ANNUAL FINANCIAL
REPORT
FOR THE FINANCIAL YEAR ENDED
31 December 2022
Sacgasco Limited
ABN 83 114 061 433
CONTENTS
Sacgasco Limited
Page
Chairman’s Report ...................................................................................................................................... 1
Directors’ Report ......................................................................................................................................... 2
Auditor’s Independence Declaration ......................................................................................................... 33
Consolidated Statement of Profit or Loss ................................................................................................. 34
Consolidated Statement of Other Comprehensive Income ...................................................................... 35
Consolidated Statement of Financial Position .......................................................................................... 36
Consolidated Statement of Changes in Equity ......................................................................................... 38
Consolidated Statement of Cash Flows ................................................................................................... 40
Notes to the Consolidated Financial Report ............................................................................................. 41
Directors’ Declaration ............................................................................................................................... 95
Independent Auditor’s Report ................................................................................................................... 96
Securities Exchange Information ............................................................................................................ 101
Corporate Directory ................................................................................................................................ 103
Chairman’s Report
For the year ended 31 December 2022
Sacgasco Limited
CHAIRMAN’S REPORT
Dear Shareholder,
2022 was another challenging year for Sacgasco and the international oil and gas industry with the continuing Covid
fallout and the impact of the war in Ukraine, yet there are many real positives to draw.
With its strong production and cash flow performance, Sacgasco has served us very well during the most volatile and
challenging period for the industry. Your Board of Directors continue to be very positive on Sacgasco’s investments
and we are confident that it provides us with a stable platform to support future investment opportunities and return
of capital to you.
As I look forward to next year, Sacgasco is poised to take advantage of the opportunities presented because of
unrealistic aspirational expectations of the transition to non-hydrocarbon fuels. We expect oil and gas is going to be
needed for decades into the future in similar quantities to those being consumed today. We have an exciting outlook
with several attractive catalysts for shareholder value creation across our balanced portfolio.
Recently the Philippine Department of Energy released incentives to encourage increased oil and gas production in
the Philippines. We are very encouraged that our planned drilling programmes and continued growth in all our assets
will reward shareholders for their support and patience.
Yours faithfully,
Andrew Childs
Chairman
Page | 1
Directors’ Report
For the year ended 31 December 2022
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 2022.
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.
Gary Jeffery
Managing Director
Appointed 24 October 2013
Andrew Childs
Non-executive Chairman
Appointed 25 November 2008
William Ashby
Non-executive Director
Appointed 6 April 2022
Joanne Kendrick
Non-executive Director
Appointed 1 June 2021,
Resigned 6 April 2022
PRINCIPAL ACTIVITIES
During the financial year the principal activities of the Group were 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.
OPERATING RESULTS
The loss from continuing operations for the financial year ended 31 December 2022 attributable to members of
Sacgasco Limited after income tax was $3,814,475 (2021: $16,942,450 - restated).
The Group has a working capital deficit of $3,516,038 (2021: deficit of $3,756,986) and had net cash outflows of
$904,597 (2021: net cash outflow of $493,262).
DIVIDENDS
The Directors recommend that no dividend be provided for the year ended 31 December 2022 (2021: Nil).
Page | 2
Directors’ Report
For the year ended 31 December 2022
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
continued its’ transformation 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
Philippines
(cid:120)
Nido appointed Operator for SC 6B Cadlao Oilfield.
(cid:120) Geophysical Site Survey completed over Cadlao Oil Field in SC 6B, two high graded drilling locations
surveyed over the Nandino Prospect SC 54, and Survey areas covered drilling sites and locations for
EWT oil offtake vessels.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Planning for Extended Well Tests (EWT) to produce oil from drilling upon success.
Cadlao EWT program approved.
Actively negotiating Contracts for Philippines Drilling Program in 2023.
Farmout discussions progressing.
Keen interest by Philippines banks for reserves-based lending and project finance.
North America
(cid:120)
(cid:120)
Total net production from Canadian assets (before royalty) of 156,695 BOE.
SGC share of oil and gas flows in Canada was 420 BOEPD in December 2022.
(cid:120) Gas flow optimisation in California resulted in 60 BOEPD after royalties in the year, with very high
gas prices in the December 2022 quarter.
Offshore Philippines - Exploration, Appraisal and New Ventures
EXPLORATION AND PRODUCTION ACTIVITIES
Nido, which has been active in the Philippines for over 22 years, was acquired by Sacgasco in mid-2020 and during
this time the participant’s interests in the various Service contracts have been consolidated and simplified by farmouts
to facilitate a consolidated work program aimed at earliest production from the acquired assets.
Sacgasco through its wholly owned subsidiary Nido Petroleum Philippines Pty Ltd (“Nido”), as Operator of Service
Contract SC 6B (“SC 6B”) and Service Contract 54 (“SC 54”), has completed field survey work using the Cassandra
VI survey vessel from Hurricane Geo Inspection Survey Sdn Bhd (“HGIS”) including geophysical site surveys in
preparation for drilling the Cadlao Oil Field in SC 6B and the Nandino Prospect in SC 54 both in the North West
Palawan Basin, offshore Philippines.
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Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
The Cassandra VI survey vessel from Hurricane Geo Inspection Survey Sdn Bhd (“HGIS”)
The site survey operations have been completed at Cadlao and Nandino to Noble Denton Technical Policy Board
requirements to assess the seafloor and near seabed conditions in preparation for drilling. This included a bathymetry
survey, seabed survey analysis, sub-bottom profiling and other geophysical data acquisition and interpretation.
The site surveys provide the option for drilling of the wells using either the Deep Venture drillship or an alternative
Jack Up rig. Nido is planning to begin drilling offshore in the Philippines in late 2023.
Successful drilling would allow early production of oil under Phase One of a development program using an Extended
Well Test.
Sacgasco’s Acreage in the Northwest Palawan Basin, Philippines
Page | 4
Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
Philippines based banks have been engaged in discussion of reserves-based lending and project finance. These
together with active farmouts and Sacgasco’s cash flow from oil and gas flows in North America are core to the
ongoing implementation of Nido’s planned work in the Philippines and potentially the broader region.
The Geological and Geophysical Studies (“G&G”) are being integrated into the results of the recent geophysical
surveys. The studies are focused on Carbonate Facies Modelling to assist the decision to select the optimum location
for drilling the Nandino Prospect and drilling other oil exploration and development wells.
SC54 (SGC (Nido) Operator)
Sacgasco’s wholly owned subsidiary, Nido Petroleum Philippines Pty Ltd. (“Nido”), is the Operator of Service Contract
SC54. SC54 includes the Nandino Oil Prospect and Nido Limestone hosted oil discoveries at Tindalo, North Nido 1,
Nido 1X and Yakal.
Currently the most attractive Prospect in SC54 is the Nandino Oil Prospect. Nandino lies updip and on-trend with 4
oil discoveries within SC54. A total of over 119 metres of oil column and strong oil shows are interpreted in two
previous tests of the greater Nandino structure.
Nido Carbonate Depth Map over Nandino Prospect and surrounds
Prospective Resources in the Nandino Prospect have been endorsed by RISC Advisory (RISC). (Refer ASX
announcement dated 3 March 2022)
Nandino Prospective Resources (100%)
P90 (million barrels)
P50 (million barrels)
P10 (million barrels)
Mean (million barrels)
Oil in Place
(100%)
24.2
75.3
175.0
91.0
Recoverable Oil
(100%)
6.6
21.9
54.2
27.3
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.
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Directors’ Report
For the year ended 31 December 2022
SC 6B Cadlao (SGC (Nido) Operator)
Sacgasco Limited
Nido previously entered a Farmin Agreement (“FIA”) with the Service Contract 6B (SC 6B) Joint Venture to fund
100% and Operate the Extended Well Test (EWT) and subsequent redevelopment of the Cadlao Oil Field in return
for an additional 63.637% Participating Interest, bringing Nido’s total working interest in SC 6B to 72.727%. (Refer
ASX release “Farmin to Cadlao Oil Development 4 March 2022).
Sacgasco, through its wholly owned subsidiary, Nido Petroleum Philippines Pty Ltd (“Nido”) has entered into an
Investment Agreement with Blue Sky International Holding Inc (“Blue Sky”) to fund 45.455% of initial drilling and EWT
and subsequent Cadlao Oilfield Redevelopment on a Ground Floor basis.
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 well, Cadlao-1A, was over 4,000 bopd.
A plan to drill a new well aimed to recover oil updip from the prolific Cadlao 1 well and to then conduct a First
Production Phase based on Extended Well Test (“EWT”) to maximize reservoir knowledge and reduce risks
associated with redevelopment of the field, as well as provide early cashflow is advancing rapidly.
Given its proximity to Cadlao, there is also the opportunity to drill the East Cadlao Prospect, subject to further maturing
of the prospect to drill ready status.
3D Seismic image through East Cadlao Prospect
The results of an independent Contingent Resources estimate for the Cadlao Oilfield were released (ASX release:
“Cadlao Contingent Resources Certified” 13 April 2022).
The Contingent Resources estimate, undertaken by RISC Advisory (“RISC”) are summarized in the table below. The
Contingent Resources are for the Cadlao Field Redevelopment only and do not include any additional Contingent
and Prospective Resources identified in SC 6B, e.g., Cadlao East Prospect and other nearby leads identified on 3D
seismic.
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Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
Cadlao Contingent Resources Summary (oil, MMstb)
Gross Contingent Resources
SGC Net Contingent Resources (72.727%)
1C
4.5
3.3
2C
6.2
4.5
3C
8.2
6.0
Note 1: These are unrisked contingent resources that have not been risked for the chance of
development, and that there is no certainty that at the time of project approval it will be economically
viable to produce any portion of the contingent resources.
Note 2: Nido’s net entitlement to future production proceeds is dependent on approval of the FIA which
includes preferential cost recovery and an approved EWT agreement by the DOE
Note 3: The contingent resource estimate assumes an economic cutoff of 750 barrels of oil per day
The Cadlao Field resources are classified as Contingent Resources rather than reserves. Phase-1 of the
development (EWT) will be progressed. Resources associated with the EWT can be transferred to undeveloped
reserves once this project is approved. RISC has reviewed and in general support the field re-development plans for
Cadlao.
Cadlao drilling and EWT is planned for 2023 in a 2-well drilling program with the Nandino Prospect in Service Contract
54 (ASX Announcement “Philippines Drilling Update” 30 May 2022); subject to relevant approvals.
In the event of a successful EWT at Cadlao and depending upon the field data obtained, a full field development may
include extra wells with a dedicated oil production facility.
A Cadlao Field development Scenario
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Directors’ Report
For the year ended 31 December 2022
SC 58 (SGC 50%, Operator)
Sacgasco Limited
Nido has 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. SC 58 covers 13,440 square kilometres and Nido has mapped more than 10 prospects
on 3D and 2D seismic.
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 an underutilised pipeline to energy
hungry Manila.
Nido continues its 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.
Balyena Prospect 4 Stacked Targets
SC 14C2 West Linapacan (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. Sacgasco is considering development and funding options for the
redevelopment of the West Linapacan Field.
New Ventures (SGC 100%)
Nido has identified New Venture Opportunities in the Philippines and is actively pursuing them. These include Natural
Gas opportunities including Hydrogen and Helium.
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Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
SACGASCO PHILIPPINES TENEMENT TABLE (31 December 2022)
Service
Contract
SC 54
Fields / Discoveries
% Working Interest
Operator
Tindalo, Yakal, Nido 1X1, Nandino
Prospect
87.5% (reducing to 51.25% when
Farmout terms are satisfied, and
relevant approvals received)
NIDO (SGC)
22.28%
Philodrill
SC 14C2
West Linapacan A Field; West
Linapacan B
SC 58
SC 6B
Palawan Basin big hit Exploration
50% (after farm-in)
NIDO (SGC)
Cadlao, near field Exploration
9.09% (Increasing to 72.727%
when Farmin terms are satisfied)
NIDO (SGC)
Operator
ONSHORE CANADA - Province of Alberta
Sacgasco has Working Interests (“WI”) in two groups of Non-Operated Onshore Assets in Alberta, Canada - Red
Earth and Alberta Plains.
