Whitebark Energy
Annual Report 2018

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ABN 68 079432 796 2018 Annual Report WHITEBARK ENERGY LTD - Annual Financial Report 30 June 2018 Table of Contents Corporate Directory Chairman’s Letter Review of Operations Reserves and Resource Statement Directors’ Report Auditors Independence Declaration Independent Audit Report Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Shareholder Information Permits 3 4 5 11 14 22 23 29 30 31 32 33 63 64 67 2018 ANNUAL REPORT Page | 2 WHITEBARK ENERGY LTD Corporate Directory Directors Charles Morgan (Non-executive Chairman) David Messina (Managing Director) Stephen Keenihan (Executive Director) Company Secretary Kevin Hart Principal registered office in Australia Auditors Solicitors to the Company Share Registry Banker Stock exchange Level 2 6 Thelma Street West Perth WA 6005 Tel: +61 8 6555 6000 Fax: +61 8 6555 6099 KPMG 235 St Georges Terrace Perth WA 6000 Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street, Perth WA 6000 Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth WA 6000 Tel: +61 3 9415 5000 ANZ Whitebark Energy Limited shares and options are listed on the Australian Securities Exchange (ASX: WBE, WBEO) Company website www.whitebarkenergy.com 2018 ANNUAL REPORT Page | 3 WHITEBARK ENERGY LTD Chairman’s Letter Dear Fellow Shareholders, The 2017/2018 Financial Year has been one of transformation for Whitebark. On July 3rd, 2017 Transerv Energy became Whitebark Energy, in order to better reflect the Company’s focus on Canada, following the acquisition of 20% of Point Loma Resources Ltd’s assets in Alberta, Canada (the PLJV). Whitebark acquired the interest in the PLJV because it saw that there were many opportunities for growth in this mostly Mannville play area. A lot of historical vertical well production from an area of limited porosity and permeability pointed to the viability of horizontal stimulated wells. During the year the Company’s share of the PLJV production was 90,238 barrels of oil equivalent (BOE). From acquisition until June 30 2018 net production has increased 100% to 361 BOE/D and net reserves 145% to 2036 MBOE via drilling and acquisition. Additionally, the PLJV has some 19,000 acres of Duvernay Rights which is a fast-developing oil play in and around the PLJV lands. The PLJV has a solid plan to deliver additional growth for the current financial year and will keep shareholders informed as it progresses. In Western Australia the Company also participated for 15% in the Xanadu discovery on/offshore WA and became the 100% owner of the Warro Gas Field which remains suspended under the WA Government fracking moratorium. Plans for shooting 3D seismic over Xanadu are progressing prior to drilling an appraisal well. The Company raised $1.85 million in November 2017 and post balance date has finalised a capital raising of $2.33 million before costs to further its Canadian plans. While the company’s share price has not matched the asset growth your board believes that it has built a strong base for growth. Thank you for your support during the year, Yours sincerely, Charles W Morgan Chairman 2018 ANNUAL REPORT Page | 4 WHITEBARK ENERGY LTD Review of Operations Review Of Operations 1.1 Overview During the 2018 financial year the Company produced 90,238 barrels of oil equivalent, increased 2P reserves by 145%, drilled an oil discovery well at Xanadu-1 in the offshore Perth Basin and identified an additional 40 million barrels of in place oil resources in a successful 3D seismic campaign in Canada. Net production from the Point Loma Joint Venture (PLJV) for the 2018 financial year was 10,736 barrels of oil, 3,374 barrels of NGL’s and 456 mmcf of gas with revenue of $1.95 million dollars. Activities were focussed on growing the Company’s Canadian assets by increasing production and adding to the land and facilities. Operations became cash positive during the second half of the 2018 financial year. In Western Australia, the Xanadu-1 well was drilled in the first half of the financial year, resulting in an oil discovery. A follow-up 3D seismic survey planned for the first half of 2018 has been delayed due to environmental approval constraints but approvals are now expected in time to enable acquisition in FY2019. Other operations at Warro in Western Australia, have paused due to the State Government Fraccing Inquiry. The company is ready to restart activities when the moratorium is lifted. 