide.
He is an experience director of public companies in Australia, Uganda, and
Canada, and has broad international experience in resources, and provides
consulting services on energy and resource related matters.
Gary graduated with a BSc in Geology and Geophysics from the University
of New England. He is a WA Energy Research Alliance (WAERA) Industry
Advisory Group participant.
Other current public directorships:
None
Former directorships (past 3 years):
None
Special responsibilities:
None
Interests in shares:
Interests in options:
23,264,158
10,000,000
Page | 28
Directors’ Report
For the year ended 31 December 2021
DIRECTORS (continued)
Sacgasco Limited
Information on Directors
Experience, special responsibilities, and other directorships
Name:
Title:
Qualifications:
Appointed:
Experience and expertise:
Joanne Kendrick
Non-Executive Director
BEng. (Hons)
1 June 2021
Joanne is a Petroleum / Reservoir Engineer holding a Bachelor of
Engineering (Hons) from the University of Adelaide and is a member of the
Australian Institute of Company Directors (“MAICD”).
She is an experienced industry professional with more than 25 years’
experience in technical and executive roles with Woodside Petroleum,
Newfield Exploration, Gulf Canada, Clyde Petroleum and Nido Petroleum.
Throughout her career, Joanne has been directly responsible for managing
production operations, exploration drilling and development projects, capital
raisings, asset transactions and joint venture interests.
Other current public directorships:
Non-Executive Director of Buru Energy Limited since 22 February 2021
Non-Executive Director of 88 Energy Limited since 2 August 2021
Former directorships (past 3 years):
Managing Director of Blue Star Helium Limited from 23 March 2018 until
14 April 2021
Special responsibilities:
Member of the Audit and Risk Management Committee
Interests in shares:
Interests in options:
Nil
Nil
Joanne Kendrick joined the Board of Sacgasco Limited on 1 June 2021 as Non-Executive Director replacing David
McArthur who resigned as Non-Executive Director but remained in the role of Joint Company Secretary.
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships
of all other types of entities, unless otherwise stated.
‘Former directorships’ quoted above are directorships held in the last three years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
JOINT COMPANY SECRETARIES
David McArthur is a Chartered Accountant and was appointed to the position of Company Secretary on
24 October 2013. Mr McArthur has over 30 years’ experience in the corporate management of publicly listed
companies and has substantial experience in capital raisings, company re-organisations and restructuring, mergers
and takeovers, and asset acquisitions by public companies.
Jordan McArthur is a Chartered Accountant and was appointed to the position of joint Company Secretary on
28 February 2021. Mr McArthur has over 10 years’ corporate and financial experience in Australia and the United
Kingdom.
Page | 29
Directors’ Report
For the year ended 31 December 2021
MEETINGS OF DIRECTORS
Sacgasco Limited
The number of meetings of the Company’s Board of Directors (“the Board”) and of each Board committee held during
the year ended 31 December 2021, and the number of meetings attended by each director was:
Full Board
Audit and Risk
Management Committee
Attended
Held
Attended
Held
Andrew Childs
Gary Jeffery
Joanne Kendrick
David McArthur
4
4
3
1
4
4
3
1
2
2
1
1
2
2
1
1
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
The small size of the Board means that members of the Board meet informally on a regular basis to discuss company
operations, risks, and strategies, and as required, formalise key actions through circular resolutions.
The audit and risk management, finance and environmental functions are handled by the full board of the Company.
In addition to the meetings held above, a number of decisions of the Board were undertaken via circular
resolution (11).
PRINCIPAL ACTIVITIES
During the financial year the principal activities of the Group was oil and gas exploration with associated natural gas
flows as a by-product in California, oil and gas exploration, production and development activities in Canada, and oil
and gas exploration, appraisal, and development in the Philippines.
REVIEW OF OPERATIONS
The Review of Operations for the year ended 31 December 2021 is set out on pages 3 to 26 and forms part of this
Directors’ Report.
OPERATING RESULTS
The loss for the financial year ended 31 December 2021 attributable to members of Sacgasco Limited after income
tax was $10,681,643 (2020: $1,734,221).
The Group has a working capital deficit of $3,756,986 (2020: surplus of $757,866) and had net cash outflows of
$493,262 (2020: net cash inflows of $1,458,928).
DIVIDENDS
The Directors recommend that no dividend be provided for the year ended 31 December 2021 (2020: Nil).
Page | 30
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than as reported above in the Review of Operations, there were no significant changes in the state of affairs
of the Group during the reporting period.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Other than as disclosed in note 32 of the notes to the consolidated financial statements, there have been no other
matters or circumstances that have arisen since the end of the financial year that have significantly affected, or may
significantly affect, the operations of the Group, the results of these operations, or the state of affairs of the Group in
future financial years.
LIKELY DEVELOPMENTS
The Group is focussed on oil and gas production and exploration within its current portfolio as disclosed in the Review
of Operations and will also continue to assess other oil and gas related opportunities which may offer value enhancing
opportunities for shareholders.
ENVIRONMENTAL REGULATIONS
The Group is subject to significant environmental regulation in relation to its activities in the various regions in which
it is involved. It aims to ensure that the highest standard of environmental care is achieved, and that it complies with
all relevant environmental legislation.
The Group is not aware of any significant breaches of these laws and regulations during the period covered by this
report.
INDEMNITY AND INSURANCE OF OFFICERS
The Company has agreed to indemnify all Directors and Company Secretaries against any liability arising from a
claim brought by a third party against the Company. The Company has paid premiums to insure each Director and
Company Secretary against liabilities for costs and expenses incurred by them in defending any legal proceedings
arising out of their conduct whilst acting in the capacity of Director of the Company, other than conduct involving
wilful breach of duty in relation to the Company. The current premium is $33,794 (2020: $41,670) to insure the
Directors and Company Secretaries of the Company.
Page | 31
Directors’ Report
For the year ended 31 December 2021
SHARES UNDER OPTION
Sacgasco Limited
Unissued ordinary shares of Sacgasco Limited under option at the date of this report are as follows:
Grant date
Expiry date
Exercise price
cents
Number
under option
22-Jan-2021
30-Dec-2022
6
18,000,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue
of the Company or of any other body corporate.
SHARES ISSUED ON THE EXERCISE OF OPTIONS
The following ordinary shares of Sacgasco Limited were issued during the year ended 31 December 2021, and up
to the date of this report, on the exercise of options granted:
Date options granted
15-Oct-2019
31-May-2019
29-Jan-21
Exercise price
cents
Number of
shares issued
4
4
6
1,546,949
3,000,000
2,000,000
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking
responsibility on behalf of the Group for all or part of those proceedings.
NON-AUDIT SERVICES
No non-audit services were provided during the year from the auditor of the Company, HLB Mann Judd.
AUDITOR INDEPENDENCE
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is
set out on page 35.
AUDITOR
HLB Mann Judd (WA Partnership) continues in office in accordance with section 327 of the Corporations Act 2001.
Page | 32
Directors’ Report
For the year ended 31 December 2021
AUDITED REMUNERATION REPORT
Sacgasco Limited
This report, which forms part of the Directors’ Report, outlines the remuneration arrangements in place for the
Directors of Sacgasco Limited for the year ended 31 December 2021. There were no other key management
personnel during the year. The information provided in this remuneration report has been audited as required by
Section 308(3C) of the Corporations Act 2001 and its Regulations.
The Remuneration Report details the remuneration arrangements for the Directors who are defined as those persons
having authority and responsibility for planning, directing, and controlling the major activities of the Group, directly or
indirectly, whether executive or otherwise.
Remuneration philosophy
The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and
appropriate for the results achieved. The framework aligns executive reward with the achievement of strategic
objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for
the delivery of reward. The Board of Directors (“the Board”) ensures that executive reward satisfies the following
key criteria for good reward governance practices:
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board is responsible for determining and reviewing remuneration arrangements for its directors. The
performance of the Group depends on the quality of its key management personnel. The remuneration philosophy
is to attract, motivate and retain high performance and high-quality personnel.
The reward framework is designed to align executive reward to shareholders’ interest. The Board has considered
that it should seek to enhance shareholders’ interests by:
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate and distinct.
Non-Executive Directors’ Remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors’ fees and payment are reviewed annually by the Board. The Board may, from time to time, receive advice
from independent remuneration consultants to ensure non-executive directors’ fees and payments are appropriate
and in line with the market. The Chairman’s fees are determined independently to the fees of other non-executive
directors based on comparative roles in the external market. The Chairman is not present at any discussions relating
to the determination of his own remuneration.
Page | 33
Directors’ Report
For the year ended 31 December 2021
Remuneration structure (continued)
Sacgasco Limited
Non-Executive Directors’ Remuneration (continued)
ASX Listing Rules require the aggregate non-executive directors’ remuneration be determined periodically by a
general meeting. The most recent determination was at the Annual General Meeting held in 2005, where the
shareholders approved a maximum annual aggregate remuneration of $150,000.
Each Non-Executive Director receives a fee for being a Director of the Company which is inclusive of statutory
superannuation and membership of sub-committees:
Non-Executive Directors
$36,000 p.a. inclusive of statutory superannuation
Chairman
$40,000 p.a. inclusive of statutory superannuation
In addition to their base fees, non-executive directors may also receive payment for consultancy services at the lesser
of $200 per hour or $1,500 per day plus any reimbursable expenses.
Executive Directors’ Remuneration
The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration
which has both fixed and variable components.
There are four components to the executive remuneration and reward framework:
base pay and non-monetary benefits,
other remuneration such as superannuation and long-service leave.
share-based payments,
The combination of these comprises the executive’s total remuneration.
Fixed remuneration
Fixed remuneration, consisting of base salary, superannuation, and non-monetary benefits, are reviewed annually
by the Board. The process consists of a review of relevant comparative remuneration in the market and internally
and, where appropriate, external advice on policies and practices. The Board has access to external, independent
advice where necessary.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits where it does not create
any additional costs to the Group and provides additional value to the executive.
Short-term incentive scheme
The short-term incentives (“STI”) program is designed to align the targets of the business units with the performance
hurdles of key management. STI payments are granted to executives based on specific annual targets and key
performance indicators (“KPIs”) being achieved. At this stage, the Group does not award any STIs.
Long-term incentive scheme
The long-term incentives (“LTIs”) include long-service leave and share-based payments. Share options are awarded
to executives and other key management in a manner that aligns this element of remuneration with the creation of
shareholder wealth.
The Company has adopted an Employee Incentive Option Plan (Plan). Under the Plan, the Company may grant
options to Company eligible employees and consultants to attract, motivate and retain key employees over a period
of three years up to a maximum of 10% of the Company’s total issued ordinary shares at the date of the grant.
Director options are granted at the discretion of the Board and approved by shareholders. Performance hurdles are
not attached to vesting periods however, the Board determines appropriate vesting periods to provide rewards over
time.
Page | 34
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Group performance and link to remuneration
The remuneration of the Group’s key management personnel, including any component of remuneration that consists
of securities in the Company, is not formally linked to the prior performance of the Group. The rationale for this
approach is that the Group is in the exploration phase, and it is currently not appropriate to link remuneration to
factors such as profitability or share price.
Production income
Other income
2021
7,888,355
2020
-
2019
-
2018
-
2017
-
1,017,912
465,538
782,243
1,250,989
404,632
Loss before income tax ($)
(10,316,883)
(1,730,534)
(1,314,164)
(1,972,174)
(6,714,764)
Net loss attributable to equity holders ($)
(10,681,643)
(1,734,221)
(1,316,441)
(1,974,367)
(6,720,095)
Share price at year end (cents)
2.60
6.30
4.50
2.50
7.80
Number of listed ordinary shares
481,198,714
341,258,491
268,513,742
261,780,949
243,989,884
Weighted average number of shares
464,646,028
277,329,705
266,085,375
204,386,845
204,386,845
Basic loss per share EPS (cents)
(2.30)
(0.63)
(0.49)
(0.78)
(3.29)
Listed options
Unlisted options
-
133,429,938
133,429,948
-
-
18,000,000
19,000,000
19,000,000
43,000,000
37,500,000
Market capitalisation ($)
12,511,167
21,499,285
12,083,118
7,591,648
19,024,191
Net tangible (liabilities) / assets (NTA) ($)
(9,229,622)
844,695
(133,437)
561,307
1,517,627
NTA Backing (cents)
(1.92)
0.25
(0.05)
0.21
0.62
During the financial years noted above, there were no dividends paid or other returns of capital made by the Company
to shareholders.
Use of remuneration consultants
No remuneration consultants provided services during the year.
Voting and comments made at the Company’s 2021 Annual General Meeting (“AGM”)
At the 2021 AGM, 100% of the votes received, supported the adoption of the remuneration report for the year ended
31 December 2020. The Company did not receive any specific feedback at the AGM regarding its remuneration
practices.
Employment contracts
Remuneration and other terms of employment of the Managing Director is formalised in an employment contract.
The major provisions of the agreement related to remuneration are set out below.
Name
Gary Jeffery *
Terms of
agreement
Ongoing from
1 November 2013
Employee
notice period
Employer
notice period
Base salary **
Three months
Six months
$200,000
Termination
Benefit ***
Six months’ base
salary
*
**
On 6 November 2013, a Deed of Executive Services Agreement was entered into with Dungay Resources Pty Ltd, a
company associated with Gary Jeffery (effective 1 November 2013).
Base salary is inclusive of the superannuation guarantee charge rate applicable at the time (currently 10%) and comprises
$100,000 cash and $100,000 in shares for 50% of Mr Jeffery’s time. Shares are issued on a calendar quarterly basis with
shareholder approval. The issue price of the shares is the mathematical average of the VWAP for the first and the last five
trading days in the calendar quarter.