In November 2022 the Chairman of Sacgasco, Andrew Childs travelled to Canada for joint venture meetings and to
review field operations. The Blue Sky Resources (BSR) field operations were noted to be very professionally
managed with facilities in good condition, and meetings with the Operator identified a number of new opportunities
in existing fields. Sacgasco is continuing to work with BSR on these opportunities with further updates to be released
as they are achieved.
Sacgasco’s Canadian Producing Properties
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Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
SACGASCO CANADA TENEMENT TABLE (as at 31 December 2022)
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%
The working interest is relative to the Operator Blue Sky’s working interest (WI) – the actual WI may vary from well
to well.
Canada Oil and Gas Production
Canada Oil and Gas Production (BOE) 1
SGC Production
Year ending
31 December 2022
156,695
Year ending
31 December 2021
108,928
SGC Production after Royalty
131,498
95,179
Note 1: Gas converted to BOE using 6:1 ratio
Blue Sky Resources is undertaking a significant reactivation program at Red Earth, the results of which should
begin to show early 2023.
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.
Canadian Assets Reserve Reports
Independent Reserves Reports were undertaken by Sproule Associates Limited on Sacgasco’s Canadian Oil and
Gas Properties at Red Earth and Alberta Plains properties. The Reserve Reports were based on 31 December 2022
data.
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.
The prior year reserves values presented below as of 31 December 2021 are from Sacgasco’s 2021 Annual Report
and are not based on Sproule estimates or reports.
Page | 10
Directors’ Report
For the year ended 31 December 2022
Sacgasco Canada Net Reserves on 31 Dec 2022:
Sacgasco Limited
Canada - TOTAL Reserves Table
31 Dec 2022
Barrels of Oil Equivalent (BOE)
Proved Developed Producing (PDP)
Proved Developed Not Producing (PDNP)
Proved Undeveloped (PUD)
Total Proved (1P) Reserve
Probable Reserves (Prob.)
Total Proved plus Probable (2P)
Reserves
SGC Reserves
Canada
Before Royalty
31 Dec 2022
SGC Reserves
Canada
After Royalty
31 Dec 2022
SGC Reserves
Canada
After Royalty
31 Dec 2021
988,000
584,000
89,600
1,661,600
518,100
2,179,700
893,500
519,300
77,700
1,490,400
460,600
1,951,000
905,956
602,778
97,311
1,606,000
776,089
2,381,200
Note – Conversion Factor: 6 mcf gas equals 1 BOE.
Refer to additional Information below.
Approximately 94% of the Proved plus Probable reserves are oil and 6% are Natural Gas and Natural Gas Liquids.
The Differences between Reserves on the reporting dates in the table above are:
Proved Producing (PDP) Reserves on 31 December 2021 were reduced by Production in 2022 (approximately
131,500 BOE – After Royalty), together with adjustments based on well performances and price changes used for
31 December 2022 reserves estimation along with increased actual and expected changes to costs associated with
operating the assets.
Proved (PDNP, PUD) and Probable Reserves are adjusted to reflect updated inputs including current and offsetting
well performance, technical inputs, and future pricing strip, along with increased actual and expected changes to
costs associated with operating the assets.
Reserves Table Notes
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 Sproule Associates Limited (“Sproule”)
of Calgary, Alberta, Canada; and have been classified in accordance with SPE-PRMS. They have been
reviewed 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 are compiled from data and information supplied by the Operator of the Red Earth and
Alberta Plains Properties, Blue Sky Resources Limited.
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Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
2. Qualified Petroleum Reserves and Resource Evaluator Requirements:
Red Earth and Alberta Plains Properties:
The reserves and resources information in this Australian Stock Exchange (“ASX”) document relating to oil fields
in the Red Earth and Alberta Plains Properties are based on, and fairly represent information prepared under
the supervision of Doug Ashton (VP, Reservoir Services) of Sproule Associates Limited (“Sproule”)
Doug Ashton is an employee of Sproule. He holds a Bachelor of Science Degree in Chemical Engineering from
the University of Calgary and is a registered Professional Engineer (APEGA). Doug has over 30 years of
experience as a reservoir engineer, including eight years working for E&P companies, five years in investment
banking, and over 17 years as an Independent Qualified Reserves Evaluator / Auditor, which includes over
12 years as a project manager and team leader and is qualified in accordance with ASX listing rule 5.41.
Sproule 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 recognises oil and gas revenues based on prevailing
commodity pricing as well estimated operating costs, capital costs, royalties, and mineral taxes.
4. The reserves are estimated at 31 December 2022 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, 2022, (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 reserve report, the production royalty averages around 9%.
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.
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Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
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.
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 | 13
Directors’ Report
For the year ended 31 December 2022
Pricing Strip Tables used in Reserves Reporting
Sacgasco Limited
Page | 14
Directors’ Report
For the year ended 31 December 2022
ONSHORE CALIFORNIA
Sacgasco Limited
The Company continued to maintain leases in the Sacramento Basin during 2022. 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 with up to a Tcf recoverable prospective resources of Natural Gas.
Borba Gas
Gas Usage review for Borba Gas
California Assets
Evaluations to monetise the previously reported Borba gas discovery continued with discussions on alternative
developments. These include electricity production for an onsite data centre, hydrolysis of natural gas for Hydrogen
generation for the local transport market or other means of transporting the gas molecules to local markets. Permitting
of onsite facilities is being pursued.
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 several advantages over the
alternatives, including:
(cid:120) Excellent technology acceptance by community and support for the development of California’s hydrogen
economy by local legislators.
(cid:120) Established and fast-growing market demand.
(cid:120) Route to market by road, no need for pipelines construction or access.
(cid:120) Limited land use and associated regulatory approvals with hydrogen facilities potentially co-located at well-site.
(cid:120) Diversify traditional O&G activities into well-supported renewable energy markets.
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Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
The Sacgasco JV is developing partnerships with equipment and technology providers to support a natural gas
consuming project at Borba.
Gas Flows in Sacramento Basin
California Gas Flows (mcf)1
Gross Production
SGC Production after Mineral Royalty
Note 1: mcf = Thousand Cubic feet gas
2022
181,738
98,531
2021
144,886
80,330
Gas flow optimization and sales opportunities are being continually pursued. Gas prices in California averaged over
US$30 per mcf in December 2022 and over US$14 per mcf in January 2023.
SACGASCO CALIFORNIA TENEMENT TABLE (as at 31 December, 2022)
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
Malton Project
Los Medanos Gas Field
HBP Leases
Malton Gas Field HBP Leases
and Oil and Gas Mineral
Leases
Appraisal and Rework
90%
Exploration, Appraisal and
Rework
45-70%
Dutch Slough Gas Project
Dutch Slough Gas Field
HBP Leases
Exploration, Appraisal and
Rework
Rio Vista Gas Project
Willows Gas Field
(Non-operated)
Rio Vista Field Wells
HBP Leases
Willows Gas Fields
HBP Leases
Gas flow, development, and
Rework
Gas flow and
Rework
70%
100%
10%
Alvares Project
Alvares 1 well (P&A Re-entry) Exploration and Appraisal
50%
* Approximate WI across the referenced Project
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.
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Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
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.
COMPETENT PERSONS’ STATEMENT
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.
Page | 17
Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
CORPORATE
The Financial Year
Shares and Options
On 31 May 2022, 27,250,000 unlisted options exercisable at 4.5 cents per share were issued to directors and
consultants of the Group.
On 31 December 2022, 18,000,000 unlisted options exercisable at 6 cents per share, expired.
At the date of this report, the capital structure of the Group is as follows:
SACGASCO LIMITED – Capital Structure
Shares
Unlisted Options
UNLISTED OPTIONS @ $0.045 EXP 31/01/2024
OTCQB Market listing in North America
613,452,402
27,250,000
In February 2022 Sacgasco’s application to join the OTCQB Market in the United States was accepted, and the
Company’s shares could be listed for trading under the code SGCSF.
In December 2022 Sacgasco decided that listing on the OTCQB market in North America provided no significant
advantages for shareholders and has requested delisting.
Corporate Activity
Sacgasco Limited (ASX: SGC) (“SGC”, “Sacgasco” or “the Company”), successfully placed 116,700,000 Common
Shares to Sophisticated Investors to raise approximately $2.917 million before broker costs of approximately 5%.
The funds raised are to be used primarily to accelerate the drilling preparations for 2023 in the Philippines by allowing
Sacgasco, through its wholly owned Subsidiary Nido Petroleum Philippines, to acquire long lead items of drilling and
production equipment for the two well drilling campaign it has planned at Cadlao and Nandino.
Blue Sky International Holding Inc. (Blue Sky), which is funding via a subsidiary company the farmin to drill the
Nandino Prospect participated in the capital raise as a cornerstone investor.
Philippines Department of Trade and Industry released news of Sacgasco’s developments in the region on their
trade, industry, and investment newsreel, 21st September 2022.
Annual General Meeting
On 1 April 2022, the Company provided its 2021 Annual Report to Shareholders.
The Annual General Meeting was held on the 31 May 2022 and all Resolutions presented were passed by a poll.
Page | 18
Directors’ Report
For the year ended 31 December 2022
Board and Management Changes
Sacgasco Limited
Joanne Kendrick resigned as Non-Executive Director on 7th April 2022 and Mr William (Bill) Ashby joined the Board
as a Non-Executive Director.
Bill has thirty-nine (39) years of experience in upstream oil and gas covering the disciplines of geoscience, sub
surface engineering, drilling, development, and production. Over that time Mr Ashby has spent 16 years within SE
Asia, including five years working within the Philippines.
He has a track record of finding and developing significant discoveries, most recently in PNG, Caldita/Barossa in
Australia, Gulf Coast USA (Eagleford Shale) and Madura Strait Indonesia. Mr Ashby is focussed on business
outcomes that lead to upstream development and production of resources. He has small to mid-cap Australian listed
company experience, complemented by major company experience (ConocoPhillips and Mobil) internationally.
Public Presentations
A webinar on 4 May provided the opportunity for Managing Director Gary Jeffery to present an update on the
Philippines to shareholders.
Gary Jeffery also presented to the Australia Philippines Business Council in Perth on July 26.
Managing Director Gary Jeffery also presented to shareholders and investors at the Annual Good Oil Conference
held in Perth, Western Australia (refer ASX Release dated 6-7 September 2022).
Sacgasco Directors visited Manila, Philippines to meet with Energy officials, Service Contract participants and service
providers in September and Gary Jeffery and a Blue Sky drilling representative presented to an enthusiastic meeting
of the Manila chapter of SEAPEX.
Page | 19
Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In the opinion of the Directors there were no matters that significantly affected the affairs of the Group during the
financial year, other than those matters referred to in the Review of Operations above.
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.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Other than as disclosed in note 34 of the notes to the consolidated financial statements, there have been no 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.
Page | 20
Directors’ Report
For the year ended 31 December 2022
INFORMATION ON DIRECTORS
Sacgasco Limited
Information on Directors
Experience, qualifications, and other directorships
Name:
Title:
Qualifications:
Experience and expertise:
Andrew Childs
Non-Executive Chairman
BSc.
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 directorships:
Non-executive Director of ADX Energy Limited since 11 November 2009
Former directorships (past 3 years):
None
Special responsibilities:
Chair of the Audit and Risk Management Committee
Member of the Remuneration and Nomination Committee
Interests in shares:
Interests in options:
11,372,840
6,000,000
Name:
Title:
Qualifications:
Experience and expertise:
Gary Jeffery
Managing Director
BSc.
Gary has nearly 50 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 directorships:
None
Former directorships (past 3 years):
None
Special responsibilities:
None
Interests in shares:
Interests in options:
28,263,482
10,000,000
Page | 21
Directors’ Report
For the year ended 31 December 2022
INFORMATION ON DIRECTORS (continued)
Sacgasco Limited
Name
Experience, qualifications, and other directorships
Name:
Title:
Qualifications:
Experience and expertise:
William (Bill) Ashby
Non-Executive Director
BAS Geophysics
GradDipAS (Honours) – Petroleum Geophysics
Bill has 39 years of experience in upstream oil and gas covering the
disciplines of geoscience, subsurface engineering, drilling, development,
and production.
Over that time, he has spent 16 years within SE Asia, including five years
working within the Philippines. He has a track record of finding and
developing significant discoveries, most recently in PNG, Caldita/Barossa
in Australia, Gulf Coast USA (Eagleford Shale) and Madura Strait
Indonesia.