1.2 Canadian Operations The PLJV assets held with Point Loma Resources have grown in the past 12 months as described below. The Company plans to continue to grow is Canadian assets during FY 2019 through a combination of acquisitions and an active drilling program which will commence in December 2018. 1.2.1 Acquisitions The Gilby Acquisition was announced on 21 March 2018 and comprised approximately 26,500 gross acres of land and associated facilities. These assets are adjacent to the PLJV’s existing landholdings and were producing approximately 450 boe/d with 30% being oil and NGLs. The assets included significant upside potential with booked Proved and Probable undeveloped reserves as well as numerous exploration locations with multi-zone potential across the Mannville, Cardium and Duvernay zones. On 2nd May 2018, the Company announced the final payment of CAN$143,965 for the Gilby acquisition on 30th April, taking WBE’s total cost of the acquisition to CAN$328,266 for a 30% share of the asset. Smaller acquisitions were made in the first half of the financial year which expanded and consolidated the PLJV’s core Paddle River Oil Project. 1.2.2 Development Activity 1.2.2.1 5-31 Nordegg Recompletion – West Cove The 5-31 Nordegg well in the West Cove area was placed on production in October 2017 with initial production between 100-160boe/d. It should be noted that this production is only from a short lateral intersecting the upper Nordegg. It is expected that longer horizontal laterals would produce at higher rates. The well pad is configured for two additional wells, which would produce through the existing pipeline infrastructure enhancing the economics of future wells (Refer ASX release dated 24 October 2017). In addition to the Nordegg pool, the area has an underlying Banff oil target. During the period, 3D seismic was acquired to delineate the Nordegg pool further and assist in evaluating the Banff and other deeper targets. A further 5,760 acres of leases over surrounding acreage were acquired to secure the Nordegg and Banff potential (see exploration section below). 1.2.2.2 Paddle River – Additional Wells and Drilling Locations The 1-32 horizontal development well was drilled into the Ostracod A pool. As expected, the well encountered oil shows. The JV is planning to sidetrack the identified oil pay zone. (Refer ASX release dated 11 October 2017). In addition, the previously announced, acquired horizontal well (drilled in 2014), was transferred and placed on production in November 2017. Two additional, potential horizontal drilling opportunities are also supported on the acquired land. 2018 ANNUAL REPORT Page | 5 WHITEBARK ENERGY LTD Review of Operations The PLJV has identified a means to significantly reduce operating costs of the field by converting a non-productive horizontal well on the periphery of the field to a water injector. The associated plant and equipment will be sourced from other facilities owned by the JV. This water injection project is expected to be completed in the first quarter of 2019 and result in an ~$80,000/month reduction in field opex. 1.2.3 Exploration 1.2.3.1 Thorsby Area - 11-18 Glauconite and 9-18 Sparky Wells The 11-18 Glauconite well was recompleted and is presently producing gas at an average rate of 800 mcf/day. WBE has an 80% interest in this well until payout of the cost of the associated pipeline. The neighbouring 9-18 horizontal Sparky exploration well which was drilled and completed, is presently shut in due to poor performance. 