***
Termination benefits are payable upon early termination by the Company, other than for gross misconduct. They are equal
to base salary for the notice period.
Page | 35
Directors’ Report
For the year ended 31 December 2021
Details of remuneration
Sacgasco Limited
Details of the remuneration of key management personnel of the Group are set out in the following tables.
Short-term benefits
Share-based payments
Total
Cash salary
and fees
D&O insurance
premiums
2021
$
$
Shares
$
Equity-settled
options
(A)
$
$
Non-executive Directors
Andrew Childs
Joanne Kendrick (C)
Executive Directors
20,000
10,500
11,265
4,660
14,511
10,500
312,600
-
358,376
25,660
Gary Jeffery
100,000
11,265
72,554
521,000
704,819
-
130,500
6,604
33,794
-
208,400
215,004
97,565
1,042,000
1,303,859
20,000
-
13,890
5,161
17,012
-
Gary Jeffery
100,000
13,890
85,063
Former Directors
Greg Channon
18,952
138,952
8,729
-
41,670
102,075
-
-
-
-
-
50,902
5,161
198,953
27,681
282,697
(A) The fair value of options granted was determined using the Black-Scholes option pricing model,
(B) David McArthur was appointed on 17 August 2020 and resigned on 1 June 2021, and
(C) Joanne Kendrick has opted to receive her directors’ fee on the same terms as Gary Jeffery and Andrew Childs,
being 50% in cash and 50% in shares, subject to shareholder approval at the next general meeting. If not
approved by shareholders, accrued fees will be settled in cash.
Page | 36
Former Directors
David McArthur (B)
2020
Non-executive Directors
Andrew Childs
David McArthur
Executive Directors
Directors’ Report
For the year ended 31 December 2021
Details of remuneration (continued)
Sacgasco Limited
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-executive Directors
Andrew Childs
Joanne Kendrick
Executive Directors
Gary Jeffery
Former Directors
David McArthur
Greg Channon
Fixed remuneration
At risk - LTI
2021
%
2020
%
2021
%
2020
%
9
59
16
3
-
67
-
57
100
100
91
41
84
97
-
33
-
43
-
-
No cash bonuses were granted during the year (2020: Nil).
Share-based compensation
Shares issued in lieu of deferred director fees
At a general meeting on 21 July 2020, a share plan was approved by shareholders to satisfy 50% of the Executive
Director and Chairman fees, payable to Mr Jeffery and Mr Childs, through the issue of shares on a quarterly basis.
These shares were issued as follows:
Quarter
ended
Director
name
31-Dec-20 (1)
31-Dec-20(1)
Gary Jeffery
Andrew Childs
31-Mar-21
Gary Jeffery
31-Mar-21
30-Jun-21 (2)
30-Jun-21 (2)
30-Jun-21 (3)
Andrew Childs
Gary Jeffery
Andrew Childs
Joanne Kendrick
30-Sep-21
Gary Jeffery
30-Sep-21
Andrew Childs
30-Sep-21
Joanne Kendrick
Contractual
value of
services
rendered
Market value of
shares on
grant date
No. of Plan
Shares
issued
Share price
on grant date
Date of
issue
$
-
-
25,000
5,000
25,000
5,000
1,500
25,000
5,000
4,500
96,000
$
-
-
8,012
1,603
23,438
4,688
-
20,833
4,167
-
431,034
15-Jan-21
86,207
15-Jan-21
320,513
14-Apr-21
64,103
14-Apr-21
781,250
156,250
-
694,444
138,889
-
02-Aug-21
02-Aug-21
-
07-Oct-21
07-Oct-21
-
62,741
2,672,690
cents
2.50
2.50
2.50
2.50
3.00
3.00
-
3.00
3.00
-
Page | 37
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Share-based compensation (continued)
Shares issued in lieu of deferred director fees (continued)
Quarter
ended
Director
name
31-Dec-21
31-Dec-21
31-Dec-21
Gary Jeffery
Andrew Childs
Joanne Kendrick
Contractual
value of
services
rendered
$
25,000
5,000
4,500
34,500
Market value of
shares on
grant date
No. of Plan
Shares
issued
Share price
on grant date
Date of
issue
$
20,271
4,053
-
675,676
135,135
-
19-Jan-22
19-Jan-22
-
24,324
810,811
cents
3.00
3.00
-
(1)
(2)
(3)
No value is recorded for contractual value of services and market value of shares in the current financial year
as these expenses ($12,931) were accrued as of 31 December 2020, but the shares issued on
15 January 2021.
At a general meeting on 28 May 2021, a share plan was approved by shareholders to satisfy 50% of the
Executive Director and Chairman fees payable to Mr Jeffery and Mr Childs through the issue of shares on a
quarterly basis for the period 1 April 2021 to 31 March 2022.
Subject to shareholder approval at the next shareholder meeting, 50% of Ms Kendrick’s non-executive
directors’ fee will be payable through the issue of shares on a quarterly basis. Her non-executive directors’
fee for the period 1 June 2021 to 31 March 2022 will be based on the market value and share price on grant
date, being the next shareholder meeting.
Options granted as compensation
At the date of this report, share options granted to the Directors of the Company as part of their remuneration are:
Number
of options
granted
Grant
date
Value per
option at
grant date
Value of
options at
grant date
Vesting
and first
exercise
date
Gary Jeffery
10,000,000
22-Jan-21
Andrew Childs
6,000,000
22-Jan-21
David McArthur
4,000,000
22-Jan-21
cents
5.21
5.21
5.21
$
521,000
29-Jan-21
312,600
29-Jan-21
208,400
29-Jan-21
Exercise
Price
Per option
cents
Expiry
date
6.0
6.0
6.0
31-Dec-22
31-Dec-22
31-Dec-22
The options tabled above were provided at no cost to the recipients.
The cost of these options will form part of the 31 December 2021 remuneration report.
2,000,000 options granted as compensation in the current or prior years were exercised. At exercise date, the
options had a market value of 2 cents, with a total value of $400,000 (2020: nil).
16,000,000 options granted as compensation in prior years expired (2020: nil).
Page | 38
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Additional disclosures relating to key management personnel
Shareholdings
The number of shares in the company held during the financial year by each director, including their personally related parties, is set out below:
Held on
31 December
2020
Held on
appointment /
(resignation)
Andrew Childs
7,392,391
Joanne Kendrick
David McArthur (1)
-
-
-
-
(2,000,000)
In lieu
of fees
445,449
-
-
Conversion
of options
Held on
31 December
2021
Held at
31 December
2021
Held at
31 December
2021
-
-
2,000,000
7,837,840
-
-
Gary Jeffery
20,361,241
-
2,227,241
-
22,588,482
27,753,632
(2,000,000)
2,672,690
2,000,000
30,426,322
Option holdings
The number of options over ordinary shares in the company held during the financial year by each director, including their personally related parties, is set out below:
Held on
31 December
2020
Held on
appointment /
(resignation)
Granted as
compensation
6,000,000
Exercised
-
Expired
(9,224,769)
Held on
31 December
2021
Vested and
exercisable
on
31 December
2021
6,000,000
6,000,000
Andrew Childs
9,224,769
Joanne Kendrick
David McArthur (1)
-
-
-
-
(2,000,000)
4,000,000
(2,000,000)
-
-
-
-
-
-
-
-
Gary Jeffery
17,823,485
-
10,000,000
-
(17,823,485)
10,000,000
10,000,000
27,048,254
(2,000,000)
20,000,000
(2,000,000)
(27,048,254)
16,000,000
16,000,000
(1)
David McArthur held 2,000,000 fully paid shares, and 2,000,000 options at the date of resignation as a director.
Page | 39
Directors’ Report
For the year ended 31 December 2021
Sacgasco Limited
Additional disclosures relating to key management personnel (continued)
Share-based remuneration granted as compensation
For details of share-based payments granted during the year, refer note 23.
Other transactions with key management personnel
Details of other transactions with key management personnel not involving direct remuneration are disclosed in
note 25.
END OF AUDITED REMUNERATION REPORT
This report is made in accordance with a resolution of the directors, pursuant to section 298(2)(a) of the Corporations
Act 2001.
GARY JEFFERY
Managing Director
31 March 2022
Perth, WA
Page | 40
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor f or the audit of the consolidated f inancial report of Sacgasco Limited f or the year
ended 31 December 2021, I declare that to the best of my knowledge and belief , there have been
no contraventions of :
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
31 March 2022
N G Neill
Partner
Page | 41
Financial Report
For the year ended 31 December 2021
CONTENTS
Sacgasco Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income .......................................................... 43
Consolidated Statement of Financial Position ............................................................................................................ 44
Consolidated Statement of Changes in Equity ........................................................................................................... 46
Consolidated Statement of Cash Flows ..................................................................................................................... 48
Notes to the Consolidated Financial Report ............................................................................................................... 49
GENERAL INFORMATION
The consolidated financial statements cover Sacgasco Limited as a Group consisting of Sacgasco Limited and the
entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars,
which is Sacgasco Limited’s functional and presentation currency.
Sacgasco Limited is a listed public company limited by shares, incorporated, and domiciled in Australia. Its registered
office and principal place of business are:
Registered office
Level 1,
31 Cliff Street
Fremantle WA 6160
Principal place of business
Level 2,
210 Bagot Road
Subiaco WA 6008
A description of the nature of the Group’s operations and its principal activities are included in the Directors’ Report,
which is not part of the financial statements.
The financial statements were authorised for issued, in accordance with a resolution of directors, on 31 March 2022.
The directors have the power to amend and reissue the financial statements.
Page | 42
Financial Report
For the year ended 31 December 2021
Sacgasco Limited
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
For the year ended 31 December 2021
Production income
Other income
Finance income
Expenses
Cost of sales
Other operating expenses
Exploration expenditure
Site restoration expense
Personnel expenses
General and administrative expenses
Withholding tax
Professional fees
Marketing and business development expense
Depreciation and amortisation – oil and gas properties
Depreciation and amortisation – other assets
Finance expenses
Foreign exchange gains / (losses)
Impairment gain / (loss) on trade receivables
Loss before income tax
Income tax expense
Loss for the year
Other comprehensive income
Note
4
5
6
5
8
7
17
6
2021
$
7,888,355
1,017,912
401
(6,344,778)
(895,918)
(4,381,605)
-
(1,560,682)
(178,418)
(3,586,592)
(633,386)
(64,693)
(994,313)
(1,991)
(954,820)
172,340
201,305
2020
$
-
465,538
1,134
-
(731,769)
(311,313)
(6,794)
(309,593)
(123,078)
-
(309,938)
(85,660)
-
(3,214)
(27,468)
(14,959)
(273,420)
(10,316,883)
(1,730,534)
10
(364,760)
(3,687)
(10,681,643)
(1,734,221)
Foreign currency translation difference of foreign operations
(405,104)
31,030
Total comprehensive loss for the year
(11,086,747)
(1,703,191)
Loss per share (cents per share)
Basic and diluted
9
(2.30)
(0.63)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
Page | 43
Financial Report
For the year ended 31 December 2021
Sacgasco Limited
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of 31 December 2021
Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Prepayments
Interest bearing assets
Other financial assets
Total current assets
Oil and gas properties
Capitalised exploration
Other financial assets
Property, plant, and equipment
Intangible assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Borrowings
Employee entitlements
Site restoration provision
Contract liabilities
Current tax liabilities
Total current liabilities
Site restoration provision
Total non-current liabilities
Total liabilities
Net liabilities / (assets)
Note
11
12
13
14
15
16
17
15
18
19
7
21
20
2021
$
1,286,051
1,948,770
48,771
100,323
-
-
2020
$
1,735,573
260,964
-
18,150
66,709
142,952
3,383,915
2,224,348
28,671,482
6,062,915
280,511
3,079
34
35,018,021
-
-
264,509
4,857
106
269,472
38,401,936
2,493,820
(4,782,003)
(1,140,746)
(839,534)
(27,191)
(903,257)
(219,639)
(369,277)
(319,423)
(6,313)
-
-
-
(7,140,901)
(1,466,482)
21
(34,427,709)
(34,427,709)
(182,537)
(182,537)
(41,568,610)
(1,649,019)
(3,166,674)
844,801
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Page | 44
Financial Report
For the year ended 31 December 2021
Sacgasco Limited
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
As of 31 December 2021
Equity
Issued capital
Reserves
Accumulated losses
Note
2021
$
2020
$
22
29,941,940
23,635,092
824,836
675,916
(33,933,450)
(23,466,207)
Total equity attributable to equity holders
of the Company
(3,166,674)
844,801
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Page | 45
Financial Report
For the year ended 31 December 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Sacgasco Limited
Balance on 1 January 2020
Loss for the period
Foreign exchange translation difference on
foreign operations
Total comprehensive loss for the period
Issued
capital
$
21,304,674
-
-
-
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
2,330,418
Equity
component of
convertible
note
$
-
-
-
-
-
Issue of convertible notes
Share-based payments
-
-
361,229
-
Translation
reserve
Options
reserve
Share-based
payments
reserve
Accumulated
losses
Total
equity
$
$
$
$
$
160,526
110,200
23,438
(21,731,986)
(133,148)
-
31,030
31,030
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(10,507)
(1,734,221)
(1,734,221)
-
31,030
(1,734,221)
(1,703,191)
-
-
-
2,330,418
361,229
(10,507)
Balance on 31 December 2020
23,635,092
361,229
191,556
110,200
12,931
(23,466,207)
844,801
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Page | 46
Financial Report
For the year ended 31 December 2021
Sacgasco Limited
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
For the year ended 31 December 2021
Issued
capital
$
Equity
component of
convertible
note
$
Translation
reserve
Options
reserve
Share-based
payments
reserve
Accumulated
losses
Total
equity
$
$
$
$
$
Balance on 31 December 2020
23,635,092
361,229
191,556
110,200
12,931
(23,466,207)
844,801
Loss for the period
Foreign exchange translation difference on
foreign operations
Total comprehensive loss for the period
-
-
-
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
5,877,051
-
-
-
-
Issue of convertible notes
429,797
(361,229)
Transfer to accumulated losses on exercise of options
Transfer to accumulated losses on expiry of options
Share-based payments
-
-
-
Balance on 31 December 2021
29,941,940
-
-
-
-
-
(405,104)
(405,104)
-
-
-
-
-
-
-
-
-
-
(121,600)
(92,800)
1,042,000
-
-
-
-
-
-
-
(10,681,643)
(10,681,643)
-
(405,104)
(10,681,643)
(11,086,747)
-
-
5,877,051
68,568
121,600
92,800
-
-
87,653
-
1,129,653
(213,548)
937,800
100,584
(33,933,450)
(3,166,674)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Page | 47
Financial Report
For the year ended 31 December 2021
Sacgasco Limited
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
Cash flows from operating activities
Receipts from customers
Government grants
Cash paid to suppliers and employees
Payments for exploration and evaluation
Interest paid
Interest received
Income taxes paid
Note
2021
$
4,462,491
-
(6,096,239)
(3,958,336)
(10,491)
1,416
(3,163)
2020
$
3,025
20,000
(692,363)
(409,967)
(21,601)
48
(3,687)
Net cash used in operating activities
11(b)
(5,604,322)
(1,104,545)
Cash flows from investing activities
Cash held on acquisition of subsidiaries
17
Payments for oil and gas properties
Payments for property, plant, and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares and options
Proceeds from the exercise of options
Proceeds from issue of convertible notes
Repayment of loan to joint venture partner
Repayment of premium funding facility
Loan to joint venture partner
Proceeds from related party loans
Repayment of related party loans
Payment of capital raising costs
Net cash from financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents on 1 January
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents on 31 December
11(a)
1,121,841
(1,579,286)
-
(457,445)
5,003,250
301,879
-
202,060
-
(137,450)
870,000
(340,000)
(331,234)
5,568,505
(493,262)
1,735,573
43,740
1,286,051
-
-
(198)
(198)
2,335,951
-
400,500
-
(38,984)
(65,681)
270,000
(170,000)
(168,115)
2,563,671
1,458,928
282,454
(5,809)
1,735,573
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Page | 48
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
NOTES TO THE CONSOLIDATED FINANCIAL REPORT
For the year ended 31 December 2021
1
SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
1.1 NEW OR AMENDED ACCOUNTING STANDARDS AND INTERPRETATIONS ADOPTED
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (“AASB”) that are mandatory for the current reporting period.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 31 December 2021.