Bill is focussed on business outcomes that lead to upstream development
and production of resources. He has small to mid-cap Australian listed
company experience, complemented by major company experience
(ConocoPhillips and Mobil) internationally.
Other current directorships:
None
Former directorships (past 3 years):
None
Special responsibilities:
Chair of the Remuneration and Nomination Committee
Member of the Audit and Risk Management Committee
Interests in shares:
Interests in options:
663,773
4,000,000
‘Other current directorships’ stated above are current directorships for listed entities only and exclude directorships
of all other types of entities.
‘Former directorships’ stated above are directorships held in the last three years for listed entities only and exclude
directorships of all other types of entities.
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.
Page | 22
Directors’ Report
For the year ended 31 December 2022
COMPANY SECRETARIES (continued)
Sacgasco Limited
Jordan McArthur is a Chartered Accountant and was appointed to the position of Joint Company Secretary on
28 February 2021. Mr McArthur has over ten years corporate and financial experience in Australia and the United
Kingdom.
MEETINGS OF DIRECTORS
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 2022, 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
William Ashby
Joanne Kendrick
9
9
6
1
9
9
8
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, several decisions of the Board were undertaken via twelve circular resolutions.
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 or Company Secretary of the Company, other than
conduct involving wilful breach of duty in relation to the Company. The current premium is $37,088 (2021: $33,794)
to insure the Directors and Company Secretaries of the Company.
INDEMNITY AND INSURANCE OF AUDITOR
The Group has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Group has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Page | 23
Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
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.
SHARES UNDER OPTION
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
31-May-2022
31-Jan-2024
4.5
27,250,000
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
No ordinary shares of Sacgasco Limited were issued during the year ended 31 December 2022, and up to the date
of this report, on the exercise of options granted.
AUDIT AND 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 33.
AUDITOR
HLB Mann Judd (WA) Partnership continues in office in accordance with section 327 of the Corporations Act 2001.
Page | 24
Directors’ Report
For the year ended 31 December 2022
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 2022. 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:
(cid:120)
competitiveness and reasonableness
(cid:120) acceptability to shareholders
(cid:120) performance linkage / alignment of executive compensation
(cid:120)
transparency
The Nomination and Remuneration Committee 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:
(cid:120)
(cid:120)
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
(cid:120) 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 payments are reviewed annually by the Nomination and Remuneration Committee. The
Nomination and Remuneration Committee 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 | 25
Directors’ Report
For the year ended 31 December 2022
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 2008, where the
shareholders approved a maximum annual aggregate remuneration of $250,000.
Each Non-Executive Director receives a fee for being a Director of the Company which is inclusive of sub-committee
memberships:
(cid:120) Non-Executive Directors
$36,000 p.a. inclusive of statutory superannuation
(cid:120) 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 three components to the executive remuneration and reward framework:
(cid:120) base pay and non-monetary benefits
(cid:120)
share-based payments
(cid:120) other remuneration such as superannuation and long-service leave
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 Nomination and Remuneration Committee. 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
Nomination and Remuneration Committee 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 based on long-term incentive measures. These include increase in shareholder’s value relative to the
entire market and the increase compared to similar companies.
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 | 26
Directors’ Report
For the year ended 31 December 2022
Remuneration structure (continued)
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 ($)
2022
17,849,415
2021
Restated
7,888,355
2020
2019
2018
-
-
-
1,246,073
1,017,912
465,538
782,243
1,250,989
Loss before income tax ($)
(3,510,104)
(16,577,690)
(1,730,534)
(1,314,164)
(1,972,174)
Net loss attributable to equity holders ($)
(3,597,778)
(16,942,450)
(1,734,221)
(1,316,441)
(1,974,367)
Share price at year end (cents)
1.20
2.60
6.30
4.50
2.50
Number of listed ordinary shares
611,180,909
481,198,714
341,258,491
268,513,742
261,780,949
Weighted average number of shares
567,437,263
464,646,028
277,329,705
266,085,375
204,386,845
Basic loss per share EPS (cents)
Listed options
Unlisted options
(0.63)
-
(3.65)
(0.63)
(0.49)
-
133,429,938
133,429,948
(0.78)
-
27,250,000
18,000,000
19,000,000
19,000,000
43,000,000
Market capitalisation ($)
7,334,171
12,511,167
21,499,285
12,083,118
7,591,648
Net tangible assets / (liabilities) (NTA) ($)
(10,235,712)
(9,229,622)
844,695
(133,437)
561,307
NTA Backing (cents)
(1.67)
(1.92)
0.25
(0.05)
0.21
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 2022 AGM, 100% of the votes received, supported the adoption of the remuneration report for the year ended
31 December 2022. 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
Employee
notice period
Employer
notice period
Base salary *
Ongoing from
1 November 2013
Three months
Three 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 10.5%) 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 | 27
Directors’ Report
For the year ended 31 December 2022
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
Post
employment
benefits
Share-based payments
Total
Cash salary
and fees
$
Other
benefits
(A)
$
Super-
annuation
$
Shares
$
Equity-
settled
options
$
$
20,000
19,584
12,363
10,682
-
3,313
23,376
14,603
35,400
23,600
91,139
71,782
2022
Non-executive Directors
Andrew Childs
William Ashby
Executive Directors
Gary Jeffery
100,000
12,363
Former Directors
Joanne Kendrick (B & C)
4,800
3,251
-
-
116,882
59,000
288,245
3,270
-
11,321
144,384
38,659
3,313
158,131
118,000
462,487
2021
Non-executive Directors
Andrew Childs
William Ashby
20,000
11,265
-
-
Executive Directors
Gary Jeffery
100,000
11,265
Former Directors
Joanne Kendrick
David McArthur
10,500
-
4,660
6,604
130,500
33,794
-
-
-
-
-
-
14,511
312,600
358,376
-
-
-
72,554
521,000
704,819
10,500
-
-
208,400
25,660
215,004
97,565
1,042,000
1,303,859
(A) Other benefits include D&O insurance premiums to all directors ($37,088), and Philippines’ accommodation
for William Ashby ($1,571)
(B) Joanne Kendrick was appointed on 1 June 2021 and resigned on 6 April 2022, and
(C) Joanne Kendrick opted to receive her directors’ fee on the same terms as Gary Jeffery and Andrew Childs,
being 50% in cash and 50% in shares, approved by shareholders at the AGM on 31 May 2022.
Page | 28
Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
Details of remuneration (continued)
The proportion of equity remuneration and the fixed proportion are as follows:
Fixed remuneration
At risk - LTI
Name
Non-executive Directors
Andrew Childs
William Ashby
2022
%
36
47
2021
%
9
-
2022
%
64
53
2021
%
91
-
Executive Directors
Gary Jeffery
Former Directors
Joanne Kendrick
David McArthur
39
16
61
84
71
-
59
3
29
-
41
97
No cash bonuses were granted during the year (2021: Nil).
Share-based compensation
Shares issued in lieu of deferred director fees
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.
These shares were issued as follows:
Contractual
value of
services
rendered
Market value of
shares on
grant date
No. of Plan
Shares
issued
$
-
-
(1,695)
25,862
5,173
4,965
675,676
135,135
293,497
862,069
172,414
165,517
22,000
1,000,000
4,400
3,360
200,000
152,727
32,353
1,470,588
19-Oct-22
6,470
5,270
294,118
239,553
19-Oct-22
19-Oct-22
Date of
issue
19-Jan-22
19-Jan-22
06-Jun-22
20-Apr-22
20-Apr-22
06-Jun-22
08-Jul-22
08-Jul-22
08-Jul-22
Share price
on grant date
cents
3.00
3.00
3.00
3.00
3.00
3.00
2.20
2.20
2.20
2.20
2.20
2.20
$
-
-
-
25,000
5,000
4,800
25,000
5,000
3,818
25,000
5,000
4,072
Quarter
ended
Director
name
31-Dec-21 (1)
31-Dec-21 (1)
31-Dec-21 (2)
Gary Jeffery
Andrew Childs
Joanne Kendrick
31-Mar-22
Gary Jeffery
31-Mar-22
06-Apr-22 (2)
30-Jun-22 (3)
30-Jun-22 (3)
30-Jun-22 (3)
Andrew Childs
Joanne Kendrick
Gary Jeffery
Andrew Childs
William Ashby
30-Sep-22
Gary Jeffery
30-Sep-22
Andrew Childs
30-Sep-22
William Ashby
Page | 29
Directors’ Report
For the year ended 31 December 2022
Sacgasco Limited
Share-based compensation (continued)
Shares to be issued in lieu of deferred director fees (continued)
Quarter
ended
Director
name
31-Dec-22
31-Dec-22
31-Dec-22
Gary Jeffery
Andrew Childs
William Ashby
Contractual
value of
services
rendered
$
25,000
5,000
4,073
Market value of
shares on
grant date
No. of Plan
Shares
issued
Share price
on grant date
Date of
issue
$
36,667
1,666,667
17-Jan-23
7,333
5,973
333,333
271,493
17-Jan-23
17-Jan-23
cents
2.20
2.20
2.20
136,763
158,131
7,932,787
(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 ($24,324) were accrued as of 31 December 2021.
At a general meeting on 31 May 2022, shareholders approved the issue of shares under the same terms
approved at the 2021 AGM, to satisfy 50% of Ms Kendrick’s non-executive directors’ fee for the period
1 June 2021 to 6 April 2022. 100% of fees were accrued as of 31 December 2021 resulting in a fair-value
adjustment.
At a general meeting on 31 May 2022, a share plan was approved by shareholders to satisfy 50% of all
director fees through the issue of shares on a quarterly basis for the period 1 April 2022 to 31 March 2023.
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
31-May-22
Andrew Childs
6,000,000
31-May-22
William Ashby
4,000,000
31-May-22
cents
0.59
0.59
0.59
$
59,000
31-May-22
35,400
31-May-22
23,600
31-May-22
Exercise
Price
Per option
cents
Expiry
date
4.5
4.5
4.5
31-Jan-24
31-Jan-24
31-Jan-24
The options tabled above were provided at no cost to the recipients.
The cost of these options form part of the 31 December 2022 remuneration report.
No options granted as compensation in the current or prior years were exercised (2021: 2,000,000 options).
16,000,000 options granted as compensation in prior years expired (2021: 16,000,000 options expired).
Page | 30
Directors’ Report
For the year ended 31 December 2022
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 at
31 December
2021
Held on
appointment /
(resignation)
Purchases
In lieu
of fees
Held at
31 December
2022
Andrew Childs
7,837,840
Gary Jeffery
22,588,482
William Ashby
Joanne Kendrick
-
-
30,426,322
-
-
-
-
-
2,400,000
801,667
11,039,507
-
-
-
4,008,333
26,596,815
392,280
392,280
-
-
2,400,000
5,202,280
38,028,602
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 at
31 December
2021
Number
Held on
Appointment /
(resignation)
Number
Granted as
compensation
Number
Held at
31 December
2022
Number
Expired
Number
Vested and
exercisable
at
31 December
2022
Number
6,000,000
(6,000,000)
6,000,000
6,000,000
10,000,000
(10,000,000)
10,000,000
10,000,000
4,000,000
-
-
-
4,000,000
4,000,000
-
-
Value of
options
expired
during the
year
$
(312,600)
(521,000)
-
-
20,000,000
(16,000,000)
20,000,000
20,000,000
(833,600)
Andrew Childs
6,000,000
Gary Jeffery
10,000,000
William Ashby
Joanne Kendrick
-
-
16,000,000
-
-
-
-
-
Page | 31
Auditor’s Independence Declaration
For the year ended 31 December 2022
Sacgasco Limited
Additional disclosures relating to key management personnel
The value of options over ordinary shares issued to directors as part of compensation in prior years, which expired
during the year ended 31 December 2022, is set out in the table above.
20,000,000 options were granted as compensation during the year. No options granted as compensation in prior
years were exercised.
Share-based remuneration granted as compensation
Refer to note 25 for the terms and conditions of each grant of options over ordinary shares affecting remuneration of
directors in this financial year or future reporting years.
Other transactions with key management personnel
Details of other transactions with key management personnel not involving direct remuneration are disclosed in
note 27.
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.
On behalf of the Directors.