1.2.3.2 Westcove 3D The PLJV undertook a 3D Seismic Program during the third quarter of the financial year in the Westcove area (Refer ASX Release 30 May 2018). The data were processed and tied to adjacent surveys and wells and interpretation of those results continues. The program identified significant new drilling targets with potential for over 40 million boe in place adjacent to the PLJV’s Paddle River oil field. The main objective of the 3D program was to define the extent of the Nordegg oil accumulation being produced by the PLJV’s horizontal well 5-31 and provide guidance on the optimal location and direction for a planned Nordegg horizontal development well. A secondary objective was to delineate the extent of an underlying Banff Oil play in the surrounding area and in the NW portion of the survey around well 8-11. The 3D delivered valuable information on these objectives and also identified a potential Ostracod oil pool which appears to be analogous to the adjacent PLJV Paddle River Ostracod oil field (Figure 1). The 3D defined the areal extent of the Nordegg pool accumulation around well 5-31 to the north and west, and suggests the potential for further development wells. In the NW part of the 3D (Figure 2), the data indicate a Banff level closure with a seismic amplitude anomaly which is usually associated with a thickening of the reservoir unit (Figure 2 and Figure 1). Importantly, well 8-11, which drilled through the feature, appears to contain by-passed pay at the Banff level with the unit yielding high gas readings, strong oil related fluorescence and indications of pay on the electric logs. Figure 1 - Westcove 3D Timeslice showing location of prospects and Paddle River Pool To the west of the Westcove 3D area, the PLJV operates the Paddle River Ostracod oil field which is held in a stratigraphic trap formed by the reservoir unit pinching out up-dip within a paleo valley. The 3D has identified an analogous configuration within the Westcove area (Figure 1) where the presence of a low with a seismic thickening at the Ostracod level suggests the potential for an oil accumulation akin to the Paddle River field. 2018 ANNUAL REPORT Page | 6 The potential unrisked resources for all the features described above are set out in Table 1. WHITEBARK ENERGY LTD Review of Operations Figure 2- Westcove 3d Seismic Arbitrary Line through wells 8-11 and 5-31 Table 1 - Resource Estimation Approach Westcove 3D Drilling Opportunities Category Resource assessment approach Stra�graphic Unit Prospec�ve Determinis�c GRV Cretaceous and bbls/ac-� Best Es�mate OOIP mmbbl 10 Best Es�mate OOIP mmbl Net to WBE (20% WI) 2 Con�ngent Determinis�c GRV Mississippian 15 and bbls/ac-� Prospec�ve Determinis�c GRV Mississippian 5 and bbls/ac-� 3 1 Ostracod Prospect Banff 8-11 by-passed pay 5-31 Banff Type of Trap Reservoir Type Stra�graphic Fossiliferous Sandstone Structural/Stra�graphic Dolomite Structural/Stra�graphic Dolomite 5-31 Nordegg Con�ngent Determinis�c Jurassic 12 2.4 Structural/Stra�graphic Limestone and Dolomite The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery, as well as a risk of development. Further exploration, appraisal and evaluation is required to determine the existence of a commercial quantity of potentially moveable hydrocarbons. Gas to liquid conversion factor of 6 has been used in the resource estimates to deal with volumes of associated gas. 1.2.3.3 Duverney Shale Oil Acreage Surrounding Whitebark Lands Whitebark currently has a 20% interest in approximately 19,000 gross acres (3,800 net acres or ~6 net sections) in the West Duvernay Basin with Point Loma Resources as part of its PLJV holdings. The May 20th Alberta land sale by the Alberta Government recorded increased transaction activity attracting C$42m of sales with the majority of the acreage posted within the West Duvernay shale oil basin. Several large parcels of land, with combined acreage of 82,820 acres, and located just to the southeast of PLJV lands were bought for C$33.3 million or an average price of C$347/acre (Refer ASX Release 6 June 2018). The Duvernay shale is an emerging oil play which continues to attract increasing industry activity and attention, with an estimated 150 horizontal oil wells drilled mostly in the East Duvernay Basin. An analysis by Point Loma of technical data from the West Duvernay Basin indicates similar reservoir characteristics to the East Duvernay Basin, where contingent resources of 10 to 15 million barrels per section of original oil in place have been stated by other operators. 