The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
1.2 BASIS OF PREPARATION
These general-purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) and the Corporations
Act 2001, as appropriate for, for-profit oriented entities. These financial statements also comply with International
Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”).
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through
other comprehensive income, certain classes of property, plant, and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial statements, are disclosed in note 2.
1.3 PARENT ENTITY INFORMATION
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 31.
1.4 PRINCIPLES OF CONSOLIDATION
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Sacgasco Limited
(“company” or “parent entity”) as of 31 December 2021 and the results of all subsidiaries for the year then ended.
Sacgasco Limited and its subsidiaries together are referred to in these financial statements as the ‘Group’.
Page | 49
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
1.4 PRINCIPLES OF CONSOLIDATION (continued)
Subsidiaries are all those 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 involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances, and unrealised gains on transactions between entities in the Group are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired, is recognised
directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or
loss and other comprehensive income, statement of financial position, and statement of changes in equity of the
Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that results in a
deficit balance.
When the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities, and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
Group recognises the fair value of the consideration received and the fair value of any investment retained together
with any gain or loss in profit or loss.
1.5 FOREIGN CURRENCY TRANSLATION
The financial statements are translated into Australian dollars, which is Sacgasco Limited’s functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at financial yearend exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the
average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting
foreign exchange differences are recognised in other comprehensive income through the foreign currency translation
reserve in equity.
The foreign currency translation reserve is recognised in profit or loss when the foreign operation or net investment
is disposed of.
Page | 50
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
1.6 CURRENT AND NON-CURRENT CLASSIFICATION
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when it is either expected to be realised or intended to be sold or consumed in the
Group’s normal operating cycle, it is held primarily for the purpose of trading, it is expected to be realised within 12
months after the reporting date, or the asset is cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least 12 months after the reporting date. All other assets are classified as non-current.
A liability is classified as current when it is either expected to be settled in the Group’s normal operating cycle, it is
held primarily for the purpose of trading, it is due to be settle within 12 months after the reporting date, or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting date. All other
liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
1.8 GOING CONCERN
The consolidated financial statements have been prepared on a going concern basis which contemplates continuity
of normal business activities and the realisation of assets and settlement of liabilities in the normal course of
business.
For the year ended 31 December 2021, the Group recorded a loss of $10,681,643 and had net cash outflows of
$493,262. On 31 December 2021, the Group had net liabilities of $3,166,674, with total cash on hand of $1,286,051.
As disclosed in note 17, there is a liability of $3,586,592 for estimated withholding tax on intercompany loan interest
which was payable prior to the acquisition of BCPE on 1 July 2021. The Company has obtained preliminary legal
advice on the recovery of this amount under the warranties provided under the share purchase agreement, with such
legal advice confirming the Company has strong grounds to recover these amounts.
The ability of the Group to continue as a going concern is dependent on achieving future positive cashflows from the
Group’s Canadian producing assets. Should this future revenue not be met, the Group may need to secure further
working capital.
Should the Canadian producing assets in which the Group has an interest be unsuccessful in providing positive cash
flows and the Group is unable to raise secure further working capital via the issue of securities, there is a material
uncertainty that exists that may cast significant doubt as to whether the Group will be able to continue as a going
concern and therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of
business.
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, that it may be unable to realise its assets and discharge its liabilities in the normal
course of business.
The financial report does not include any adjustments relating to the amounts or classification of recorded assets
and liabilities that might be necessary if the Group does not continue as a going concern.
Page | 51
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
2
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, revenue, and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events,
management believes this to be reasonable under the circumstances. The resulting accounting judgements and
estimates will seldom equal the related actual results. Judgements estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes)
within the next financial year are discussed below.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or
may have, on the Group based on known information. This consideration extends to the nature of exploration
activities and geographic regions in which the Group operates. Other than as addressed in specific notes, there
does not currently appear to be either any significant impact upon the financial statements or any significant
uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date
or subsequently resulting from the Coronavirus (COVID-19) pandemic.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined using a Black-Scholes model,
using the assumptions detailed in note 23.
Revenue from contracts with customers involving sale of goods
When recognising revenue in relation to the sale of goods to customers, the key performance obligation of the Group
is considered the point of delivery, of the goods to the customer, as this is deemed to be the time that the customer
obtains control of the promised goods and therefore the benefits of unimpeded access.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based
on the lifetime expected credit loss and makes assumptions to allocate an overall expected credit loss rate for each
group. These assumptions include recent sales experience, historical collection rates, and forward-looking
information that is available. The allowance for expected credit loss, as disclosed in note 12, is calculated based on
the information available at the time of preparation. The actual credit loss in future years may be higher or lower.
Fair value of financial instruments
Management uses valuation techniques to determine the fair value of financial instruments (where active market
quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent
with how market participants would price the instrument.
Management bases its assumption on observable data as far as possible, but this is not always available. In that
case, management uses the best information available. Estimated fair values may vary from the actual prices that
would be achieved in an arm’s length transaction at the reporting date. Refer note 24.
Page | 52
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
2
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued)
Fair value of non-financial assets
Non-financial assets are reviewed 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.
Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use
is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to
the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are
grouped together to form a cash-generating unit.
Useful lives of depreciable assets
Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the
expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the
utility of certain software and IT equipment.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is
probable that future taxable amounts will be available to utilise those temporary differences and losses. Refer
note 10.
Asset acquisition
Differentiating a business combination from an asset acquisition is key to applying the appropriate accounting
treatment involving significant judgement and a detailed analysis of the inputs and processes acquired. Where an
asset acquisition does not constitute a business combination under AASB 3, the assets and liabilities are assigned
a carrying value amount based on their relative fair values in an asset purchase transaction. Refer to note 17.
Exploration and evaluation assets and oil and gas properties
The Groups’ accounting policy for exploration and evaluation expenditure and oil and gas properties is set out at
note 8 and 16 respectively. The application of this policy necessarily requires management to make certain estimates
and assumptions as to future events and circumstances, in particular, the assessment of whether economic
quantities of reserves have been found. Any such estimates and assumptions may change as new information
becomes available. If, after having capitalised expenditure under the policy, it is concluded that the expenditures
are unlikely to be recovered by future exploitation or sale, then the relevant capitalised amount will be written off
through profit or loss.
Restoration obligations
Where restoration obligations exist, the Group estimates the future removal costs of oil and gas platforms, production
facilities, wells, and pipelines at the time of installation of the assets. In most instances, removal of assets occurs
many years into the future. This requires judgmental assumptions regarding, but not limited to removal date, future
environmental legislation, the extent of reclamation activities required, the engineering methodology for estimating
cost, and future removal technologies in determining the removal cost and liability, and specific discount rates that
should be used to determine the present value of estimated cash flows. Refer to note 21.
Page | 53
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
2
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued)
Estimates of reserve quantities
The estimated quantities of proved plus probable hydrocarbon reserves reported by the Group are integral to the
calculation of depletion and depreciation expense and to the assessment of possible impairment of assets.
Estimated reserve quantities are based upon interpretation of geological and geophysical models and assessments
of technical feasibility and commercial viability of producing the reserves. These assessments require assumptions
to be made regarding future development and production costs, commodity prices, exchange rates and fiscal
regimes. The estimates of reserves may change from period to period as the economic assumptions used to
estimate the reserves can change from period to period, and as additional geological data is generated during the
course of production and operations. Reserves estimates are prepared in accordance with the Group’s policies and
procedures for reserve estimation which conform to guidelines prepared by the Society of Petroleum Engineers and
specified by Australian Securities Exchange regulations and guidelines.
3
OPERATING SEGMENTS
Accounting Policy
Operating segments are presented using the ‘management approach’, where the information presented is on the
same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM, who
is responsible for allocating resources and assessing performance of the operating segments, has been identified
as the Board of Directors of Sacgasco Limited.
The Group is organised into two operating segments based on the operations each performs, being:
oil and gas exploration and appraisal
oil and gas production
These operating segments are based on the internal reports that are reviewed and used by the Board of Directors
(who are identified as the CODM) in assessing performance and determining the allocation of resources. There is
no aggregation of operation segments. Any amounts that fall outside of these segments are categorised as
“Corporate”.
There has been a change to the basis of segmentation since 31 December 2020 with the addition of the oil and gas
production segment following the acquisition of working interests in the Canadian producing assets during the year
ended 31 December 2021.
Page | 54
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
3
OPERATING SEGMENTS (continued)
Segment profit or loss
Sacgasco Limited
Oil and gas production
Oil and gas exploration
Eliminations
Finance income
Finance costs
Government grants
Withholding tax
Central administrative expenses
Revenue
Segment profit / (loss)
2021
$
2020
$
7,888,355
-
7,888,355
-
7,888,355
-
-
-
-
-
2021
$
573,761
2020
$
-
(5,037,126)
(886,141)
(4,463,365)
(886,141)
(1,413)
-
(4,464,778)
(886,141)
387
1,134
(69,170)
(27,468)
-
20,000
(3,586,592)
-
(2,196,730)
(838,059)
Loss from continuing operations before tax
(10,316,883)
(1,730,534)
Segment profit or loss represents the loss before tax earned by each segment without allocation of central
administrative expenses. This is the measure reported to the CODM for the purposes of resource allocation and
assessment of segment performance.
Segment assets and liabilities
Assets
Liabilities
2021
$
2020
$
2021
$
2020
$
Oil and gas exploration
Oil and gas production
7,035,947
406,648
(8,790,805)
(263,577)
29,958,425
-
(27,916,244)
-
Total segment assets and liabilities
36,994,372
406,648
(36,707,049)
(263,577)
Corporate and other segment assets/liabilities
1,407,564
2,087,172
(4,861,561)
(1,385,442)
Total
38,401,936
2,493,820
(41,568,610)
(1,649,019)
Page | 55
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
3
OPERATING SEGMENTS (continued)
Sacgasco Limited
For monitoring segment performance and allocating resources between segments:
all assets are allocated to reportable segments, other than corporate office assets; and
all liabilities are allocated to reportable segments, other than Group entity liabilities.
The CODM monitors cash, receivables, and payables position. This is the information that the CODM receives and
reviews to make decisions.
Geographical information
The Group operates its business in Canada and the USA. During the period, the Group’s production income was
derived from Canada. The Group’s production income and non-current assets by geographical location is as follows:
Australia
Canada and USA
Philippines
Total
Production income
Non-current assets
2021
2020
$
-
7,888,355
-
7,888,355
$
-
-
-
-
2021
$
2020
$
6,183
7,114
28,948,923
262,358
6,062,915
-
35,018,021
269,472
Non-current assets comprise oil and gas properties and bonds.