GARY JEFFERY
Managing Director
31 March 2023
Perth, WA
Page | 32
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Sacgasco Limited for the year
ended 31 December 2022, 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 2023
D I Buckley
Partner
Page | 33
Financial Report
For the year ended 31 December 2022
Sacgasco Limited
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 31 December 2022
Production income
Other income
Finance income
Expenses
Cost of sales
Other operating expenses
Exploration expenditure expensed through profit or loss
Marketing and business development costs
Personnel expenses
General and administration costs
Professional fees
Depreciation and amortisation – oil and gas properties
Depreciation and amortisation – other assets
Amortisation – right-of-use assets
Foreign exchange gains / (losses)
Impairment (loss) / gain on trade receivables
Loss on disposal of subsidiary
Finance expenses
Withholding tax
Loss before income tax
Note
5
6
7
9
8
19
14
7
20
2022
$
17,849,415
1,246,073
7,206
2021
Restated
$
7,888,355
1,017,912
401
(14,276,572)
(6,344,778)
(1,109,139)
(895,918)
(3,361,851)
(10,642,412)
(38,045)
(64,693)
(447,471)
(1,560,682)
(307,167)
(911,590)
(2,239,244)
(10,300)
(36,922)
18,276
(336,247)
(969)
(178,418)
(633,386)
(994,313)
(1,991)
-
172,340
201,305
-
(763,304)
(954,820)
1,207,747
(3,586,592)
(3,510,104)
(16,577,690)
Income tax expense
12
(304,371)
(364,760)
Loss for the year from continuing operations
(3,814,475)
(16,942,450)
Gain on acquisition and disposal of subsidiaries
10
Profit from discontinued operations
216,697
216,697
-
-
Loss for the year
(3,597,778)
(16,942,450)
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
Page | 34
Financial Report
For the year ended 31 December 2022
Sacgasco Limited
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2022
Loss for the year
Other comprehensive income
Note
2022
$
2021
Restated
$
(3,597,778)
(16,942,450)
Foreign currency translation difference of foreign operations
(634,841)
(207,211)
Total comprehensive loss for the year
(4,232,619)
(17,149,661)
Loss for the year is attributable to:
Continuing operations
Discontinued operations
Comprehensive loss for the year is attributable to:
Continuing operations
Discontinued operations
Loss per share (cents per share)
Basic and diluted – continuing operations
Basic and diluted – discontinued operations
(3,814,475)
(16,942,450)
216,697
-
(3,597,778)
(16,942,450)
(4,449,316)
(17,149,661)
216,697
-
(4,232,619)
(17,149,661)
(0.67)
0.04
(0.63)
(3.65)
-
(3.65)
11
The above consolidated statement of other comprehensive income should be read in conjunction with the
accompanying notes.
Page | 35
Financial Report
For the year ended 31 December 2022
Sacgasco Limited
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of 31 December 2022
Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Prepayments
Other financial assets
Current tax assets
Total current assets
Oil and gas properties
Property, plant, and equipment
Right of use assets
Intangible assets
Other financial assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Borrowings
Lease liabilities
Employee benefits
Site restoration provision
Contract liabilities
Current tax liabilities
Total current liabilities
Note
2022
$
2021
Restated
$
13
14
15
16
17
12
18
19
17
20
21
22
8
23
435,870
1,406,782
124,782
2,177,077
5,435
72,447
1,286,051
1,948,770
48,771
100,324
-
-
4,222,393
3,383,916
22,884,305
28,671,482
12,357
140,841
634
318,365
3,079
-
34
280,511
23,356,502
28,955,106
27,578,895
32,339,022
(5,652,013)
(4,782,003)
(917,041)
(839,534)
(89,272)
(16,926)
(1,061,769)
(1,410)
-
-
(27,191)
(903,257)
(219,639)
(369,277)
(7,738,431)
(7,140,901)
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Page | 36
Financial Report
For the year ended 31 December 2022
Sacgasco Limited
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
As of 31 December 2022
Site restoration provision
Lease liabilities
Total non-current liabilities
Total liabilities
Net liabilities
Equity
Share capital
Reserves
Accumulated losses
Total deficit attributable to equity holders
of the Company
Note
2022
$
2021
Restated
$
23
22
(30,030,547)
(34,427,709)
(44,994)
-
(30,075,541)
(34,427,709)
(37,813,972)
(41,568,610)
(10,235,077)
(9,229,588)
24
33,058,906
29,941,940
(439,748)
1,022,729
(42,854,235)
(40,194,257)
(10,235,077)
(9,229,588)
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Page | 37
Financial Report
For the year ended 31 December 2022
Sacgasco Limited
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Balance on 1 January 2021
23,635,092
361,229
191,556
110,200
12,931
(23,466,207)
844,801
Share
capital
$
Equity
component of
convertible
note
$
Translation
reserve
Options
reserve
Share-based
payments
reserve
Accumulated
losses
Total
equity
$
$
$
$
$
Loss for the year - restated
Foreign exchange translation difference on
foreign operations - restated
Total comprehensive loss for the year - restated
-
-
-
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 – restated
29,941,940
-
-
-
-
-
(207,211)
(207,211)
-
-
-
-
-
-
-
-
-
-
(121,600)
(92,800)
1,042,000
-
-
-
-
-
-
-
(16,942,450)
(16,942,450)
-
(207,211)
(16,942,450)
(17,149,661)
-
-
5,877,051
68,568
121,600
92,800
-
-
87,653
-
1,129,653
(15,655)
937,800
100,584
(40,194,257)
(9,229,588)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Page | 38
Financial Report
For the year ended 31 December 2022
Sacgasco Limited
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
For the year ended 31 December 2022
Balance on 1 January 2022 – restated
Loss for the period
Foreign exchange translation difference on
foreign operations
Total comprehensive loss for the period
Share
capital
$
29,941,940
-
-
-
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs
3,116,966
Transfer to accumulated losses on exercise of options
Share-based payments
-
-
Balance on 31 December 2022
33,058,906
Equity
component of
convertible
note
$
-
-
-
-
-
-
-
-
Translation
reserve
Options
reserve
Share-based
payments
reserve
Accumulated
losses
Total
equity
$
$
$
$
$
(15,655)
937,800
100,584
(40,194,257)
(9,229,588)
-
(634,841)
(634,841)
-
-
-
-
-
-
-
(937,800)
-
-
-
-
-
(3,597,778)
(3,597,778)
-
(634,841)
(3,597,778)
(4,232,619)
-
3,116,966
937,800
-
160,775
(50,611)
-
110,164
(650,496)
160,775
49,973
(42,854,235)
(10,235,077)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Page | 39
Financial Report
For the year ended 31 December 2022
Sacgasco Limited
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
Cash flows from operating activities
Receipts from customers
Cash paid to suppliers and employers
Payments for exploration and evaluation
Interest paid
Interest received
Income taxes paid
Note
2022
$
2021
$
4,621,122
4,462,491
(1,261,519)
(6,096,239)
(6,216,916)
(3,958,336)
(106,082)
7,178
(757,463)
(10,491)
1,416
(3,163)
Net cash used in operating activities
13(b)
(3,713,680)
(5,604,322)
Cash flows from investing activities
Cash held on acquisition of subsidiary
Payments for oil and gas properties
Payments for property, plant, and equipment
Payments for intangible assets
-
-
1,121,841
(1,579,286)
(18,951)
(928)
-
-
Net cash used in investing activities
(19,879)
(457,445)
Cash flows from financing activities
Proceeds from issue of shares and options
Proceeds from the exercise of options
Repayment of loan to joint venture partner
Loan to joint venture partner
Proceeds from related party loans
Repayment of loans from related parties
Repayment of right of use lease liability
Payment of capital raising costs
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents on 1 January
Effect of exchange rate fluctuations on cash held
2,917,500
5,003,250
-
-
-
100,000
-
(41,527)
(147,011)
301,879
202,060
(137,450)
870,000
(340,000)
-
(331,234)
2,828,962
5,568,505
(904,597)
(493,262)
1,286,051
1,735,573
54,416
43,740
Cash and cash equivalents on 31 December
13(a)
435,870
1,286,051
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Page | 40
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
NOTES TO THE CONSOLIDATED FINANCIAL REPORT
For the year ended 31 December 2022
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
and principal place of business is:
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 2023.
The directors have the power to amend and reissue the financial statements.
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 the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (“AASB”) that are mandatory for the current reporting period. No change to accounting
policies was required.
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 2022.
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.
Page | 41
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
1.2 BASIS OF PREPARATION (continued)
Critical accounting estimates
Sacgasco Limited
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 33.
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 2022 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’.
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.
Page | 42
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
1.5 FOREIGN CURRENCY TRANSLATION
Sacgasco Limited
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.
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.
1.7 GOING CONCERN
The financial report has been prepared on a going concern basis which contemplates continuity of normal business
activities and realisation of assets and settlement of liabilities in the normal course of business.
On 31 December 2022, the Group had net liabilities of $10,235,077, comprised of a $2,378,845 withholding tax
liability (see below) and a $30,030,547 non-current site restoration provision. $21,622,979 relates to the Group’s
Canadian producing assets and $8,201,169 to the Philippines exploration assets, neither of which are likely to be
payable in the near term. During the year ended 31 December 2022, the Group incurred an operating loss of
$3,597,778 and had net cash outflows of $904,597.
Page | 43
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
1.7 GOING CONCERN (continued)
Sacgasco Limited
As disclosed in note 20, there is a liability of $2,378,845 for estimated withholding tax on intercompany loan interest
which was payable prior to the acquisition of BCPE on 1 July 2021. Legal advice on the recovery of this amount
under the warranties provided under the share purchase agreement continues, with such legal advice confirming the
Company has strong grounds to recover these amounts.
During the financial year, the Group received cash inflows from oil and gas production operations in Canada. At year
end, the Group is in a payable position predominantly due to development costs incurred by the operator in drilling
and completion works at the Joint Venture’s Alberta Plains assets.
Despite ongoing operations in Canada, present conditions indicate a material uncertainty that may cast significant
doubt about the Group’s ability to continue as a going concern and therefore, may be unable to realise its assets at
carrying value and discharge its liabilities in the normal course of business.
Further, the Board acknowledges the need to source further funding to meet planned and committed operating
expenditures and discharge its current liabilities. Should the Canadian producing assets in which the Group has an
interest be unsuccessful in providing sufficient positive cash flows, the Directors are confident of sourcing these funds
from one or more of the following alternatives:
(cid:120) Capital raising such as:
o Private placement
o Entitlement issue
o Share purchase plan
(cid:120)
(cid:120)
Borrowings from related or third parties
Successful sale of rights to exploration or production assets
The Directors are confident that a combination of these strategies will sufficiently fund operations in the foreseeable
future.
Whilst these factors give rise to a material uncertainty regarding the outcome of funding alternatives, and therefore
may cast significant doubt as to whether or not the Group will be able to continue as a going concern and realise its
assets at carrying values, given the Group’s ability to raise cash when required, the directors are of the opinion the
Group can carry on operations for the foreseeable future, and that it will be able to realise its debts and discharge its
liabilities in the normal course of business. If necessary, the Group has the capacity to delay or cancel expenses
that are discretionary in nature, including administrative costs and exploration expenditure that are not contractually
binding. The timing of raising additional capital will depend on the investment markets, current and future planned
exploration activities and positive cashflows from the Group’s Canadian producing assets.
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 | 44
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
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 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 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 25.
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 14, 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 26.
Page | 45
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
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 12.
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 23.
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 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.
Page | 46
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
2
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued)
Asset acquisition
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.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability.
Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or
purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when
ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances
that create an economical incentive to exercise an extension option, or not to exercise a termination option, are
considered at the lease commencement date. Factors considered may include the importance of the asset to the
consolidated entity's operations; comparison of terms and conditions to prevailing market rates; incurrence of
significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the
asset. The consolidated entity reassesses whether it is reasonably certain to exercise an extension option, or not
exercise a termination option, if there is a significant event or significant change in circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated
to discount future lease payments to measure the present value of the lease liability at the lease commencement
date. Such a rate is based on what the consolidated entity estimates it would have to pay a third party to borrow the
funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security, and
economic environment.
Page | 47
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
3
VOLUNTARY CHANGE OF ACCOUNTING POLICY
In 2016, the Group changed its accounting policy for exploration and evaluation expenditure to expense as incurred.