Page | 56
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
4
PRODUCTION INCOME
Accounting Policy
Revenue recognition
Revenue associated with the sale of crude oil and natural gas, which the Group has rights to, is recognised when
Blue Sky Resources Limited (“the Operator”) satisfies its contractual performance obligations by transferring title
of specified goods based on contracts entered with customers. Revenue is based upon volumes sold to customers
under these contracts.
The transfer of control ordinarily occurs when the product is physically transferred at the delivery point agreed in
the contract and legal title to the product passes to the customer (often via connected pipelines).
Revenue is measure at the fair value of the consideration received or receivable. Revenue from the sale of crude
oil and natural gas is recognised when all the following conditions have been satisfied:
The Operator has transferred control of the goods to the buyer and the revenue is recognised at that time,
The Operator retains no continuing managerial involvement to the degree usually associated with
ownership or effective control over the goods sold,
The amount of revenue can be reliably measured,
It is probable that the economic benefits associated with the transaction will flow to the Operator, and
thereby a proportional interest to the Group, and
The costs incurred or to be incurred in respect of the transaction can be reliably measured.
Revenue for the year ended 31 December 2021, relates to contracts executed for the sale of crude oil and natural
gas. All performance obligations have been met within the period. There is no variable consideration requiring
estimation for the period ended 31 December 2021. Revenue is derived from one single customer.
The Group did not have contracts that were executed in a prior period, whereby the performance obligations were
partially met at the beginning of the period.
The Group’s revenue is currently wholly derived from Canadian operations and is disaggregated as such in the
Group’s segment note disclosure in note 3. The Group’s revenue disaggregated by pattern of revenue recognition
is as follows:
Goods transferred at a point in time
Crude oil
Natural gas
2021
$
7,712,575
175,780
7,888,355
2020
$
-
-
-
Page | 57
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
5
OTHER INCOME
Accounting Policy
Other income is recognised when the amount can be reliably measured and control of the right to receive the
income be passed to the Group.
Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to
match them with the costs that they are intended to compensate.
Other operating income – California
Other operating income – Canada
Other income
Government grants
Total other income
Note
(i)
(ii)
2021
$
724,019
265,237
989,256
28,656
-
2020
$
437,155
-
437,155
8,383
20,000
1,017,912
465,538
(i)
(ii)
The gas flow from the Californian wells sold to customers, is a natural by-product of exploration activities in
the Capay and Los Medanos gas fields. Until such time as well production becomes an economically viable
direction for the Group, it is recognised as other operating income offset by operating expenses totalling
$895,918 (2020: $731,769).
The Canadian production assets additionally generate minor revenues through provision of access to private
roads.
6
NET FINANCE COSTS
Accounting Policy
Interest income
Interest income is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using
the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to the net carrying amount of the financial asset.
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.
Page | 58
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
6
NET FINANCE COSTS (continued)
Interest income on deposits
Interest income on loans to joint venture partner
Total finance income
Interest expense on financial liabilities measured at
amortised cost
Interest expense on loans received from related parties
Interest expense on premium funding
Interest on convertible notes
Interest expense
Unwinding of discounts on provisions
Total finance costs
Net finance costs
Note
19
19
Sacgasco Limited
2021
$
32
369
401
43,238
-
25,932
69,170
885,650
954,820
954,419
2020
$
104
1,030
1,134
22,915
1,188
3,365
27,468
-
27,468
26,334
7
PERSONNEL EXPENSES AND EMPLOYEE BENEFITS
Accounting Policy
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the
liabilities are settled.
Other long-term employee benefits
The liability for annual and long service leave, not expected to settle within 12 months of the reporting date are
measured at 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 expected
future wage and salary levels, experience of employee departures and periods of service. Expected future
payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and
currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Page | 59
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
7
PERSONNEL EXPENSES AND EMPLOYEE BENEFITS (continued)
The table below sets out personnel costs expensed during the year.
Directors’ remuneration
Other wages and salaries
Contributions to defined contribution plans
Other personnel costs on termination of Philippines staff
Other associated personnel expenses
Note
2021
$
25
1,303,859
98,589
3,242
135,534
19,458
2020
$
282,697
24,182
2,241
-
473
1,560,682
309,593
The table below sets out employee benefits payable at the reporting date.
Current
Salary accrual
Statutory superannuation contributions
2021
$
24,674
2,517
27,191
2020
$
5,900
413
6,313
8
EXPLORATION AND EVALUATION EXPENDITURE
Accounting Policy
Exploration and evaluation expenditure is assessed for each separate area of interest for which rights of tenure
are current. As per AASB 6 ‘Exploration for and Evaluation of Mineral Resources’, each area of interest may be
expensed as incurred; or partially or fully capitalised and recognised as an exploration and evaluation asset if the
requirements of paragraph AUS7.2 are satisfied.
An exploration and evaluation asset shall only be recognised where it is expected that the expenditure may be
recovered through the successful development and exploitation of an area of interest, or by its sale, or exploration
activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate
of the existence or otherwise of economically recoverable reserves. Where a project or an area of interest has
been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made.
Impairment
Non-current assets are tested for impairment when facts and circumstances indicate that the carrying amount may
exceed the recoverable amount. Where a potential impairment is indicated, an assessment is performed for each
CGU which is no larger than an area of interest authority.
Page | 60
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
8
EXPLORATION AND EVALUATION EXPENDITURE (continued)
Acquisition costs
Costs arising from acquisitions are carried forward where exploration and evaluation activities, have not, at reporting
date, reached a stage to allow a reasonable assessment of economically recoverable reserves.
The costs incurred to acquire the Philippines exploration assets have been capitalised on acquisition. Refer note 17.
Exploration and evaluation expenditure
Costs arising from ongoing exploration and evaluation activities are expensed to profit or loss as incurred.
Expenditure incurred on activities that precede exploration and evaluation of mineral resources, including all
expenditure prior to securing legal rights to explore an area, is expensed to profit or loss as incurred.
Exploration expenditure as incurred - California
Exploration expenditure as incurred - Philippines
2021
$
2020
$
3,751,594
630,011
311,313
-
4,381,605
311,313
Page | 61
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
9
LOSS PER SHARE
Accounting Policy
Basic earnings per share
Basic earnings per share is calculated by dividing the profit / (loss) attributable to the owners of Sacgasco Limited,
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 accounting
for the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares
and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
Basic and diluted loss per share
Loss after income tax attributable to owners of Sacgasco Limited
(10,681,643)
(1,734,221)
2021
$
2020
$
Basic loss per share
Diluted loss per share
Weighted average number of ordinary shares
Issued ordinary shares on 1 January
Effect of shares issued
Cents
Cents
(2.30)
(2.30)
(0.63)
(0.63)
Number
Number
341,258,491
268,513,742
123,387,537
8,815,963
Weighted average number of ordinary shares on 31 December
464,646,028
277,329,705
Page | 62
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
10
INCOME TAX EXPENSE
Accounting Policy
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities
attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where
applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied
when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively
enacted, except for:
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business combination and that, at the time of the transaction, affects
neither the accounting nor taxable profits, or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be controlled, and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date.
Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits
will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are
recognised to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities, and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses, and assets are recognised net of the amount of, unless the GST incurred is not recoverable
from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from or payable to the tax authority, are presented as operating cash flows.
Commitments and commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the taxation authority.
Page | 63
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
10
INCOME TAX EXPENSE (continued)
(a) Amounts recognised in profit or loss
Current tax expense
Deferred tax expense
Income tax expense
Sacgasco Limited
2021
$
364,760
-
364,760
2020
$
3,687
-
3,687
Numerical reconciliation of income tax expense to prima facie tax
payable
Loss from continuing operations before income tax
(10,316,883)
(1,730,534)
Tax at the Australian tax rate of 30% (2020: 27.5%)
(3,095,065)
(475,897)
Effect of change in tax rates from 27.5%
Tax rate differential on on-Australian income
Non-deductible expenses
Non-assessable income
Non-assessable non-exempt overseas subsidiaries expense
Overseas minimum income tax
Adjustment for prior years
Timing differences
Tax losses not brought to account
Income tax expense
(176)
(110,050)
1,863,196
(144,268)
1,432,159
3,162
(1,938)
289,453
128,287
364,760
-
-
53,498
(237,919)
519,266
3,687
1,900
(4,692)
143,844
3,687
Tax losses
Potential future income tax benefits attributed to tax losses,
not brought to account
1,809,735
1,541,328
All unused tax losses were incurred by Australian entities.
The benefit of these tax losses will only be obtained if:
future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be
realised,
the conditions for deductibility imposed by tax legalisation continue to be complied with,
no changes in tax legislation adversely affect the Group in realising the benefit, and
satisfaction of either the continuity of ownership or the same business test.
i)
ii)
iii)
iv)
Page | 64
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
10
INCOME TAX EXPENSE (continued)
(b) Unrecognised deferred tax assets and liabilities
Deferred tax liabilities have not been recognised in respect of the following items:
2021
$
(8,203)
(11,948)
(20,151)
21,257
-
224,048
66
12,600
755
99,369
2020
$
(2,294)
-
(2,294
23,229
2,017
-
84
6,600
114
-
1,809,735
1,541,328
2,167,830
1,573,372
2,147,679
1,571,078
Deferred tax liabilities
Prepaid expenditure
Trade and other receivables
Deferred tax assets
Capital raising costs – s40-880
Borrowing costs – s25-25
Oil and gas properties
Property, plant, and equipment
Trade and other payables
Employee benefits
Site restoration provision
Carry forward tax losses
Net unrecognised deferred tax assets
11
CASH AND CASH EQUIVALENTS
Accounting Policy
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, 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 an insignificant risk of changes in value. For the statement of cash flows
presentation purposes, cash and cash equivalent also includes, bank overdrafts, which are shown within
borrowings in current liabilities on the statement of financial position.
(a) Reconciliation of cash recorded in Statement of Financial Position to Statement of Cash Flows
2021
$
2020
$
Cash and cash equivalents in the statement of cash flows
1,286,051
1,735,573
Page | 65
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
11
CASH AND CASH EQUIVALENTS (continued)
(b) Reconciliation of cash flows from operating activities
Cash flows from operating activities
Loss for the period
Adjustments for:
Equity-settled share-based payment transactions
Depreciation and amortisation
Provision for expected credit losses
Net (profit) / loss on foreign exchange translations
Net finance expense / (income)
Unwind of discount on provisions
Change in other receivables
Change in prepayments
Change in inventory
Change in other financial assets
Change in interest bearing assets
Change in trade and other payables
Change in interest bearing liabilities
Change in contract liabilities
Change in current tax liabilities
Change in employee benefits
Change in site restoration provision
2021
$
2020
$
(10,681,643)
(1,734,221)
1,205,324
996,304
-
(60,298)
25,932
885,650
(1,028,183)
39,283
(47,757)
244,042
1,028
2,826,254
32,747
219,639
361,597
(9,388)
(614,853)
152,075
3,214
273,420
17,414
(259)
-
(12,117)
42,771
-
(142,971)
-
295,274
5,098
-
-
(11,037)
6,794
Net cash used in operating activities
(5,604,322)
(1,104,545)
Page | 66
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
11
CASH AND CASH EQUIVALENTS (continued)
(c) Changes in liabilities arising from financing activities
Related
party loans
Convertible
notes
Premium
funding
Total
$
174,285
100,000
$
-
-
-
42,636
2,502
276,787
530,000
-
42,636
-
-
(42,636)
32,747
839,534
-
-
$
$
38,984
(38,984)
-
-
-
-
-
-
-
213,269
61,016
42,636
2,502
319,423
530,000
(42,636)
32,747
839,534
Balance on 1 January 2020
Net cash used in financing activities
Interest on convertible notes
Interest on related party loans
Balance on 31 December 2020
Net cash from / (used in) financing activities
Interest on convertible notes
Interest on related party loans
Balance on 31 December 2021
12
TRADE AND OTHER RECEIVABLES
Accounting Policy
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for
settlement within 30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on
days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
2021
$
311,140
(30,525)
280,615
2020
$
365,974
(244,884)
121,090
Current
Trade debtors
Less: Provision for expected credit losses
Trade debtors (carried forward)
Page | 67
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
12
TRADE AND OTHER RECEIVABLES (continued)
Note
Current
Trade debtors (brought forward)
Authorised government agencies
Other receivables – oil and gas assets
Philippines joint venture partners
Other receivables
Income receivable
Movement in the allowance for expected credit losses
Opening balance
(Reversal of) / additional provisions recognised
Effects of foreign exchange
2021
$
280,615
30,289
1,238,172
253,280
146,414
-
2020
$
121,090
91,227
-
-
48,609
38
1,948,770
260,964
244,884
(201,305)
(13,054)
30,525
-
273,420
(28,536)
244,884
For the year ended 31 December 2020, the Group provided $226,626 of expected credit losses (ECL) for amounts
due from subsidiaries of California Resources Corporation (CRC) after CRC filed for Chapter 11 bankruptcy
reorganisation in July 2020. The Group sought payment of these amounts, and as of 31 December 2021 recovered
$201,305 from these parties.
The remaining balance is due from other working interest parties. The Group has assessed the recoverability of
these amounts due for well expenses on exploratory wells, accounting for factors such as oil and gas prices and
historical recovery and determined that an ECL of $30,525 for the year ended 31 December 2021 is appropriate.
Should the exploratory wells for which costs are due move from exploration to production in the future, the Group
intends to recover the amounts owing prior to releasing net revenues to the working interest parties.
Other receivables are non-interest bearing.
Note 24 includes disclosures relating to the credit risk exposures and analysis relating to the allowance for expected
credit losses.