However, this change did not specifically mention acquisition costs.
The new exploration and evaluation expenditure accounting policy adopted on 31 December 2016 was to expense
all exploration and evaluation expenditure 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.
The previous accounting policy was that expenditure on exploration and evaluation activities in relation to areas of
interest which had not reached a stage which permitted reasonable assessment of the existence or otherwise of
economically recoverable reserves were capitalised as incurred.
When Sacgasco acquired BCPE on 1 July 2021, the cost of acquiring the Philippines operations was capitalised.
The Directors believe that expensing all exploration and evaluation expenditure as incurred, will provide more relevant
information and no less reliable information to users of the consolidated financial statements. Both the previous and
the new accounting policies are compliant with AASB 6 Exploration for and Evaluation of Mineral Resources, which
permits a choice of accounting policy for an area of interest.
The impact of the change in accounting policy on the consolidated statement of profit or loss and other comprehensive
income, consolidated statement of financial position and reconciliation of cash flows from operating activities, is
included in the following tables:
Extract from consolidated statement of profit or loss and other comprehensive income
31 December
2021
Increase /
(decrease)
31 December
2021
Restated
$
$
$
Exploration expenditure expensed through profit or loss
(4,381,605)
(6,260,808)
(10,642,413)
General and administrative expenses
(178,418)
1
(178,417)
Loss before income tax
Income tax expense
Loss for the year
(10,316,883)
(6,260,807)
(16,577,690)
(364,760)
-
(364,760)
(10,681,643)
(6,260,807)
(16,942,450)
Foreign currency translation difference of foreign operations
(405,104)
197,893
(207,211)
Total comprehensive loss for the year
(11,086,747)
(6,062,914)
(17,149,661)
Loss per share
Basic and diluted (cents per share)
(2.30)
(1.35)
(3.65)
Page | 48
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
3
VOLUNTARY CHANGE OF ACCOUNTING POLICY (continued)
Extract from reconciliation of cash flows from operating activities
Loss for the year
Adjustments for:
31 December
2021
Increase /
(decrease)
31 December
2021
Restated
$
$
$
(10,681,643)
(6,260,807)
(16,942,450)
Exploration expenditure expensed through profit or loss
-
11,980,830
11,980,830
Change in prepayments
Other provisions
39,283
(1)
39,282
(614,853)
(5,720,022)
(6,334,875)
Net cash from operating activities
(5,604,322)
-
(5,604,322)
Extract from consolidated statement of financial position
Prepayments
31 December
2021
Increase /
(decrease)
$
100,323
$
1
Capitalised exploration acquisition costs
6,062,915
(6,062,915)
31 December
2021
Restated
$
100,324
-
6,163,238
(6,062,914)
100,324
29,941,940
-
29,941,940
824,836
197,893
1,022,729
(33,933,450)
(6,260,807)
(40,194,257)
(3,166,674)
(6,062,914)
(9,229,588)
Equity
Issued capital
Reserves
Accumulated losses
Total deficiency
Page | 49
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
4
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:
(cid:120) oil and gas exploration and appraisal
(cid:120) 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 have been no changes to the basis of segmentation or the measurement basis for the segment profit or loss
since 31 December 2021.
Segment profit or loss
Revenue
Segment profit / (loss)
2022
2021
2022
$
$
$
2021
Restated
$
Oil and gas production
Oil and gas exploration
16,700,519
7,888,355
(110,535)
573,761
1,148,896
-
(3,727,123)
(11,297,934)
17,849,415
7,888,355
(3,837,658)
(10,724,173)
Eliminations
-
-
(1,869)
(1,412)
17,849,415
7,888,355
(3,839,527)
(10,725,585)
Finance income
Finance costs
Government grants
Withholding tax
Central administrative expenses
3,617
387
(80,986)
(69,170)
-
-
1,207,747
(3,586,592)
(800,955)
(2,196,730)
Loss from continuing operations before tax
(3,510,104)
(16,577,690)
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.
Page | 50
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
4
OPERATING SEGMENTS (continued)
Segment assets and liabilities
Sacgasco Limited
Assets
Liabilities
2022
$
2021
Restated
$
2022
$
2021
Restated
$
Oil and gas exploration
Oil and gas production (1)
3,565,864
973,033
(10,276,992)
(8,790,805)
23,009,086
29,958,425
(24,004,700)
(27,916,244)
Total segment assets and liabilities
26,574,950
30,931,458
(34,281,692)
(36,707,049)
Corporate and other segment assets/liabilities
1,003,945
1,407,564
(3,532,280)
(4,861,561)
Total
27,578,895
32,339,022
(37,813,972)
(41,568,610)
(1)
includes oil and gas properties and inventories
For monitoring segment performance and allocating resources between segments:
(cid:120) all assets are allocated to reportable segments, other than corporate office assets; and
(cid:120) 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:
Production income
Non-current assets
Australia
Canada and USA
Philippines
Total
2022
2021
2022
$
-
$
-
2021
Restated
$
$
7,029
6,183
17,849,415
7,888,355
23,178,734
28,948,923
-
-
170,739
-
17,849,415
7,888,355
23,356,502
28,955,106
Non-current assets comprise oil and gas properties and bonds.
Information about major customers
Total revenue for the year from contracts with customers is derived from one single customer.
Page | 51
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
5
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
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:
(cid:120) The Operator has transferred control of the goods to the buyer and the revenue is recognised at that time,
(cid:120) The Operator retains no continuing managerial involvement to the degree usually associated with
ownership or effective control over the goods sold,
(cid:120) The amount of revenue can be reliably measured,
(cid:120)
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
(cid:120) The costs incurred or to be incurred in respect of the transaction can be reliably measured.
Revenue for the year ended 31 December 2022, 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 2022.
The Group did not have contracts that were executed in the current or prior period, whereby the performance
obligations were partially met at the beginning of the period.
The Group’s revenue disaggregated by pattern of revenue recognition is as follows:
Goods transferred at a point in time
Crude oil
Natural gas
2022
$
2021
$
16,429,444
7,712,575
1,419,971
175,780
17,849,415
7,888,355
Page | 52
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
6
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.
Other operating income – California
Other operating income – Canada
Other income
Debt forgiveness
Prior period employee expense refunds
Total other income
Note
(i)
(ii)
(iii)
(iv)
2022
$
289,107
277,763
566,870
19,962
250,224
409,017
2021
$
724,019
265,237
989,256
28,656
-
-
1,246,073
1,017,912
(i)
(ii)
(iii)
(iv)
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. Each working interest owner pays a share of the lease operating
expenses (COPAS) for managing these wells.
The Canadian production assets additionally generate minor revenues through provision of access to private
roads.
Intercompany loan debt forgiveness following dissolution of Sacgasco SG Pte Ltd.
Includes $395,869 ATO refund following re-assessment of Nido Petroleum’s historical PAYG paid.
7
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 | 53
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
7
NET FINANCE COSTS (continued)
Interest income on deposits
Interest income from authorised government agencies
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 on right of use lease liabilities
Interest expense on convertible notes
Interest expense
Unwinding of discounts on provisions
Total finance costs
Net finance costs
Note
21
22
Sacgasco Limited
2022
$
3,661
3,545
-
7,206
80,986
2,603
-
83,589
2021
$
32
-
369
401
-
43,238
-
25,932
69,170
679,715
885,650
763,304
954,820
756,098
954,419
8
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 | 54
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
8
PERSONNEL EXPENSES AND EMPLOYEE BENEFITS (continued)
The table below sets out personnel costs expensed during the year.
Note
27
Directors’ remuneration
Other wages and salaries
Contributions to defined contribution plans
Other employee benefits
Share-based payments expense
Other personnel costs on termination of Philippines staff
Other associated personnel expenses
Expensed in exploration and evaluation
Expensed in personnel expenses
The table below sets out employee benefits at the reporting date.
Current
Salary accrual
Statutory superannuation contributions
2022
$
462,487
200,250
1,669
22,090
1,180
-
8,233
2021
$
1,303,859
98,589
3,242
-
-
135,534
19,458
695,909
1,560,682
248,438
447,471
-
1,560,682
695,909
1,560,682
2022
$
14,866
2,060
16,926
2021
$
24,674
2,517
27,191
Page | 55
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
9
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.
The exploration and evaluation accounting policy expenses all exploration and evaluation expenditure 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 as incurred to exploration expenditure
expensed through profit or loss.
Exploration expenditure as incurred - California
Exploration expenditure as incurred - Philippines
2022
$
76,639
3,285,212
2021
Restated
$
3,751,594
6,890,819
3,361,851
10,642,413
Page | 56
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
10
ASSET ACQUISITION AND DISPOSAL
Acquisition of TG World (BVI) Corporation
Sacgasco Limited
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 SC 54 production until the maximum is reached. The
acquisition was subject to regulatory approvals which were not completed until 1 March 2022.
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.
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 TG World. 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 this acquisition 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 TG World acquired on 1 March 2022 are as follows:
Net liabilities acquired:
Other financial assets
Trade and other payables
Current tax liabilities
Financial liabilities
Net liabilities acquired
Net effect of acquisition
$
13,617
(145,307)
(89,388)
(23,240,059)
(23,461,137)
(23,461,137)
Disposal of TG World (BVI) Corporation
On 16 December 2021, the Company executed an agreement to transfer a 12.5% working interest in SC 54 to
Blue Sky International Holdings Inc. (“Blue Sky”) through the sale of TG World. Consideration for the sale was
$216,697 (C$200,000) and subject to the regulatory approvals disclosed above.
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.
The SC 54 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.
The sale of TG World was completed on 2 March 2022 with no change in net liabilities or its functional currency USD,
resulting in a gain on disposal of $216,697 equivalent to the cash received.
Page | 57
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
11
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 accounts
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.
2022
$
2021
Restated
$
Basic and diluted loss per share from continuing operations
Loss after income tax attributable to owners of Sacgasco Limited
(3,814,475)
(16,942,450)
Basic and diluted loss per share
(0.67)
(3.65)
Cents
Cents
2022
$
2021
Restated
$
Basic and diluted earnings per share from discontinued operations
Profit after income tax attributable to owners of Sacgasco Limited
216,697
-
Basic and diluted earnings per share
0.04
-
Cents
Cents
Page | 58
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
11
LOSS PER SHARE (continued)
Sacgasco Limited
2022
$
2021
Restated
$
Basic and diluted loss per share
Loss after income tax attributable to owners of Sacgasco Limited
(3,597,778)
(16,942,450)
Basic and diluted loss per share
(0.63)
(3.65)
Cents
Cents
Weighted average number of ordinary shares
Issued ordinary shares on 1 January
Effect of shares issued
Number
Number
481,198,714
341,258,491
86,238,549
123,387,537
Weighted average number of ordinary shares on 31 December
567,437,263
464,646,028
In both years ending 31 December 2022 and 2021, diluted earnings per share is the same as basic earnings per
share due to the absence of dilutive potential ordinary shares during the year.
Page | 59
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
12
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:
(cid:120) When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset
or liability in as transaction that is not a business combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits, or
(cid:120) 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
probably 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 assets and 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.
Sacgasco Limited (“the head entity”) and its wholly owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax
consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated
group has applied the ‘separate taxpayer within group’ approach in determining the appropriate amount of taxes
to allocate to members of the tax consolidated group.
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 contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
Page | 60
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
12
INCOME TAX EXPENSE (continued)
(a) Amounts recognised in profit or loss
Current tax expense
Deferred tax expense
Income tax expense
Sacgasco Limited
2022
$
2021
$
304,371
364,760
-
-
304,371
364,760
Numerical reconciliation of income tax expense to prima facie tax
payable
Loss from continuing operations before income tax
(3,293,407)
(16,577,690)
Tax at the Australian tax rate of 30% (2021: 30%)
(988,022)
(4,973,307)
Non-deductible expenses
Non-assessable income
Change in income tax rates from 27.5% to 30%
Tax rate differential on Australian income
Non-assessable non-exempt overseas subsidiaries expenses
Overseas minimum income tax
Adjustment for prior periods
Timing differences
Tax losses utilised not previously brought to account
Income tax expense
165,731
(409,718)
-
7,737
842,305
3,463
(2,114)
337,573
347,416
304,371
1,863,196
(144,268)
(176)
(110,050)
1,432,159
3,162
(1,938)
2,167,695
128,287
364,760
Tax losses
Potential future income tax benefits attributed to tax losses,
not brought to account
2,155,037
1,809,735
Current tax asset / (liability)
72,447
(369,277)
All unused tax losses were incurred by Australian entities.