13
INVENTORY
Oil in storage – at cost
Page | 68
2021
$
48,771
2020
$
-
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
14
INTEREST BEARING ASSETS
Current
Opening balance
Advance to joint venture partner
Cash calls paid on behalf of joint venture partner
Interest charged at 10%
Repayment of loans
Effects of foreign exchange
Sacgasco Limited
Note
(i)
(ii)
2021
$
66,709
137,450
-
369
(203,457)
(1,071)
2020
$
-
-
65,681
1,028
-
-
-
66,709
(i)
(ii)
During the current year a non-interest bearing, unsecured loan was advanced to, and repaid by another joint
venture partner.
During the prior year, joint venture partners mutually agreed to fund reciprocal cash calls, accruing interest at
10% per annum. The unsecured loans including interest were settled in two tranches on 15 January 2021 and
29 January 2021.
Page | 69
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
15 OTHER FINANCIAL ASSETS
Accounting Policy
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part
of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on their classification. Classification is
determined based on both the business model within which such assets are held and the contractual cash flow
characteristics of the financial asset unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part, or all, of a financial asset, the carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified
as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for
trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or
a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are
recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the Group
intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial
recognition.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either measured
at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance
depends upon the Group’s assessment at the end of each reporting period as to whether the financial instrument’s
credit risk has increase significantly since initial recognition, based on reasonable and supportable information that
is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses
that is attributable to a default event that is possible within the next 12 months. Where a financial asset has
become credit impaired, or where it is determined that credit risk has increased significantly, the loss allowance is
based on the asset’s lifetime expected credit losses. The amount of expected credit loss recognised is measure
on the probable weighted present value of anticipated cash shortfalls over the life of the instrument discounted at
the original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance
is recognised in other comprehensive income with a corresponding expense through profit or loss. In all other
cases, the loss allowance reduces the asset’s carrying value with a corresponding expense through profit or loss.
Current: Deposit for Canadian oil and gas investment
Non-current: Deposits and bonds
Page | 70
2021
$
-
280,511
280,511
2020
$
142,952
264,509
407,461
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
15 OTHER FINANCIAL ASSETS (continued)
Sacgasco Limited
Reconciliation of the fair values at the beginning and end of the current and previous financial year are set out below:
Balance on 1 January 2020
-
285,138
5,000
Deposit
$
DoGGR
Bond (1)
$
ANZ
Term Deposit
$
Deposit for Canadian oil and gas asset investment
142,952
Interest income re-invested
Effects of foreign exchange
Balance on 31 December 2020
Transfer to acquisition cost of Canadian oil and
gas properties
Interest income re-invested
Effects of foreign exchange
-
-
142,952
(169,933)
-
-
-
(25,649)
259,489
-
-
26,981
15,950
-
20
-
5,020
-
52
-
Total
$
290,138
142,952
20
(25,649)
407,461
(169,933)
52
42,931
Balance on 31 December 2021
-
275,439
5,072
280,511
1.
includes $275,439 (US$200,000) DoGGR bond required to work within the regulations of the Californian authorities with
regards to the planning and timing of site rehabilitation.
Refer to note 24 for further information on fair value measurement.
Page | 71
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
16 OIL AND GAS PROPERTIES
Accounting Policy
Assets in development
When the technical and commercial feasibility of an undeveloped oil or gas field has been demonstrated the field
enters its development phase. The costs of oil and gas assets are transferred from exploration and evaluation
expenditure into development phase and include past exploration and evaluation costs, development drilling and
other subsurface expenditures, surface plant and equipment, and any associated land and buildings.
Producing Assets
All costs directly associated with the development and production of oil and natural gas interests are capitalised
on an area-by-area basis as oil and natural gas interests if they extend or enhance the recoverable reserves of
the underlying assets. Items of property, plant, and equipment, which include oil and natural gas production assets,
are measured at cost less accumulated depreciation / amortisation and any accumulated impairment losses.
Development costs include expenditure for areas where technical feasibility and commercial viability has been
determined. The capitalised value of producing assets includes acquisition costs, reactivation and development
costs and initial estimates of decommissioning liabilities associated with their operation.
Depreciation and Amortisation
Depletion charges are calculated to amortise the capitalised value of carried forward production assets over the
life of the estimated Proved plus Probable (“2P”) reserves for a hydrocarbon reserve, together with future costs
necessary to develop the respective hydrocarbon reserve. The value of oil and natural gas interests is depleted
using the units of production method by reference to the ratio of production in the period to the related proved and
probable reserves, considering estimated future development costs necessary to bring those reserves into
production.
Proven and probable reserves are estimated using independent reserve engineer reports and represent the
estimated quantities of crude oil and natural gas with geological, geophysical, and engineering data demonstrate
with a specified degree of certainty to be recoverable in future years from known reservoirs and which are
considered commercially viable. There should be a 50 percent statistical probability that the actual quantity of
recoverable reserves will be more than the amount estimated as proved and probable and a 50 percent statistical
probability that it will be less. The equivalent statistical probabilities for the proved component of proved and
probable reserves ae 90 percent and 10 percent, respectively.
Reserve estimates
Estimation of reported recoverable quantities of 2P reserves include judgemental assumptions regarding
commodity prices, exchange rates, discount rates and production and transportation costs for future cash flows.
It also requires interpretation of complex geological and geophysical models in order to assess the size, shape,
depth, and quality of reservoirs and t heir anticipated recoveries. These factors used to estimate the reserves may
change from period to period.
Reserve estimates are used to calculate amortisation of producing assets.
On 12 November 2020, the Company signed a binding agreement with Blue Sky Resources Limited (“Blue Sky”) to
acquire a 30% working interest in the Red Earth producing oil and gas assets of the northern Alberta Plains.
Consideration for this purchase was $531,040 (C$500,000) cash plus the issue of 8,850,000 Sacgasco shares at
$0.087 per share, based on the share price prior to the date of signing on 19 March 2021.
On 22 January 2021, the Company signed a binding agreement with Blue Sky to acquire a 20% working interest in
oil and gas producing assets in Southern Alberta, Canada, (known as “Alberta Plains” Assets). Consideration for
this purchase was $643,621 (C$606,000) cash plus the issue of 1,917,808 Sacgasco shares at $0.03 per share,
based on the share price on the date shareholders approved the acquisition, being 28 May 2021. The shares were
issued on 2 August 2021.
Page | 72
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
16 OIL AND GAS PROPERTIES (continued)
Sacgasco Limited
2021
2020
Subsurface
assets
$
Plant and
equipment
$
Subsurface
assets
$
Plant and
equipment
$
Cost
22,510,778
7,176,134
Accumulated depreciation and depletion
(769,599)
(245,831)
Total
Reconciliation of movements:
Balance at beginning of period
Acquisitions [1]
Additions [2]
21,741,179
6,930,303
28,671,482
-
-
1,869,815
152,231
17,676,292
6,072,828
Change in site restoration liabilities
2,496,523
801,836
Depreciation and depletion
Exchange differences
(753,594)
(240,719)
452,143
144,127
Balance at end of period
21,741,179
6,930,303
A reconciliation of the allocation of costs between acquisition and additions is below:
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Acquisition [1]
Additions [2]
Alberta Plains
$
Red Earth
$
Alberta Plains
$
Red Earth
$
Cash
Issue of 8,850,000 shares (note 22)
Issue of 1,917,808 shares (note 22)
Reactivation costs
NPV of asset retirement obligation
531,040
-
57,534
-
-
643,621
769,950
-
-
-
-
404,625
-
-
-
11,889,954
11,454,541
Effects of foreign exchange on issue of shares
(516)
20,417
-
-
588,058
1,433,988
12,294,579
11,454,541
2,022,046
23,749,120
Acquisition
$
Additions
$
1,869,815
17,676,292
152,231
6,072,828
2,022,046
23,749,120
Subsurface assets
Plant and equipment
Page | 73
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
17
ASSET ACQUISITION
Accounting Policy
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair value of the assets transferred, equity
instruments issued, or liabilities incurred by the acquirer to former owners of the acquiree. On acquisition of a
business, the Group assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contract terms, economic conditions, the Group’s operating or accounting
policies and other pertinent conditions in existence at the acquisition date.
Business combinations are initially accounted for on a provision basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period,
based on new information obtained about the facts and circumstance that existed at the acquisition date. The
measurement period ends on either the earlier of (i) 12 months from the ate of the acquisition, or (ii) when the
acquirer receives all the information possible to determine fair value.
To be considered a business, an acquired set of activities and assets must include inputs and a substantive
process that together significantly contribute to the ability to create outputs.
To be substantive, the inputs acquired include both an organised workforce that has skills, knowledge, or expertise
to perform the process, and other inputs that an organised workforce could develop and convert into outputs.
If the assets acquired are not a business, the Group shall account for the transaction or other event as an asset
acquisition.
Summary of Acquisitions
BCPE Energy International PTE. LTD. (“BCPE”)
On 1 July 2021, the Company acquired BCP Energy International PTE. LTD. (“BCPE”) from Bangchak Corporation,
including its fully owned subsidiary NIDO Petroleum Pty Ltd (“NIDO”) for a cash consideration of $1. The acquisition
includes all rights and obligations of NIDO in the Philippines service contracts that NIDO is a party to either as
Operator or Joint Venture Participant.
On 3 September 2021, Sacgasco executed an offtake agreement for its future Philippines crude oil production with
a Bangchak Corporation (“Bangchak”) subsidiary. Bangchak owns and operates a 120,000 bopd oil refinery in
Thailand. The offtake price will be determined and agreed for each production asset and will be dependent upon
criteria including oil quality and cargo size. Sacgasco retains the right to sell any oil produced to other parties at
more favourable terms in the event Sacgasco and BCP cannot reach agreement on pricing.
Yilgarn Petroleum Philippines Pty Ltd (“Yilgarn”)
On 3 September 2021, Sacgasco executed an agreement with IMC Investments Capital Pte Ltd (“IMC”) to acquire
its wholly owned subsidiary Yilgarn Petroleum Philippines Pty Ltd for consideration of A$1 (one dollar) and up to a
maximum royalty of US$1.5 million paid after commercial production is achieved. The royalty will be paid at the rate
of 30.1% of the contractor share of net proceeds from SC54A. The acquisition is subject to the usual regulatory
approvals. Sacgasco’s working interest in SC54A will increase to 72.5% with Sacgasco as Operator.
The net assets of Yilgarn on acquisition date were $nil.
To acquire a business under AASB 3 Business Combinations there must be a set of activities, and assets must
include an input and a substantive process that together significantly contribute to the ability to create outputs. To
be substantive, the inputs acquired include both an organised workforce that has skills to perform the process and
other inputs that can convert to outputs.
Page | 74
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
17
ASSET ACQUISITION (continued)
Sacgasco Limited
As substantial exploration activities are required before a decision can be made on the commercial viability of these
operations, AASB 3 does not apply to the acquisition of BCPE or Yilgarn. This would lead to an asset acquisition,
but AASB 116 Property, plant and equipment notes that mineral rights must be accounted for under
AASB 6 Exploration for and Evaluation of Mineral Resources. As both of these acquisitions did not meet the
definition of a business, they have been accounted for as asset acquisitions utilising the principles in AASB 2.
Details of the fair value of the assets and liabilities of BCPE acquired on 1 July 2021 are as follows:
Net liabilities acquired:
Cash and cash equivalents
Trade and other receivables
Prepayments
Other financial assets
Current tax assets
Trade and other payables
Employee entitlements
Site restoration provision
Financial liabilities
Net liabilities acquired
$
1,121,841
569,785
63,308
101,143
55,690
(734,468)
(615,022)
(6,625,192)
(63,309,336)
(69,372,251)
Intercompany loan between BCPE and Bangchak acquired by Sacgasco Limited
63,309,336
Net effect of acquisition
(6,062,915)
The Group recognises acquisition costs as capitalised exploration, refer note 8.
Withholding Tax
As part of its acquisition of BCPE International Pte. Ltd. on 1 July 2021, the Company also acquired an A$63,303,000
interest-bearing intercompany loan with accrued interest. Under Subdivision 12-F of Schedule 1 of the Taxation
Administration Act 1953, the requirement to withhold interest withholding tax arises at the time the interest is paid or
credited. Based on the interest withholding tax (“WHT”) rate of 25% between Australia and Thailand, a prima facie
interest WHT liability of $3,586,592 (US$2,604,271) is owed to the ATO based on a historical accrued interest
balance of $13,515,601 (US$10,417,082), and is accrued, see note 18.
At the time the Company acquired BCPE, certain representations were made or implied in relation to the liabilities of
BCPE and its subsidiaries. Subsequent to the acquisition, a withholding tax liability has arisen that was not disclosed
to the Company at the time of the acquisition. The Company has obtained preliminary legal advice on the recovery
of this amount under the warranties provided under the share purchase agreement, with such legal advice confirming
the Company has strong grounds to recover these amounts.
Page | 75
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
18
TRADE AND OTHER PAYABLES
Accounting Policy
Sacgasco Limited
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial year and which are unpaid. Due to their short-term nature, they are measured at amortised cost
and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Note
(i)
2021
$
372,179
3,586,592
541,912
281,320
2020
$
842,184
-
298,562
4,782,003
1,140,746
Current
Trade payables
Authorised government agencies
DOE training assistance for Philippine service contracts
Accrued expenses
(i)
interest withholding tax. Refer to note 17.
Refer to Note 24 for further information on financial instruments.
19
LOANS AND BORROWINGS
Accounting Policy
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.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the
statement of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate
for an equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost
basis until extinguished on conversion or redemption. The increase in the liability due to the passage of time is
recognised as a finance cost. The remainder of the proceeds are allocated to the conversion option that is
recognised and included in shareholders equity as convertible note reserve, net of transaction costs. The
carrying amount of the conversion option is not remeasured in the subsequent years. The corresponding interest
on convertible notes is expensed to profit or loss.
Page | 76
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
19
LOANS AND BORROWINGS (continued)
Sacgasco Limited
Book value
2021
$
Fair value
2021
$
Book value
2020
$
Fair value
2020
$
Current
Loans received from a related party
839,534
839,534
276,787
276,787
Convertible notes
Balance
-
-
42,636
42,636
839,534
839,534
319,423
319,423
Reconciliation of movement in loans:
Balance on 1 January 2020
Loans and borrowings received
Equity component of convertible notes
Interest charged
Less: repaid
Balance on 31 December 2020
Loans and borrowings received
Equity component of convertible notes transferred
Interest charged
Conversion to fully paid shares
Less repaid (1)
Balance on 31 December 2021
Convertible
notes
$
Loans from
a director (2)
$
Premium
funding
$
-
400,500
(361,229)
3,365
174,285
270,000
-
22,915
38,984
-
-
1,188
Total
$
213,269
670,500
(361,229)
27,468
-
(190,413)
(40,172)
(230,585)
42,636
-
361,229
25,932
(429,797)
-
-
276,787
870,000
-
43,238
-
(350,491)
839,534
-
-
-
-
-
-
-
319,423
870,000
361,229
69,170
(429,797)
(350,491)
839,534
(1)
(2)
amounts repaid include interest and loan establishment costs.
refer to note 25 for further details.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Related party loans
Used at the reporting date
Related party loans
Unused at the reporting date
Related party loans
Page | 77
2021
$
2020
$
800,000
270,000
800,000
270,000
-
-
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
20
CONTRACT LIABILITIES
Accounting Policy
Contract liabilities represent the Group’s obligation to transfer goods or services to a customer and are
recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its
unconditional right to consideration (whichever is earlier) before the Group has transferred the goods or services
to the customer.
Current
Advance for sale of 12.5% working interest in SC54
2021
$
219,639
2020
$
-
On 25 November 2021, the Company executed an agreement with TG World Energy Corp (“TEC”) to acquire its
wholly owned subsidiary TG World (BVI) Corporation (“TG World”) for consideration of $1 and up to a maximum net
royalty of US$530,000 paid after commercial production is achieved. The royalty will be paid at the rate of 12.5% of
the contractor share of net proceeds from Service Contract SC54A production until the maximum is reached. The
acquisition was subject to regulatory approvals which were not completed until post year end.
On 16 December 2021, the Company executed an agreement to transfer a 12.5% working interest in SC54A to
Blue Sky International Holdings Inc. (“Blue Sky”) through the sale of TG World. Consideration for the sale was
$219,639 (C$200,000) and subject to the regulatory approvals disclosed above.
The acquisition of TG World was completed on 1 March (refer to note 32).
21
SITE RESTORATION PROVISION
Accounting Policy
Provisions for the costs of rehabilitation, decommissioning and restoration of the area disturbed during oil and
gas exploration and development activities depends on the legal requirements at the date of decommissioning,
the costs and timing of work and the discount rate applied.
At each reporting date, the site restoration provision is reassessed and adjusted to reflect the changes in
discount rates and timing or amounts of the costs to be incurred. Such changes in the estimated liability are
accounted for prospectively from the date of the change and either added to, or deducted from, the related asset
where it is possible that future economic benefits will flow to the entity.
The timing of rehabilitation expenditure is dependent on the life of the gas field which may vary in the future.
The nature of restoration activities includes plugging gas wells, restoration, reclamation, and revegetation of
affected areas.
Page | 78
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
21
SITE RESTORATION PROVISION (continued)
California, USA (Sacramento Basin)
The Company continues to work within the regulations of the Californian authorities with regards to the planning and
timing of the rehabilitation, such rehabilitation subject to the Company’s share of the DoGGR bond of US$200,000
for up to fifty wells.
Alberta, Canada (Red Earth and Alberta Plains assets)
The activities of the joint operation in Alberta, Canada (comprising the Group’s working interest in the Red Earth
assets and the Alberta Plains assets) give rise to dismantling, decommissioning and site disturbance remediation
activities. Provisions are made for the estimated cost of asset retirement obligations associated with site restoration
and are capitalised to Oil and Gas Assets, as outlined in note 16, and amortised over the useful life of the assets.
Philippines (Service Contract SC 14-C2)
The Group has recognised a restoration liability for the complete abandonment of the historically abandoned wells,
based on the estimated $34,067,509 (US$24,736,861) (gross) cost to abandon the field, which has been inflated
and discounted as appropriate until 2025. The Group’s share (22.28%) after inflation and discounting applied as of
31 December 2021 is $7,590,241 (US$5,511,373).
Site restoration provisions have been disaggregated based upon geography due to differing jurisdictional
requirements as per the table below:
2021
$
903,257
2020
$
-
193,757
182,537
26,643,711
7,590,241
-
-
34,427,709
182,537
35,330,966
182,537
Current
Canada
Non-current
California
Canada
Philippines
Page | 79
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
21
SITE RESTORATION PROVISION (continued)
Reconciliation of movements in site restoration provision:
Balance on 1 January 2020
Additional provisions recognised
Effects of foreign exchange
Balance on 31 December 2020
Amounts recognised on acquisition
Additional provisions recognised
Amounts utilised or extinguished
Accretion expense
Change in site restoration estimates
Effects of foreign exchange
California
$
Canada
$
Philippines
$
Total
$
193,894
6,794
(18,151)
182,537
-
-
-
-
-
-
-
-
-
-
-
-
-
193,894
6,794
(18,151)
182,537
23,344,495
6,625,192
29,969,687
-
523,757
(30,610)
361,840
3,368,411
-
-
-
523,757
(30,610)
361,840
3,368,411
11,220
502,832
441,292
955,344
Balance on 31 December 2021
193,757
27,546,968
7,590,241
35,330,966
Page | 80
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
22
CAPITAL AND RESERVES
Accounting Policy
Ordinary shares are classified as equity, as are payments made for options.
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.
Issued Capital
Balance on 1 January
Issue of shares for cash
Ordinary shares
Number of shares
Amount in $
2021
2020
2021
2020
341,258,491
268,513,742
23,635,092
20,904,384
76,973,072
66,741,458
5,003,250
2,335,951
Issue of shares in lieu of directors’ fees
2,672,690
4,503,281
75,671
112,582
Issue of shares for working interest acquisitions
10,767,808
Issue of shares on conversion of convertible notes
40,049,984
Issue of shares to extinguish interest on convertible
Notes
Issue of shares on conversion of listed options
Issue of shares on conversion of unlisted options
2,929,700
1,546,969
5,000,000
-
-
-
10
-
827,484
400,500
29,297
61,879
240,000
-
-
-
-
-
Issue of shares in satisfaction of service
provider fees
Capital raising costs
-
-
1,500,000
-
50,000
-
(331,233)
(168,115)
Balance on 31 December
481,198,714
341,258,491
29,941,940
23,234,802
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value
and the company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
There is no current on-market share buy-back.
Reserves
Share-based payments reserve
The share-based payments reserve represents the fair value of shares to be issued to directors, consultants, and
employees. This reserve will be transferred to capital once the shares are issued. Refer to note 23.
Foreign currency translation reserve
Exchange differences relating to the translation of the results and net assets of the Group’s foreign operations from
their functional currencies to the Group’s presentation currency (i.e., Australian dollars) are recognised directly in
other comprehensive income and accumulated in the foreign currency translation reserve. Exchange differences
previously accumulated in the foreign currency translation reserve are classified to profit or loss on the disposal of
the foreign operations.
Page | 81
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
Sacgasco Limited
23
SHARE-BASED PAYMENTS
Accounting Policy
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in
exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services,
where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently
determined using the Black-Scholes option pricing model that considers 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, together with non-vesting
conditions that do not determine whether the Group receives the services that entitle the employees to receive
payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase inequity over
the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the
award, the best estimate of the number of awards that are likely to vet and the expired portion of the vesting period.
The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date
less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying
the Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award
was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
during the vesting period, the liability at each reporting date is the fair value of the award at that date
multiplied by the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the
liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the
cash paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market
conditions are considered to vest irrespective of whether that market condition has been met or not, provided all
other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that increases
the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the Group or employee, and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period,
unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the
cancelled and new award is treated as if they were a modification.
Page | 82
Notes to the Consolidated Financial Report
For the year ended 31 December 2021
23
SHARE-BASED PAYMENTS (continued)
Sacgasco Limited
The share-based payment expense included within the consolidated financial statements can be broken down as
follows:
Expensed in personnel expenses (director remuneration)
Shares issued to directors
Shares to be issued to directors
Options issued to directors
Expensed in professional fees
Shares to be issued to a consultant
2021
$
62,741
34,824
1,042,000
65,759
2020
$
89,144
12,931
-
-
Share-based payment programme
The Company has adopted an Employee Share Option Scheme (“ESOS”). Under the ESOS, the Company may
grant options and rights to Company eligible employees to acquire securities to a maximum of 10% of the Company’s
total issued ordinary shares at the date of the grant. The fair value of share options granted is measured using the
Black Scholes option pricing model.
The options and rights vest on a time scale as specified in the ESOS and are granted for no consideration. Options
and rights granted under the plan carry no dividend or voting rights. When exercisable, each option is converted into
one ordinary share. The maximum term of an option is five years from grant date and the exercise price is settled in
cash.
Options will not be transferable and will not be listed on the ASX unless the offer provides otherwise or the Board in
its absolute discretion approves.
Page | 83
Notes to the Financial Report
For the year ended 31 December 2021
23
SHARE-BASED PAYMENT PLANS (continued)
Sacgasco Limited
Options
On 31 December 2021, a summary of the Group options issued and not exercised under the share-based payment programme are as follows. Options are settled by the
physical delivery of shares:
Grant
date
31-May-19
Vesting
date
13-Jun-19
Expiry
date
31-Dec-21
29-Jan-21
29-Jan-21
31-Dec-22
Exercise
Price
(cents)
4
6
Balance at
the start of
the year
19,000,000
Granted
during
the year
-
Exercised
during
the year
(3,000,000)
Expired /
forfeited
during
the year
(16,000,000)
Balance at
the end of
the year
-
Vested and
exercisable
at the end of
the year
-
-
20,000,000
(2,000,000)
-
18,000,000
18,000,000
Total
19,000,000
20,000,000
(5,000,000)
(16,000,000)
18,000,000
18,000,000
Weighted average exercise price (cents)
4.00
6.00
4.80
4.00
6.00
At the reporting date, the weighted average remaining contractual life of options outstanding at year end was one year.
Key valuation assumptions made at valuation date under the Black & Scholes option pricing model are summarised below:
Number of
Options
Exercise
Price
Grant
date
Expiry
Date
Life of the
Options
Volatility
Risk free
Rate
Tranche 1
20,000,000
(cents)
6.00
29-Jan-21
31-Dec-22
(years)
1.92
151.94%
8.00%
Fair value
at grant
date
(cents)
5.21
Share price
at grant
date
(cents)
6.00
Page | 84
Notes to the Financial Report
For the year ended 31 December 2021
23
SHARE-BASED PAYMENT PLANS (continued)
Sacgasco Limited
Options (continued)
On 31 December 2020, a summary of the Group options issued and not exercised under the share-based payment programme are as follows. Options are settled by the
physical delivery of shares:
Grant
date
31-May-19
Vesting
date
13-Jun-19
Expiry
date
31-Dec-21
Total
Weighted average exercise price (cents)
Exercise
Price
(cents)
4
Balance at
the start of
the year
19,000,000
19,000,000
4.00
Granted
during
the year
-
Exercised
during
the year
-
-
-
-
-
Expired /
forfeited
during
the year
-
-
-
Balance at
the end of
the year
19,000,000
Vested and
exercisable
at the end of
the year
19,000,000
19,000,000
19,000,000
4.00
At the reporting date, the weighted average remaining contractual life of options outstanding at year end was two years.
Page | 85
Notes to the Financial Report
For the year ended 31 December 2021
24
FINANCIAL INSTRUMENTS
Accounting Policy
Sacgasco Limited
Recognition and derecognition
Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of
the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or
when the financial asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled, or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the
transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable).
For subsequent measurement, financial assets, other than those designated and effective as hedging instruments,
are classified into the following categories:
fair value through profit or loss (FVTPL)
amortised cost
equity instruments at fair value through other comprehensive income (FVOCI)
debt instruments at fair value through other comprehensive income (FVOCI).
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
The classification is determined by both:
the entity’s business model for managing the financial asset; and
the contractual cash flow characteristics of the financial asset.
Subsequent remeasurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVTPL):
they are held within a business model whose objective is to hold the financial assets to collect its
contractual cash flows,
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised costs using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade
and most other receivables fall into this category of financial instruments as well as listed bonds that were
previously classified as held-to-maturity under AASB 139.
Page | 86
Notes to the Financial Report
For the year ended 31 December 2021
24
FINANCIAL INSTRUMENTS (continued)
Accounting Policy (continued)
Sacgasco Limited
Impairment of financial assets
AASB 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the
‘expected credit loss (ECL) model’. This replaced AASB 139’s ‘incurred loss model’.
Instruments within the scope of the new requirements included loans and other debt-type financial assets measured
at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under AASB 15 and
loan commitments that are not measured at fair value through profit or loss.
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead, the
Group considers a broader range of information when assessing credit risk and measuring expected credit losses,
including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability
of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
financial instruments that have not deteriorated significantly in credit quality since initial recognition or that
have low credit risk (‘Level 1’); and
financial instruments that have deteriorated significantly in credit quality since initial recognition and whose
credit risk is not low (‘Level 2’).