The benefit of these tax losses will only be obtained if:
i)
ii)
iii)
iv)
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.
Page | 61
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
12
INCOME TAX EXPENSE (continued)
(b) Unrecognised deferred tax assets and liabilities
Deferred tax liabilities have not been recognised in respect of the following items:
Deferred tax liabilities
Prepayments
Oil and gas properties
Trade and other receivables
Deferred tax assets
Capital raising costs – s40-880
Oil and gas properties
Property, plant, and equipment
Trade and other payables
Employee benefits
Provisions
Carry forward tax losses
2022
$
2021
$
(8,207)
(8,203)
(4,307,512)
-
(4,315,719)
-
(11,948)
(20,151)
5,224
-
50
18,438
618
4,815,682
2,155,037
21,257
224,048
66
12,600
755
99,369
1,809,735
6,995,049
2,167,830
Net unrecognised deferred tax assets
2,679,330
2,147,679
13
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.
Page | 62
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
13
CASH AND CASH EQUIVALENTS (continued)
(a) Reconciliation of cash recorded in Statement of Financial Position to Statement of Cash Flows
2022
$
2021
$
Cash and cash equivalents in the statement of cash flows
435,870
1,286,051
(b) Reconciliation of cash flows from operating activities
Cash flows from operating activities
Loss for the period
Adjustments for:
2022
$
2021
$
(3,597,778)
(16,942,450)
Equity-settled share-based payment transactions
25
401,485
1,205,324
Depreciation and amortisation
Exploration expenditure expensed through profit or loss
Provision for expected credit losses
Debt forgiveness
Other income
Net loss / (profit) on foreign exchange translations
Net finance expense / (income)
Unwind of discount on provisions
Loss on disposal of subsidiary
Change in other receivables
Change in inventory
Change in prepayments and deposits
Change in other operating assets
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 provision
Change in site restoration provision
Net cash used in operating activities
Page | 63
2,286,466
996,304
-
11,980,830
342,943
(250,224)
(47,700)
85,523
679,715
511
889,576
(77,741)
(2,037,122)
(1,156,669)
(24,940)
-
199,037
(22,493)
(218,255)
(451,043)
(10,265)
-
-
-
(60,298)
25,932
885,650
(1,028,183)
(47,757)
39,282
-
244,042
1,028
2,826,254
32,747
219,639
361,597
(9,388)
(704,706)
(6,334,875)
(3,713,680)
(5,604,322)
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
13
CASH AND CASH EQUIVALENTS (continued)
(c) Non-cash investing and financing activities
Additions to the right-of-use assets
2022
$
174,521
(d) Changes in liabilities arising from financing activities
Related
party loans
Right-of-use
assets
Convertible
notes
2021
$
-
Total
$
Balance on 1 January 2021
Net cash from financing activities
Interest on convertible notes
Interest on related party loans
Balance on 31 December 2021
$
276,787
530,000
-
32,747
839,534
$
-
-
-
-
-
Net cash used in financing activities
100,000
(41,527)
Interest on related party loans - expensed
Interest on related party loans – paid
Right of use lease liabilities
Effects of foreign exchange
80,986
(103,479)
-
-
-
-
174,521
1,272
Balance on 31 December 2022
917,041
134,266
$
42,636
-
319,423
530,000
(42,636)
(42,636)
-
-
-
-
-
-
-
-
32,747
839,534
58,473
80,986
(103,479)
174,521
1,272
1,051,307
14
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.
Page | 64
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
14
TRADE AND OTHER RECEIVABLES (continued)
Current
Trade debtors
Less: provision for expected credit losses
Philippines joint venture partners cash calls
Less: provision for expected credit losses
Authorised government agencies
Other receivables – oil and gas assets
Other
Movement in the allowance for expected credit losses
Opening balance
Reversal of provisions recognised
Effects of foreign exchange
Provision for expected credit losses on Philippines cash calls
2022
$
2021
$
272,828
(25,691)
247,137
774,604
(342,942)
431,662
23,968
389,461
314,554
311,140
(30,525)
280,615
253,280
-
253,280
30,289
1,238,172
146,414
1,406,782
1,948,770
30,525
(6,696)
1,862
25,691
342,942
368,333
244,884
(201,305)
(13,054)
30,525
-
30,525
(i)
(ii)
(i)
(ii)
(i)
The Group has assessed the recoverability of the amounts due for the California well expenses on exploratory
wells, accounting for factors such as oil and gas prices and historical recovery and determined that an ECL of
$25,691 for the year ended 31 December 2022 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.
(ii)
A provision of $342,942 has been recorded for cash calls issued to a joint venture partner of the Philippines
exploration assets as there is an increased probability of payment delays or non-payment. The full provision
is in relation to one debtor.
Other receivables are non-interest bearing. Note 26 includes disclosures relating to the credit risk exposures and
analysis relating to the allowance for expected credit losses.
Page | 65
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
15
INVENTORIES
Sacgasco Limited
2022
$
2021
$
Oil in storage – at costs
124,782
48,771
16
PREPAYMENTS
Current
Exploration expenses
Insurance
Australian Securities Exchange
Other
2022
$
(1)
2,112,926
2,314
13,988
47,849
2021
$
60,313
2,882
15,540
21,589
2,177,077
100,324
(1)
Includes $2,053,870 (US$1,400,000) initial consideration for key drilling long lead items, refer note 28
(commitments).
17 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.
Page | 66
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
17
OTHER FINANCIAL ASSETS (continued)
Accounting Policy (continued)
Sacgasco Limited
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, as 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 probably 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.
2022
$
5,435
318,365
323,800
318,365
5,435
323,800
2021
$
-
280,511
280,511
280,511
-
280,511
Current
Non-current
Deposits and bonds
Retainer
Page | 67
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
17 OTHER FINANCIAL ASSETS (continued)
Reconciliation
Reconciliation of the fair values at the beginning and end of the current and previous financial year are set out below:
DoGGR
Bond (1)
$
ANZ
Term Deposit
$
Security
Deposit (2)
$
Director
Retainer (3)
$
Deposit
$
Total
$
Balance on 1 January 2021
259,489
5,020
Transfer to acquisition cost of Canadian oil and gas properties
Interest income re-invested
Effects of foreign exchange
Balance on 31 December 2021
Additions
Effects of foreign exchange
Balance on 31 December 2022
-
-
15,950
275,439
-
17,971
293,410
-
52
-
5,072
-
-
5,072
-
-
-
-
-
19,505
378
19,883
-
-
-
-
-
5,435
-
5,435
142,952
407,461
(169,933)
(169,933)
-
26,981
-
-
-
-
52
42,931
280,511
24,940
18,349
323,800
1.
2.
3.
includes $293,410 (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.
security deposit held by Alakor Corporation for the Philippines office lease
retainer for the services of a Singapore resident director until completion of dissolution of Sacgasco SG Pte Ltd
Refer to note 26 for further information on fair value measurement.
Page | 68
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
18 OIL AND GAS PROPERTIES
Accounting Policy
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 are 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.
Page | 69
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
18 OIL AND GAS PROPERTIES (continued)
Balance on 1 January 2021
Acquisitions
Additions
Sacgasco Limited
Subsurface
assets
$
Surface
assets
$
Total
$
-
-
-
1,869,815
152,231
2,022,046
17,676,292
6,072,828
23,749,120
Change in site restoration liabilities
2,496,523
801,836
3,298,359
Depreciation and depletion
Exchange differences
(753,594)
(240,719)
(994,313)
452,143
144,127
596,270
Balance on 31 December 2021
21,741,179
6,930,303
28,671,482
Additions
-
1,156,669
1,156,669
Change in site restoration liabilities
(3,598,688)
(1,201,068)
(4,799,756)
Depreciation and depletion
Exchange differences
(1,708,433)
(530,811)
(2,239,244)
90,414
4,740
95,154
Balance on 31 December 2022
16,524,472
6,359,833
22,884,305
19
RIGHT-OF-USE ASSETS
Accounting Policy
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at
cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs incurred,
and, except when included in the cost of inventories, an estimate of costs expected to be incurred for dismantling
and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of-use assets
are subject to impairment or adjusted for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
Page | 70
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
19
RIGHT-OF-USE ASSETS (continued)
Land and buildings – right of use
Less: accumulated depreciation
Reconciliation of movements:
Opening balance
Additions
Depreciation
Effects of foreign exchange movement
Closing balance
Sacgasco Limited
2022
$
177,905
(37,064)
140,841
-
174,521
(36,922)
3,242
140,841
2021
$
-
-
-
-
-
-
-
-
The Group has a two-year lease for its office in the Philippines. On renewal, the terms of the lease will be
renegotiated.
20
TRADE AND OTHER PAYABLES
Accounting Policy
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.
Current
Trade payables
Other payables – oil and gas producing assets
Other payables – oil and gas exploration assets
Authorised government agencies
(i)
DOE training assistance for Philippine service contracts
Accrued expenses
2022
$
2021
$
161,266
1,392,399
1,302,501
2,378,845
376,657
40,345
372,179
-
-
3,586,592
541,912
281,320
5,652,013
4,782,003
Page | 71
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
20
TRADE AND OTHER PAYABLES (continued)
(i)
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). During the financial year,
further evidence identified the prevailing interest rate should be 10% resulting in a reduction of $1,207,747 to
$2,378,845. Notwithstanding this reduction, legal advice from the ongoing investigation, confirms the
Company still has strong grounds to recover these amounts.
Refer to note 26 for further information on financial instruments.
21
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 | 72
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
21
BORROWINGS (continued)
Sacgasco Limited
Book value
2022
Fair value
2022
Book value
2021
Fair value
2021
$
$
$
$
Current
Loans received from a related party
917,041
917,041
839,534
839,534
Convertible
Notes
$
Loans from
a director (2)
$
42,636
-
361,229
25,932
276,787
870,000
-
43,238
Total
$
319,423
870,000
361,229
69,170
(429,797)
-
(429,797)
-
-
-
-
-
-
(350,491)
(350,491)
839,534
100,000
80,986
839,534
100,000
80,986
(103,479)
(103,479)
917,041
917,041
Balance on 1 January 2021
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
Loans and borrowings received
Interest charged
Less repaid (1)
Balance on 31 December 2022
(1)
(2)
amounts repaid include interest and loan establishment costs
refer to note 26 for further details.
Page | 73
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
22
LEASE LIABILITIES
Accounting Policy
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate.
Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that
depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a
purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that to not depend on an index or a rate are expensed in the period in
which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
future lease payments arising from a change in an index, or a rate used
residual guarantee
lease term, or
certainty of a purchase option and termination penalties.
When a lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset, or to profit
or loss if the carrying amount of the right-of-use asset is fully written down.
2022
$
-
174,521
2,603
(44,130)
1,272
134,266
89,272
44,994
134,266
2021
$
-
-
-
-
-
-
-
-
-
Opening balance
Recognition of lease liabilities
Interest charged
Less repayments
Effects of foreign exchange
Lease liabilities included in the consolidated statement
of financial position
Current
Non-current
Refer to note 26 for further information on financial instruments
Page | 74
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
23
SITE RESTORATION PROVISION
Accounting Policy
Sacgasco Limited
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.
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 until approximately 2045.
These provisions have been recognised upon region specific cost estimates provided by the Alberta Energy
Regulator (AER). The assumptions are based on the current economic environment and are contained within
Directive 011 as provided by AER. These estimates are reviewed regularly accounting for any material changes to
the assumptions, however, actual decommissioning costs will ultimately depend upon future market prices for the
necessary decommissioning works required that will reflect market conditions at the relevant time. Furthermore, the
timing of decommissioning is likely to depend upon when the fields cease to produce at an economically viable rate.
This in turn, will depend upon future oil and gas prices, which are considered inherently uncertain.
The significant assumptions used in the calculation of the present value of the provisions are a risk-free rate of 2.819
percent, an inflation rate of 2 percent, and the assumed timing of cash outflows from 2022 until 2045. The
assumptions represent a change from the metrics utilised on 31 December 2021, due to changes in the risk-free rate
and inflation since that date.