‘Level 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
’12-month expected credit losses’ are recognised for the first category whilst ‘lifetime expected credit losses’ are
recognised for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over
the expected life of the financial instrument.
The Group makes use of a simplified approach in accounting for trade and other receivables and records the loss
allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows,
considering the potential for default at any point during the life of the financial instrument. In calculating, the Group
uses its historical experience, external indicators, and forward-looking information to calculate the expected credit
losses using a provision matrix.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.
Financial liabilities are initially measured at fair value, and where applicable, adjusted for transaction costs unless
the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are initially measured at amortised cost using the effective interest method except
for derivatives and financial liabilities designation at FVTPL, which are carried subsequently at fair value with gains
or losses recognised in profit or loss.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss
are included within finance costs or finance income.
Derivative financial instruments
Derivative financial instruments are accounted for at fair value through profit and loss (FVTPL).
Page | 87
Notes to the Financial Report
For the year ended 31 December 2021
24
FINANCIAL INSTRUMENTS (continued)
Capital risk management
Sacgasco Limited
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to shareholders through the optimisation of the debt and equity balance.
The Group’s overall strategy remains unchanged from 2020.
The capital structure of the Group consists of cash and cash equivalents, borrowings, and equity attributable to equity
holders of the parent, comprising issued capital, reserves and retained earnings.
None of the Group’s entities are subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as
tax and general administrative outgoings.
Financial risk management objectives
The Group is exposed to market risk (including foreign currency exchange rate risk and interest rate risk), credit risk
and liquidity risk.
The Group seeks to minimise the effect of these risks, by using derivative financial instruments to hedge these risk
exposures. The use of financial derivatives is governed by the Group’s Board of Directors who has overall
responsibility for the establishment and oversight of the Group’s risk management framework. The Board is
responsible for developing and monitoring the Group’s risk management policies.
The Group’s 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 on a continuous basis to reflect changes in market conditions and the Group’s activities. The
Group does not trade financial instruments, including derivative financial instruments, for speculative purposes.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates.
There has been no change to the Group’s exposure to market risks or the manner it manages and measures the risk
from the previous period.
Foreign currency exchange rate risk management
Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other
than their functional currency. The Group’s policy is to allow group entities to settle liabilities denominated in their
functional currency with the cash generated from their own operations in that currency. Where group entities have
liabilities denominated in a currency other than their functional currency, cash already denominated in that currency
will, where possible, be transferred from elsewhere within the Group.
The Group is predominantly exposed to US dollars (USD) and Canadian dollars (CAD).
Page | 88
Notes to the Financial Report
For the year ended 31 December 2021
24
FINANCIAL INSTRUMENTS (continued)
Market risk (continued)
Sacgasco Limited
As of 31 December 2021, the Group’s net exposure to foreign exchange risk was as follows:
Canadian Dollar
Philippine Peso
US Dollar
Assets
2021
$
1,786,984
38,244
2020
$
-
-
Liabilities
2021
2020
$
-
-
$
-
-
4,926,898
392,242
(4,650,612)
(265,528)
Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 5% (2020: 10%) increase and decrease in the Australian dollar
against the relevant foreign currencies and represents management’s assessment of the possible change in foreign
exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items
and adjusts their translation at the year-end for a 5% (2020: 10%) change in foreign currency rates. A positive
number indicates an increase in profit or loss where the Australian dollar strengthens against the respective currency.
If AUD strengthens by 5% (2020: 10%)
CAD
PHP
USD
If AUD weakens by 5% (2020: 10%)
CAD
PHP
USD
Impact on profit or loss
2021
$
(82,377)
(70,871)
(11,338)
82,377
70,871
11,338
2020
$
-
-
(12,671)
-
-
12,671
Fluctuations in foreign currencies during the current financial year compared with the prior year are as follows:
CAD
PHP
USD
There would be no impact on other equity of the Group.
Page | 89
2021
%
(4.11)
0.21
(5.71)
2020
%
7.38
4.15
9.91
Notes to the Financial Report
For the year ended 31 December 2021
24
FINANCIAL INSTRUMENTS (continued)
Sacgasco Limited
Interest rate risk management
The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest
rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate
borrowings.
The Group’s exposure to interest rate on financial assets and financial liabilities are detailed in the liquidity risk
management section of this note.
Interest rate risk sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates for non-derivative
instruments at the balance date.
At balance date, if interest rates had been 25 points higher or lower and all other variables were held constant, the
Group’s profit or loss would increase / (decrease) by $358 / (Nil).
The Group’s sensitivity to interest rates has decreased during the year mainly due to the reduction in variable rate
debt instruments.
Credit risk management
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to credit
risk from financial assets including cash and cash equivalents held at banks and trade and other receivables.
The Group has adopted a policy of only dealing with creditworthy counterparties.
The Group only transacts with entities that are rated the equivalent of investment grade and above. This information
is supplied by independent rating agencies where available and, if not available, the Group uses publicly available
financial information and its own trading record to rate its customers.
The Group’s exposure and the credit ratings of its counterparties are continuously monitored, and the aggregate
value of transactions concluded is spread amongst approved counterparties.
The Group does not have any significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties
are banks or government agencies with high credit ratings assigned by international credit rating agencies.
The carrying amount of financial assets recorded in the financial statements, represents the Group’s maximum
exposure to credit risk.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an appropriate
liquidity risk management framework for the management of the Group’s short, medium, and long-term funding and
liquidity management requirements.
The Group manages liquidity risk by maintaining adequate banking and borrowing facilities by continuously
monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
Non-derivative financial liabilities
The following table details the Group’s expected contractual maturities for its non-derivative financial liabilities.
These have been drawn up based on undiscounted contractual maturities of the financial liabilities based on the
earliest date the Group can be required to repay.
Page | 90
Notes to the Financial Report
For the year ended 31 December 2021
Sacgasco Limited
24
FINANCIAL INSTRUMENTS (continued)
The table include both interest and principal cash flows.
31 December 2021
Trade and other payables
Contract liabilities
Borrowings
31 December 2020
Trade and other payables
Borrowings
Weighted
average
interest
rate
%
n/a
n/a
10
n/a
10
Less than
6 months
6 months
to 1 year
1 – 5 years
$
$
3,000,431
1,778,475
219,639
839,534
-
4,059,604
1,778,475
1,147,059
276,787
1,423,846
-
-
-
$
-
-
-
-
-
-
Fair value measurement
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into
three levels of a fair value hierarchy.
The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
Transfers
There have been no transfers between the levels of the fair value hierarchy during the year ended
31 December 2021.
Not measured at fair value
The Group has various financial instruments which are not measured at fair value in the statement of financial
position.
The Directors consider that the carrying amounts of current receivables, current payables and current borrowings
are a reasonable approximation to their fair values.
The methods and valuation techniques used for the purposes of measuring fair values are unchanged compared to
the previous reporting period.
Page | 91
Notes to the Financial Report
For the year ended 31 December 2021
25
RELATED PARTIES
Accounting Policy
Sacgasco Limited
Key management personnel compensation
Directors’ remuneration is expensed as the related service is provided. A liability is recognised for the amount
expected to be paid if the Group has a present legal or constructive obligation to pay this amount because of past
service provided by the employee and the obligation can be estimated reliably.
(a) Key management personnel compensation
Key management personnel compensation comprises the following:
Short-term employee benefits
Share-based payments – shares issued
Share-based payments – shares to be issued
Share-based payments – options
Note
23
23
23
7
2021
$
164,294
62,741
34,824
1,042,000
2020
$
180,622
89,144
12,931
-
1,303,859
282,697
(b) Other key management personnel transactions
Several key management personnel, or their related parties, hold positions in other companies that result in them
having control or significant influence over these companies.
A number of these companies transacted with the Group during the year. The terms and conditions of these
transactions were no more favourable than those available, or which might reasonably be expected to be available,
in similar transactions to non-key management personnel related companies on an arm’s length basis.
Andrew Childs
Resource Recruitment Pty Ltd, a company for which Mr Childs is a Director, received $31,200 (2020: $31,200) in
repayment for office rent and outgoings. The balance outstanding on 31 December 2021 was nil (2020: nil).
David McArthur
Broadway Management (WA) Pty Ltd, a company for which Mr McArthur is a Director, received $40,000
(2020: $36,387) in repayment for commercial, arms-length consulting services. The balance outstanding on
31 December 2021 was $nil (2020: nil).
DAS (Australia) Pty Ltd, a company for which Mr McArthur is a Director, received $5,000 (2020: $4,548) in repayment
for company secretarial services. The balance outstanding on 31 December 2021 was nil (2020: nil).
Page | 92
Notes to the Financial Report
For the year ended 31 December 2021
25
RELATED PARTIES (continued)
(c)
Loans from key management personnel
Gary Jeffery
Sacgasco Limited
Dungay Resources Pty Ltd, a company for which Mr Jeffery is a Director and shareholder, provided cash loans to
the Company, accruing interest at 10% per annum, pro rata, repayable within six months if, and when, the company
was in a financial position to do so. Interest expense to 31 December 2021 was $40,979 (2020: $7,000) and the
balance outstanding was $839,534 (2020: $71,760).
Gary Jeffery provided cash loans to the Company in the prior year, accruing interest at 10% per annum, pro rata,
repayable within six months if, and when, the company was in a financial position to do so. Interest expense to
31 December 2021 was $2,259 (2020: $15,915) and the balance outstanding was $nil (2020: $205,027). These
loans are based on standard commercial terms and conditions.
26
CAPITAL AND OTHER COMMITMENTS
Office rent
Less than one year (1)
2021
$
2020
$
15,600
15,600
(1)
Office rents are short-term (less than 12 months) and continue to be recognised on a straight-line basis.
27
CONTINGENT LIABILITIES
Dempsey 1-15
Pursuant to the acquisition of Peregrine Limited, a cash bonus totalling in aggregate $3,000,000 may be payable out
of the net proceeds of sales of gas (after deducting operating costs) from any reservoir below the Forbes Zone and
attributable to a 17.5% working interest in the Dempsey 1-15 well.
Service Contract 14C2 (SC 14C2)
The Group has a 22.279% participating interest in SC 14C2 which includes the West Linapacan Oil Field. The
approved commitment budget is U$19,530 (2022).
Service Contract 54A (SC 54A)
As disclosed in note 17, on 3 September 2021, the Company acquired Yilgarn Petroleum Pty Ltd for cash
consideration of $1. In addition to the cash consideration, up to a maximum royalty of $1.97 million (US$1.5 million)
would be payable to IMC Investments Capital Pte Ltd after commercial production is achieved under SC 54A. There
are no wells currently capable of producing oil or gas.
As disclosed in note 20, on 20 November 2021, the Company executed an agreement to acquire TG World for cash
consideration of $1 and up to a maximum net royalty of $730,000 (US$530,000) would be payable to TEC after
commercial production is achieved at a rate of 12.5% under SC 54A.
SC 54A is under Force Majeure and Nido Petroleum is not required to perform any activity except for desktop
exercises with a gross commitment budget of US$241,000 (2022). The Group’s share of this budget will be reduced
if the Farmin referenced in note 32 is approved.
Page | 93
Notes to the Financial Report
For the year ended 31 December 2021
27
CONTINGENT LIABILITIES (continued)
Service Contract 58 (SC 58)
Sacgasco Limited
Nido Petroleum Pty Ltd has provided a letter of undertaking dated 14 November 2006 to the Department of Energy
in the Philippines to provide technical and financial support to Nido Petroleum Philippines Pty Ltd in relation to work
obligations in the SC 58 Farm In Agreement executed between PNOC Exploration Corporation and Nido Petroleum
Philippines Pty Ltd on 17 July 2006.
SC 58 is under Force Majeure and Nido Petroleum is not required to perform any activity except for desktop exercises
with a commitment budget of US$70,000 (2022).
There is a commitment to drilling a well when / if Force Majeure is lifted.
28
INTEREST IN JOINT OPERATIONS
Accounting Policy
Joint arrangements are arrangements of which two or more parties have joint control. Joint control is the
contractually agreed sharing of control of the arrangement which exists only when decisions about relevant
activities require unanimous consent of the parties sharing control.
A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have
rights to the assets and obligations for the liabilities, relating to the arrangement.
In relation to its interests in joint operations, the Group recognises:
Assets, including its share of any assets held jointly.
Liabilities, including its share of any liabilities incurred jointly.
Revenue from the sale of its share of the output arising from the joint operation.
Share of the revenue from the sale of the output by the joint operation.
Expenses, including its share of any expenses incurred jointly.
Permit
SC 6B
SC 14-C2
SC 54A
SC 58
Country
Interest
Philippines
Philippines
Philippines
Philippines
9.09%
22.28%
72.50%
50.00%
Share of
assets
$
-
-
476,724
14,027
Share of
liabilities
$
-
-
(286,551)
(200,356)
The Group’s participating interest in SC 58 is dependent upon the completion of its farm-in obligation under its Farmin
Agreement with PNOC-EC dated 17 July 2006. Activity within SC 58 is under Force Majeure.
The Group has classified all joint arrangement interests in its projects as joint operations given that the arrangements
are such that each party contributes assets and has proportional rights to the return of assets and payment of
obligations based on its percentage contributed. These proportions are as noted above under average interest. In
this respect, the Company records its proportion of income, expenses, assets, and liabilities pertaining to the projects.
Any loans or contributions to the join operations, or obligations to the joint operations, that are owed directly to (or
from) the Company are recorded in full as and when they arise. (requires clarification).