Philippines (Service Contract SC 14C2)
The Group has recognised a restoration liability for the complete abandonment of the historically abandoned wells,
based on the estimated $42,908,293 (US$29,569,264) (gross) cost to abandon the field. The significant assumptions
used in the calculation of the present value of the provisions are a risk-free rate of 5.25 percent, an inflation rate of
3 percent, and the assumed timing of cash outflows until 2025. The Group’s share (22.28%) as of 31 December 2022
is $8,201,169 (US$5,590,245).
Page | 75
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
23
SITE RESTORATION PROVISION (continued)
Site restoration provisions have been disaggregated based upon geography due to differing jurisdictional
requirements as per the table below:
Current
Canada
Non-current
California
Canada
Philippines
2022
$
2021
$
1,061,769
903,257
-
206,399
193,757
21,622,979
26,643,711
8,201,169
7,590,241
30,030,547
34,427,709
Balance
31,092,316
35,330,966
Reconciliation of movements in site restoration provision:
Balance on 1 January 2021
Amounts recognised on acquisition
Amounts utilised or extinguished
Accretion expense
Change in site restoration estimates
California
Canada
$
182,537
$
-
Philippines
Restated (1)
$
Total
Restated
$
-
182,537
-
-
-
-
23,344,495
12,543,107
35,887,602
(30,610)
361,840
-
523,757
(30,610)
885,597
3,368,411
(5,230,969)
(1,862,558)
Effects of foreign exchange
11,220
502,832
(245,654)
268,398
Balance on 31 December 2021
Amounts utilised or extinguished
Accretion expense
Change in site restoration estimates
Effects of foreign exchange
193,757
27,546,968
7,590,241
35,330,966
-
-
-
(636,670)
-
(636,670)
566,206
113,509
679,715
(3,855,632)
-
(3,855,632)
12,642
(936,124)
497,419
(426,063)
Balance on 31 December 2022
206,399
22,684,748
8,201,169
31,092,316
(1) As of 31 December 2022, the site restoration provision of $12,543,107 was combined with the acquisition
cost of acquiring NPP but was subsequently changed as disclosed in note 3.
Page | 76
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
Sacgasco Limited
24
CAPITAL AND RESERVES
Accounting Policy
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Issued capital
Ordinary shares
Number of shares
Amount in $
2022
2021
2022
2021
Balance on 1 January
481,198,714
341,258,491
29,941,940
23,635,092
Issue of fully paid shares for cash
116,700,000
76,973,072
2,917,500
5,003,250
Issue of shares in lieu of directors’ fees
5,661,294
2,672,690
Issue of shares in satisfaction of service provider fees
7,620,901
-
Issue of shares for working interest acquisitions
Issue of shares on conversion of convertible notes
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
Capital raising costs
-
-
-
-
-
-
10,767,808
40,049,984
2,929,700
1,546,969
5,000,000
142,983
203,494
-
-
-
-
-
75,671
-
827,484
400,500
29,297
61,879
240,000
-
(147,011)
(331,233)
Balance on 31 December
611,180,909
481,198,714
33,058,906
29,941,940
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 25.
Options reserve
The options 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 or reversed through retained earnings if the options
expire or are cancelled. Refer to note 25.
Page | 77
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
24
CAPITAL AND RESERVES (continued)
Reserves (continued)
Sacgasco Limited
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.
25
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:
(cid:120) during the vesting period, the liability at each reporting date is the fair value of the award at that date
(cid:120)
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.
Page | 78
Notes to the Consolidated Financial Report
For the year ended 31 December 2022
25
SHARE-BASED PAYMENTS (continued)
Accounting Policy (continued)
Sacgasco Limited
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.
The share-based payment expense included within the consolidated financial statements can be broken down as
follows:
Expensed in personnel expenses
Shares issued to directors
Shares to be issued to directors
Options issued to directors
Options issued to employees
Expensed in professional fees
Shares issued to consultants
Shares to be issued to consultants
Options issued to consultants of the Company
2022
$
2021
$
108,158
49,973
118,000
1,180
82,578
-
41,595
62,741
34,824
1,042,000
-
-
65,759
-
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 | 79
Notes to the Financial Report
For the year ended 31 December 2022
25
SHARE-BASED PAYMENTS (continued)
Sacgasco Limited
Options
On 31 December 2022, 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
Vesting
date
Expiry
date
29-Jan-21
29-Jan-21
31-Dec-22
31-May-22
31-May-22
31-Jan-24
Total
Weighted average exercise price (cents)
Exercise
Price
(cents)
6.0
4.5
Balance at
the start of
the year
18,000,000
Granted
during
the year
-
-
27,250,000
18,000,000
27,250,000
6.0
4.5
Exercised
during
the year
Expired /
forfeited
during
the year
Balance at
the end of
the year
Vested and
exercisable
at the end of
the year
-
-
-
-
(18,000,000)
-
-
-
27,250,000
27,250,000
(18,000,000)
27,250,000
27,250,000
6.0
4.5
At the reporting date, the weighted average remaining contractual life of options outstanding at year end was 1.08 years.
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
Fair value
at grant
date
(cents)
Share price
at grant
date
(cents)
91.72%
2.60%
0.59
2.20
Tranche 1
27,250,000
4.5
31-May-22
31-Jan-24
(cents)
(years)
1.67
Page | 80
Notes to the Financial Report
For the year ended 31 December 2022
25
SHARE-BASED PAYMENTS (continued)
Sacgasco Limited
Options (continued)
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
Vesting
date
Expiry
date
31-May-19
13-Jun-19
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
Expired /
forfeited
during
the year
Balance at
the end of
the year
Vested and
exercisable
at the end of
the year
-
(3,000,000)
(16,000,000)
-
-
-
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.
Page | 81
Notes to the Financial Report
For the year ended 31 December 2022
26
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)
(cid:120) amortised cost
(cid:120)
(cid:120) equity instruments at fair value through other comprehensive income (FVOCI)
(cid:120) 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:
(cid:120)
(cid:120)
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):
(cid:120)
(cid:120)
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 | 82
Notes to the Financial Report
For the year ended 31 December 2022
26
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:
(cid:120)
(cid:120)
(cid:120)
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. The Group does not have any material expected credit losses.
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 | 83
Notes to the Financial Report
For the year ended 31 December 2022
26
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 2021.
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’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 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), Canadian dollars (CAD) and Philippines Peso (PHP).
Page | 84
Notes to the Financial Report
For the year ended 31 December 2022
26
FINANCIAL INSTRUMENTS (continued)
Market risk (continued)
As of 31 December 2022, the Group’s net exposure to foreign exchange risk was as follows:
Assets
2022
$
2021
$
Sacgasco Limited
Liabilities
2022
2021
$
6,067
1,786,984
(1,392,399)
220,854
38,244
-
2,099,925
4,926,898
(2,482,260)
(4,650,612)
$
-
-
Canadian Dollar
Philippine Peso
US Dollar
Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 5% (2021: 5%) 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% (2021: 5%) 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% (2021: 5%)
CAD
PHP
USD
If AUD weakens by 5% (2021: 5%)
CAD
PHP
USD
Impact on profit or loss
2022
$
(63,978)
(419,507)
(113,031)
63,978
419,507
113,031
2021
$
(82,377)
(70,871)
(11,338)
82,377
70,871
11,338
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 | 85
2022
%
0.81
4.36
3.54
2021
%
(4.11)
0.21
(5.71)
Notes to the Financial Report
For the year ended 31 December 2022
26
FINANCIAL INSTRUMENTS (continued)
Market risk (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.
The Group’s sensitivity to interest rates is immaterial.
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.
Page | 86
Notes to the Financial Report
For the year ended 31 December 2022
26
FINANCIAL INSTRUMENTS (continued)
Liquidity risk management (continued)
Sacgasco Limited
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.
The table include both interest and principal cash flows.
31 December 2022
Trade and other payables
Contract liabilities
Borrowings (including right of use lease liabilities)
n/a
n/a
9.36
2,674,556
1,410
65,028
Less than
6 months
6 months
to 1 year
1 – 5 years
Weighted
average
interest
rate
%
$
$
-
-
$
3,771,244
-
40,458
945,821
31 December 2021
Trade and other payables
Contract liabilities
Borrowings (including right of use lease liabilities)
2,740,994
40,458
4,717,065
n/a
n/a
10
3,000,431
1,778,475
219,639
839,534
-
-
4,059,604
1,778,475
-
-
-
-
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:
(cid:120)
(cid:120)
(cid:120)
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).
Page | 87
Notes to the Financial Report
For the year ended 31 December 2022
26
FINANCIAL INSTRUMENTS (continued)
Transfers
Sacgasco Limited
There have been no transfers between the levels of the fair value hierarchy during the year ended
31 December 2022.
Not measured at fair value
The Group has various financial instruments which are not measured at fair value on a recurring basis 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.
27
RELATED PARTIES
Accounting Policy
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
Post-employment benefits
Share-based payments – shares issued
Share-based payments – shares to be issued
Share-based payments – options
2022
$
183,043
3,313
108,158
49,973
118,000
2021
$
164,294
-
62,741
34,824
1,042,000
462,487
1,303,859
Page | 88
Notes to the Financial Report
For the year ended 31 December 2022
Sacgasco Limited
27
RELATED PARTIES (continued)
(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 (2021: $31,200) in
repayment for office rent and outgoings. The balance outstanding on 31 December 2022 was nil (2021: nil).
Joanne Kendrick
Ms Kendrick received $31,500 for consultancy services during the period. This debt was extinguished through the
issue of 945,946 fully paid shares at 3.33 cents per share. No balance was outstanding on 31 December 2022.
(c)
Loans from key management personnel
Gary Jeffery
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 2022 was $80,986 (2021: $40,979) and the balance
outstanding was $917,041 (2021: $839,534).
28
CAPITAL AND OTHER COMMITMENTS
Exploration expenses
Committed at the reporting date, not yet recognised as liabilities
Payable (2)
Office rent
Less than one year (1)
2022
$
2021
$
2,200,575
-
15,600
15,600
(1)
Office rents are short-term (less than 12 months) and continue to be recognised on a straight-line basis.
Page | 89
Notes to the Financial Report
For the year ended 31 December 2022
Sacgasco Limited
28
CAPITAL AND OTHER COMMITMENTS (continued)
(2)
On 10 June 2022, Nido Petroleum Philippines, a subsidiary of Sacgasco, signed an agreement to acquire key
drilling long lead items (“LLI”) for US$2.9 million under an agreed payment structure:
(cid:120)
Initial consideration of US$1.4 million payable in three instalments:
o
o
o
US$400,000 – paid June 2022
US$500,000 – payable within 90 days of the agreement date
US$500,000 – payable within 120 days of the agreement date
(cid:120)
(cid:120)
Balance of US$1,500,000 payable on the earlier of mobilisation of the equipment, or 12 months after
the agreement date
A revised payment schedule has been agreed that spreads the payment of the balance over three
payments:
o
o
o
US$500,000 – payable on 31 May 2023
US$500,000 – payable on or before 31 July 2023
US$500,000 – payable on or before 9 September 2023
$2,112,926 (US$1,400,000) was paid as of 31 December 2022 and has been recognised as a prepayment.
29
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.
There is no completion in the Below Forbes Zone; in fact, there is a plug in the well above that zone; and hence there
is no expectation of this liability being realised.
Service Contract 6B (SC 6B) (Technical Operator is Nido Petroleum Philippines Pty Ltd)
On 4 March 2022, the Company announced that it had signed a Farmin Agreement with the Service Contract 6B
(SC 6B) participants to fund 100%, and to operate an extended well test and any subsequent development of the
Cadlao Field, in return for an additional 63.637% working interest, bringing the Group’s working interest to 72.727%
after farmout. The Farm-in agreement is subject to approvals from The Philippines DOE. The approved budget for
SC 6B is $726,000 (U$500,000) (2022).
Service Contract 14 C2 (SC 14 C2) (Non-Operated- Nido Petroleum Philippines Pty Ltd is Participant)
The Group has a 22.279% participating interest in SC 14C2 which includes the West Linapacan Oil Field. The
approved commitment contingent budget is U$19,530,000 (2022). There is no plan for expenditure of this budget in
2023.
The budget was for the plugging and abandoning of the previously producing wells. These will be postponed until
such time as a decision has been made on potential redevelopment of the West Linapacan Oilfield and a decision is
made as to those wells’ potential future utility in any redevelopment.
Page | 90
Notes to the Financial Report
For the year ended 31 December 2022
29
CONTINGENT LIABILITIES (continued)
Sacgasco Limited
Service Contract 54A (SC 54A) (Operated by Nido Petroleum Philippines Pty Ltd)
On 2 September 2021, the Company acquired Yilgarn Petroleum Pty Ltd for cash consideration of $1. In addition to
the cash consideration, a contingent net royalty of up to $2.18 million (US$1.5 million) would be payable to
IMC Investments Capital Pte Ltd after commercial production is achieved under SC 54. There are no wells currently
capable of producing oil or gas in SC 54.
On 20 November 2021, the Company executed an agreement to acquire TG World for cash consideration of $1 and
a contingent net royalty of up to $907,000 (US$625,000) payable to TG World Energy Corp after any commercial
production is achieved in SC 54. There are no wells currently capable of producing oil or gas in SC 54.
Service Contract 54A (SC 54A) (Operated by Nido Petroleum Philippines Pty Ltd) (continued)
On 16 December 2021, the company executed an agreement to sell TG World for cash consideration of Canadian
$200,000. This agreement is silent on the contingent net royalty of up to $907,000 (US$625,000) payable to TG World
Energy Corp after any commercial production is achieved in SC 54A referred to above and hence the contingent net
royalty remains a contingent liability for the Company. There are no wells currently capable of producing oil or gas
in SC 54A.
The participants in SC 54A advised The Philippines DOE effective 5 August 2022 of their willingness to enter
Sub Phase 7 of the SC 54A. This 12-month period requires a commitment well to be drilled in SC 54 prior to 5 August
2023, unless SC 54A is extended or relinquished. The contingent commitment is $8.71 million (US$6 million).
SC 54A participant TG World has agreed to fund 85% of the drilling of a well in SC 54A to retain and earn a total
after farmin interest of 48.75%. This well is expected to be drilled on the Nandino Prospect. If the Nandino well is
drilled the Company will be required to fund 15% of the well.
Service Contract 58 (SC 58) (Operated by Nido Petroleum Philippines Pty Ltd)
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 Suspension until 15 October 2022, and Nido Petroleum is not required to perform any
activity except for desktop exercises with a commitment budget of US$70,000 (2022). Furthermore, the Company
has applied for a further indefinite Force Majeure Suspension of the SC and suspension of all work programme and
budget activities “until such time as the issues surrounding the West Philippine Sea is resolved”.
There is a commitment to drilling a well when / if Force Majeure is lifted.
Page | 91
Notes to the Financial Report
For the year ended 31 December 2022
30
INTERESTS IN JOINT OPERATIONS
Accounting Policy
Sacgasco Limited
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:
(cid:120) Assets, including its share of any assets held jointly.
(cid:120) Liabilities, including its share of any liabilities incurred jointly.
(cid:120) Revenue from the sale of its share of the output arising from the joint operation.
(cid:120) Share of the revenue from the sale of the output by the joint operation.
(cid:120) 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%
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.
31
AUDITOR’S REMUNERATION
HLB Mann Judd
Audit and other assurance services
Audit and review of financial reports
Taxation services
Total Auditor’s Remuneration
Page | 92
2022
$
2021
$
96,029
-
96,029
60,794
-
60,794
Notes to the Financial Report
For the year ended 31 December 2022
32
SUBSIDIARIES
Sacgasco Limited
The consolidated financial statements incorporate the assets, liabilities, and results of the following wholly owned
subsidiary in accordance with the accounting policy described in note 1.4:
Name of subsidiary
Place of incorporation
Equity Interests
Sacgasco CA Inc.
PEOCO LLC
Sacgasco AB Ltd
Nido Petroleum Pty Ltd
United States of America
United States of America
Canada
Australia
Nido Petroleum Philippines Pty Ltd
Australia
Yilgarn Petroleum Pty Ltd
Sacgasco SG Pte Ltd (1)
Australia
Singapore
2022
%
100
100
100
100
100
100
-
2021
%
100
100
100
100
100
100
100
(1)
Sacgasco SG Pte Ltd was deregistered on 9 December 2022.
Balances and transactions between the Company and its subsidiary, which is a related party of the Company, have
been eliminated on consolidation.
Page | 93
Notes to the Financial Report
For the year ended 31 December 2022
33
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 2022, 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
Share-based payments reserve
Options reserve
Accumulated losses
Total (deficiency) / equity
2022
$
2021
$
(5,259,002)
(7,623,911)
(5,259,002)
(7,623,911)
266,733
273,762
340,341
1,687,917
(1,885,716)
(1,267,999)
(1,885,716)
(1,267,999)
33,058,906
29,941,940
49,973
160,775
100,584
937,800
(34,881,608)
(30,560,406)
(1,611,954)
419,918
34
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
On 17 January 2023, the Company issued 2,271,493 shares in lieu of directors’ fees, as approved by shareholders on
31 May 2022.
Other than as disclosed above, no matters or circumstances 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.
Page | 94
Directors’ Declaration
For the year ended 31 December 2022
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 2022 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 2022.
On behalf of the Board
Gary Jeffery
Managing Director
31 March 2023
Perth
Page | 95
INDEPENDENT AUDITOR’S REPORT
To the members of Sacgasco Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Sacgasco Limited (“the Company”) and its controlled entities
(“the Group”), which comprises the consolidated statement of financial position as at 31 December
2022, the consolidated statement of profit or loss, the consolidated statement of other
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 31 December 2022 and of its
financial performance for 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 further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1.7 in the financial report, which indicates that a material uncertainty
exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter described in the Material
Uncertainty Related to Going Concern we have determined the matters described below to be the
key audit matters to be communicated in our report.
Page | 96
Key Audit Matter
How our audit addressed the key audit matter
Recoverability of oil and gas properties
Refer to Note 18
At 31 December 2022 the Group had oil and gas
properties of $22,884,305.
Our audit procedures included but were not
limited to the following:
(cid:16) Testing impairment indicators to ensure that
no such indicators exist at year end.
(cid:16) Enquiry regarding future plans for the oil and
gas properties and ensuring that such plans
support the recoverability.
(cid:16) Assessing the current carrying value of the
oil and gas properties and ensuring items
capitalised during the year were appropriate
to capitalise.
(cid:16) Assessing the application of reserves and
resources in the amortisation models by
comparing them to the latest published
statement and underlying records.
(cid:16) Testing the mathematical accuracy of the
amortisation models.
(cid:16) Assessing the adequacy of the Group’s
to amortisation and
disclosures relating
depreciation.
Our audit procedures included but were not
limited to the following:
(cid:16) Understanding
revenue and controls
revenue.
the Group’s process
for
in place around
(cid:16) Testing a sample of sales transactions made
during the year to supporting documentation.
the Group’s
revenue
of
for
(cid:16) Assessing
recognition
the
requirements of the accounting standards
and checked
these were adequately
disclosed in the financial statements.
policies
against
(cid:16) Confirming the revenue recognised with the
operator of the wells.
(cid:16) Assessing the adequacy of disclosures in the
financial report.
Assessing the recoverability and carrying value
of this balance was considered to be a key audit
matter due to the judgements and estimations
involved.
These estimations and judgements surround two
areas being
the
amortisation associated with this asset.
impairment indicators and
Impairment indicators involve judgement around
the likely recoverability of the asset.
Amortisation and depreciation involves using
estimated reserves and resources (used as the
“units-of-production””
a
denominator
calculation) of the wells.
in
Revenue recognition
Refer to Note 5
The Group generates revenue predominantly
from its Alberta Plains assets which produce oil
and gas. The Group recognised sales revenue
of $17,849,415 for the year (2021: $7,888,355).
Revenue recognition is considered to be a key
audit matter given the significance of revenue to
the Group’s results as well as the fraud risk
around cut-off including:
(cid:120) An overstatement of revenues
through
premature revenue recognition or recording
of fictious revenues.
(cid:120) Revenue not being recognised when control
is transferred to the customer, resulting in it
the correct
not being
accounting period.
recognised
in
Revenue is recognised when control is
transferred to the buyer and the amount of
revenue can be reliably determined.
Page | 97
Site restoration provision
Refer to Note 23
As at 31 December 2022, the carrying value of
the Group's site restoration provision was
$31,092,316.
The Group's provision for rehabilitation is
material to our audit, and requires significant
estimates of future costs.
The determination of the provision requires
management's judgement in relation to
estimating the costs of performing the work
required, including volume and unit rates, the
timing of cash flows and the appropriate
discount rate.
Our audit procedures included but were not
limited to the following:
competence and
(cid:16) We assessed
objectivity
by
expert
of
management in the preparation of the cost
models.
the
the
used
(cid:16) We evaluated management's cost model for
each well site and critically challenged the
key estimates and assumptions made in the
models.
(cid:16) We assessed the expected timing of the
rehabilitation to the respective life of each
well.
(cid:16) We assessed the reasonableness of the
discount and inflation rates applied to the
expected cash flows.
(cid:16) Our testing included comparison of a sample
of unit rates included in the cost models to
supporting documentation.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 31 December 2022, but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Page | 98
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
-
-
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
-
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Page | 99
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended
31 December 2022.
In our opinion, the Remuneration Report of Sacgasco Limited for the year ended 31 December
2022 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
31 March 2023
D I Buckley
Partner
Page | 100
Securities Exchange Information
Sacgasco Limited
SECURITIES EXCHANGE INFORMATION
The shareholder information set out below was applicable on 16 March 2023:
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
102
71
231
874
543
1,821
10,959
301,907
1,850,470
37,126,076
574,162,990
613,452,402
-
0.05
0.30
6.05
93.60
100.00
There were 940 holders of less than a marketable parcel of ordinary shares.
2.
Substantial shareholders
The substantial shareholders are set out below:
Blue Sky Resources Ltd
Steven David Dahl & Louisa Yvette Dahl
Number of shares
38,455,000
32,148,338
3.
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.
Page | 101
Securities Exchange Information
Sacgasco Limited
4.
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/wp-content/uploads/2022/04/01.04.2022-ASX-Corporate-Governance-Statement.pdf
5.
Unlisted options
Grant date
Number
Number of
holders
Expiry date
Exercise price
(cents)
31-May-22
27,250,000
11
31-Jan-24
4.5
6.
Twenty largest shareholders on 16 March 2023
Shareholders
Blue Sky Resources Ltd
Steven David Dahl & Louisa Yvette Dahl
Bond Street Custodians Limited
Talex Investments Pty Ltd
BNP Paribas Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
Justine Davina Michel
Citicorp Nominees Pty Limited
Mandalari Pty Ltd
Andrew Duncan Murdoch
Magaurite Pty Ltd
Brazell Pty Ltd
David Waterston & Natalie Ana Kovacev
Lay Hoon Ng
Great Eastern Holdings Pty Ltd
Still Capital Pty Ltd
Geoffrey Kenneth Farnell & Janet Lesley Farnell
Alan George Brooks & Philippa Claire Brooks
Marshall John Hood
Allan Neville Brosnan
Ordinary shares
Number
held
% of issued
shares
38,455,000
32,148,338
24,263,482
15,000,000
12,430,133
10,857,048
10,369,198
9,897,633
7,654,266
7,500,000
7,000,000
6,829,056
6,499,705
6,499,500
6,071,16
6,017,016
6,000,000
5,169,837
5,141,443
5,009,240
6.27
5.24
3.96
2.45
2.03
1.77
1.69
1.61
1.25
1.22
1.14
1.11
1.06
1.06
0.99
0.98
0.98
0.84
0.84
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Corporate Directory
Sacgasco Limited
CORPORATE DIRECTORY
Directors
Mr Andrew Childs
Mr Gary Jeffery
Mr William Ashby
Registered Office
Level 1, 31 Cliff Street
Fremantle WA 6160
Joint Secretaries
Mr David McArthur
Mr Jordan McArthur
Principal Office
Level 2, 210 Bagot Road
Subiaco WA 6008
Telephone: +61 8 9435 3200
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
Telephone: +61 8 9388 2654
Website and Email
Website:
Email:
Twitter:
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www.sacgasco.com
info@sacgasco.com
@SacGasCo