Page | 94
Notes to the Financial Report
For the year ended 31 December 2021
29
AUDITORS’ REMUNERATION
HLB Mann Judd
Audit and other assurance services
Audit and review of financial reports
Total Auditor’s Remuneration
Sacgasco Limited
2021
$
2020
$
60,794
60,794
37,669
37,669
30
SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities, and results of the following wholly owned
subsidiaries in accordance with the accounting policy described in note 1.4:
Name of subsidiary
Place of incorporation
Equity Interest
Sacgasco CA Inc
PEOCO LLC
Sacgasco AB Ltd
Sacgasco SG Pte Ltd
Nido Petroleum Pty Ltd
United States of America
United States of America
Canada
Singapore
Australia
Nido Petroleum Philippines Pty Ltd Australia
Yilgarn Petroleum Pty Ltd
Australia
2021
%
100
100
100
100
100
100
100
2020
%
100
100
-
-
-
-
-
Sacgasco AB Ltd. was incorporated in Alberta, Canada on 4 February 2021.
Sacgasco SG Pte Ltd (formerly BCPE International) and its subsidiaries was acquired on 1 July 2021.
Yilgarn Petroleum Pty Ltd was acquired on 3 September 2021.
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation.
Page | 95
Notes to the Financial Report
For the year ended 31 December 2021
31
PARENT COMPANY DISCLOSURES
Accounting Policy
Sacgasco Limited
The accounting policies of the parent entity, which has been applied in determining the financial information shown
below, are the same as those applied in the consolidated financial statements.
As at, and throughout the financial year ended 31 December 2021, the parent entity of the Group was
Sacgasco Limited.
Result of the parent entity
Loss for the year
Total comprehensive loss for the year
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Equity-settled benefits reserve
Accumulated losses
Total equity
2021
$
2020
$
(7,623,911)
(1,413,573)
(7,623,911)
(1,413,573)
340,341
1,687,917
2,083,416
2,090,530
(1,267,999)
(1,121,973)
(1,267,999)
(1,121,973)
29,941,940
23,656,342
1,038,384
484,360
(30,560,406)
(23,150,895)
419,918
968,557
Page | 96
Notes to the Financial Report
For the year ended 31 December 2021
Sacgasco Limited
32 MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
On 19 January 2022, the Company issued 810,811 shares in lieu of directors’ fees, as approved by shareholders on
28 May 2021.
On 19 January 2022, the Company issued 337,838 shares at 3.7 cents per share in satisfaction of consulting
services.
On 19 January 2022, the Company issued 649,350 shares at 2.8 cents per share in satisfaction of consulting
services.
On 19 January 2022, the Company issued 1,160,714 shares at 2.8 cents per share as partial consideration for
consulting services.
On 1 March 2022, the acquisition of TG World was completed following regulatory approvals. However, the approvals
process for the sale to Blue Sky is ongoing.
On 4 March 2022, the Company announced that it had signed a Farmin Agreement with the Service Contract 6B
(SC 6B) joint venture to fund 100%, and to operate an extended well test and subsequent development of the Cadlao
Field, in return for an additional 63.637% working interest, bringing the Group’s working interest to 72.727%. The
Farmin agreement is subject to approvals from relevant Philippines Authorities. The approved budget for SC6B is
U$500,000 (2022).
On 10 March 2022, following completion of the conditions precedent, the Company announced that Blue Sky
exercised its farmin option by committing to drill the Nandino Prospect within the Service Contract 54 (SC 54), subject
to Philippine Department of Energy approval and rig availability. Post farmin, the Groups working interest in SC 54
reduces to 36.25%.
Page | 97
Directors’ Declaration
For the year ended 31 December 2021
DIRECTORS’ DECLARATION
Sacgasco Limited
In accordance with a resolution of the Directors of Sacgasco Limited, we state that:
In the directors’ opinion:
1.
2.
3.
4.
The financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001, and other mandatory professional reporting requirements.
The attached financial statements and notes comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board as disclosed in note 1.2.
The financial statements and notes give a true and fair view of the Group’s financial position as of
31 December 2021 and of its performance for the financial year ended on that date; and
There are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance
with section 295A of the Corporations Act 2001 for the year ended 31 December 2021.
On behalf of the Board
GARY JEFFERY
Managing Director
31 March 2022
Perth, Western Australia
Page | 98
INDEPENDENT AUDITOR’S REPORT
To the members of Sacgasco Limited
Report on the Audit of the Financial Report
Opinion
We have audited the f inancial report of Sacgasco Limited (“the Company”) and its controlled entities
(“the Group”), which comprises the consolidated statement of f inancial position as at 31 December
2021, the consolidated statement of prof it or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash f lows f or the
year then ended, and notes to the f inancial statements, including a summary of signif icant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying f inancial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and f air view of the Group’s f inancial position as at 31 December 2021 and of its
f inancial perf ormance f or the year then ended; and
b) 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 f urther described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Prof essional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the f inancial report in
Australia. We have also f ulf illed our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is suf f icient and appropriate to provide a basis
f or our opinion.
Material uncertainty related to going concern
We draw attention to Note 1.8 in the f inancial report, which indicates that a material uncertainty
exists that may cast signif icant doubt on the entity’s ability to continue as a going concern. Our
opinion is not modif ied in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our prof essional judgement, were of most significance
in our audit of the f inancial report of the current period. These matters were addressed in the context
of our audit of the f inancial report as a whole, and in f orming 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 we have determined the matters described below to be the
key audit matters to be communicated in our report.
Page | 99
Key Audit Matter
Oil and gas properties
Ref er to Note 16
During the year the Group completed the f ollowing
acquisitions:
• Read Earth (a 30% working interest)
• Alberta Plains (20% working interest)
• BCPE International Pte Ltd
These acquisitions were considered to be a key audit
matter due to the size of the impact on the f inancial
statements and their important to users of the f inancial
statements.
How our audit addressed the key audit
matter
Our audit procedures included but were not
limited to the f ollowing:
• Considering the possible application of
the transaction under the requirement s
of AASB 3 Business Combinations.
• Reviewing
the sale and purchase
agreement to understand key terms and
conditions.
• Agreeing
the
consideration paid
inf ormation.
f air value of
to
the
supporting
• Obtaining audit evidence
the
acquisition date assets and liabilities of
acquiree were f airly stated.
that
• Considering the allocation of the excess
of the value of the consideration over
the net assets acquired to exploration
and evaluation expenditure.
• Ensuring appropriateness to recognise
the resultant exploration and evaluation
asset at balance date.
• Assessing the adequacy of the Group’s
disclosures in the f inancial report with
respect to this asset acquisition.
Our audit procedures included but were not
limited to the f ollowing:
• We assessed the competence and
objectivity of
the expert used by
management in the preparation of the
cost models.
• We evaluated management's cost
model f or each well site and critically
the key estimates and
challenged
assumptions made in the models.
• We assessed the expected timing of the
rehabilitation to the respective life of
each well.
• We assessed the reasonableness of the
discount and inf lation rates applied to
the expected cash f lows.
• Our testing included comparison of a
sample of unit rates included in the cost
models to supporting documentation.
Rehabilitation Provision
Ref er to Note 21
As at 31 December 2021, the carrying value of the
Group's provision f or rehabilitation was $35,330,966.
The Group's provision f or rehabilitation is material to
our audit, and requires signif icant estimates of f uture
costs.
The determination of the provision requires
management's judgement in relation to estimating the
costs of perf orming the work required, including
volume and unit rates, the timing of cash f lows and the
appropriate discount rate.
Page | 100
Information other than the financial report and auditor’s report thereon
The directors are responsible f or the other inf ormation. The other inf ormation comprises the
inf ormation included in the Group’s annual report f or the year ended 31 December 2021, but does
not include the f inancial report and our auditor’s report thereon.
Our opinion on the f inancial report does not cover the other inf ormation and accordingly we do not
express any f orm of assurance conclusion thereon.
In connection with our audit of the f inancial report, our responsibility is to read the other inf ormation
and, in doing so, consider whether the other inf ormation is materially inconsistent with the f inancial
report, or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If , based on the work we have perf ormed, we conclude that there is a material misstatement of this
other inf ormation, we are required to report that f act. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible f or the preparation of the f inancial report that gives
a true and f air view in accordance with Australian Accounting Standards and the Corporations Act
2001 and f or such internal control as the directors determine is necessary to enable the preparation
of the f inancial report that gives a true and f air view and is f ree f rom material misstatement, whether
due to f raud or error.
In preparing the f inancial report, the directors are responsible f or assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the f inancial report as a whole is
f ree f rom material misstatement, whether due to f raud 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 Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise f rom f raud or error and are
considered material if , individually or in the aggregate, they could reasonably be expected to
inf luence the economic decisions of users taken on the basis of this f inancial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise prof essional
judgement and maintain prof essional scepticism throughout the audit. We also:
-
-
-
-
Identif y and assess the risks of material misstatement of the f inancial report, whether due to
f raud or error, design and perf orm audit procedures responsive to those risks, and obtain audit
evidence that is suf f icient and appropriate to provide a basis f or our opinion. The risk of not
detecting a material misstatement resulting f rom f raud is higher than f or one resulting f rom
error, as f raud may involve collusion, f orgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not f or the purpose of expressing
an opinion on the ef f ectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast signif icant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the f inancial report or, if such
disclosures are inadequate, to modif y our opinion. Our conclusions are based on the audit
Page | 101
-
evidence obtained up to the date of our auditor’s report. However, f uture events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the f inancial report, including the
disclosures, and whether the f inancial report represents the underlying transactions and
events in a manner that achieves f air presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and signif icant audit f indings, including any signif icant def iciencies in internal control
that we identif y during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related saf eguards.
From the matters communicated with the directors, we determine those matters that were of most
signif icance in the audit of the f inancial report of the current period and are theref ore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benef its of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report f or the year ended
31 December 2021.
In our opinion, the Remuneration Report of Sacgasco Limited f or the year ended 31 December
2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible f or 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
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
31 March 2022
N G Neill
Partner
Page | 102
Securities Exchange Information
Sacgasco Limited
SECURITIES EXCHANGE INFORMATION
The shareholder information set out below was applicable on 30 March 2022:
1.
Distribution of ordinary shares
Range
Total holders
Ordinary shares
% of issued capital
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
98
73
250
945
529
1,895
11,251
311,907
1,999,179
40,369,475
441,465,615
484,157,427
-
0.06
0.42
8.34
91.18
100.00
There were 600 holders of less than a marketable parcel of ordinary shares.
2.
Voting rights
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll,
every member present or by proxy shall have one vote for every share held.
Options and rights
No voting rights.
3.
Corporate Governance Statement
In accordance with Listing Rule 4.10.3, the Company’s Corporate Governance Statement can be found on the
Company’s website.
Refer to http://www.sacgasco.com/company/corporate-governance/
4.
Unlisted options
Grant date
Number
Number of
holders
Expiry date
Exercise price
(cents)
22-Jan-21
18,000,000
4
31-Dec-22
6
Page | 103
Securities Exchange Information
Sacgasco Limited
5.
Twenty largest shareholders on 11 March 2021
Shareholders
Stephen David Dahl & Louisa Yvette Dahl
Gary John Jeffery & related parties
BNP Parabis Nominees Pty Ltd
Citicorp Nominees Pty Limited
Justine Davina Michel
HSBC Custody Nominees (Australia) Limited
BNP Parabis Nominees Pty Ltd Six Sis Ltd
Andrew Ross Childs & related parties
M & E Earthmoving Pty Ltd
Great Eastern Holdings Pty Ltd
Hemsby Super Pty Ltd
Alan George Brooks & Philippa Claire Brooks
Geoffrey Kenneth Farnell & Janet Lesley Farnell
Gordon Joseph Pearn & Joelle Marie Pearn
Magaurite Pty Ltd
David Waterston & Natalie Ana Kovacev
Andrew James Drury
Blue Sky Resources Ltd
Quatri Pty Ltd
Matilda West Pty Ltd
Ordinary shares
Number held
% of issued
shares
31,348,338
23,264,158
14,553,701
10,423,376
10,369,198
10,146,132
8,249,724
7,972,975
6,236,457
6,071,016
5,703,846
5,169,837
5,000,000
4,860,000
4,339,452
4,284,000
4,280,000
4,188,432
4,000,000
3,600,000
6.47
4.81
3.01
2.15
2.14
2.10
1.70
1.65
1.29
1.25
1.18
1.07
103
1.00
0.90
0.88
0.88
0.87
0.83
0.74
Page | 104
Corporate Directory
Sacgasco Limited
CORPORATE DIRECTORY
Directors
Mr Andrew Childs
Mr Gary Jeffery
Ms Joanne Kendrick
Secretary
Mr David McArthur
Mr Jordan McArthur
Registered Office
Level 1, 31 Cliff Street
Fremantle WA 6160
Telephone: +61 8 9435 3200
Principal Office
Level 2, 210 Bagot Road
Subiaco WA 6008
Telephone: +61 8 9388 2654
Postal Address
PO Box 584
Fremantle WA 6959
Auditors
HLB Mann Judd (WA Partnership)
Level 4, 130 Stirling Street
Perth WA 6000
Bankers
ANZ Banking Group Limited
Level 6, 77 St Georges Terrace
Perth WA 6000
Share Registry
Automic Group
Level 5, 191 St Georges Terrace
Perth WA 6000
Telephone: +61 1300,288,664
ASX Code
Shares: SGC
Options: SGCOA
Website and Email
Website: www.sacgasco.com
Email:
info@sacgasco.com
Twitter: @SacGasCo
Page | 105