2018 ANNUAL REPORT Page | 7 Point Loma’s analysis shows that the West Duvernay Basin shale has a thickness of approximately 10 to 15 metres, with porosities ranging from 3 to 10% and TOC’s in the range of 2 to 10% which are parameters comparable to other successful North American shale plays and those seen in the East Duvernay Basin. WHITEBARK ENERGY LTD Review of Operations Figure 3 – Land Holding within the Duvernay Basin Oil Play (Left) and Duvernay Shale Oil Fairway Information (Right) Three horizontal Duvernay shale oil wells have been drilled by other operators to date in 2018 within Whitebark’s core area of operations at Paddle River. The results of these wells have not yet been publicly disclosed. 1.2.4 Reserves Growth The Reserve and Resources Statement below documents the Company’s Reserves to 30 June 2018 and represent a 70% and 145% increase in its Canadian 1P and 2P reserves to 1124 mboe and 2036 mboe respectively over the last 12 months. Figure 4 - WBE Canada Net Reserve Growth 2018 ANNUAL REPORT Page | 8 WHITEBARK ENERGY LTD Review of Operations 1.3 Western Australia The Company has interests in two areas in the Northern Perth Basin. 1.3.1 Xanadu Oil Discovery: TP/15: WBE- 15% Norwest Energy Ltd (Operator) lodged the Xanadu Discovery Report with the DMIRS on 20th December 2017. The Xanadu-1 discovery has confirmed the entrapment of oil in sands of the upper Irwin River Coal Measures (IRCM) in the structure, which lies immediately adjacent to the coastline in state waters, 40 km south of the township of Dongara. While analysis of the oil recovered from Xanadu-1 continues, initial results reveal the oil has an API gravity of 34.7o with no H2S and extremely low levels of CO2 (0.02%). The Xanadu crude is similar to the crude produced at the Cliff Head oil field and, upon development, is expected to receive similar pricing in the market. The minimal levels of CO2 and no H2S detected will enable the use of lower-cost and schedule efficient development options. Reservoir quality sands were encountered throughout the IRCM with porosities generally ranging from 15% to 16%. Three discrete sand intervals (“A”, “B” and “C”) at the top of the IRCM have log-derived hydrocarbon saturations in excess of 40%. Fluorescence in rock cuttings observed while drilling and log-derived hydrocarbon saturations persist for 120m in sands below these upper zones but the lower intervals are water-bearing. MDT pressure sampling has established a high confidence water gradient and water was flowed and sampled via a wireline tool from the “B” sand despite the high oil saturation. Reservoir Unit “A” “B” “C” Gross True Ver�cal Thickness (m) 7.7 6.0 4.3 Net Sand True Ver�cal Thickness (m) 4.6 2.8 2.7 Oil Satura�on Porosity 66% 46% 41% 15% 16% 17% Net Pay (m) 4.6 N/A N/A Oil was pumped from the “A” sand utilising the Schlumberger Saturn pressure and fluid sampling tool and three downhole samples collected. Based on the log data, pressure points and recovered fluid samples, a lowest known oil depth of 871.8mTVDSS and a highest known water depth of 880.2mTVDSS have been established for the Xanadu Field. Preliminary results at Xanadu-1 indicate that the assumption of the producing Cliff Head Oil Field being the primary analogue is correct. All available data are currently being integrated to estimate the oil reserve potential of the Xanadu discovery. The data indicates that in addition to the potential up-dip, there is evidence that “down-dip” volumes may also be present (Refer ASX release dated 25 September 2017). The JV is implementing a program to determine the best means to appraise the Xanadu discovery through the acquisition of 3D. The Xanadu 3D seismic survey covers 40km2 and has been designed to define the extent of the Xanadu Discovery. It will drive future development plans, including the selection of future well locations, field studies addressing oil-in-place (OOIP) and recoverable oil volume calculations. The area is already covered by modern aeromagnetic and gravity data, which, when integrated with new 3D seismic data, will provide a detailed understanding of the Xanadu oil field. Acquiring 3D seismic data will allow a new well to be optimally placed, with the expectation of completing this well as a commercial producer, and assist in the positioning of any subsequent development wells. The 3D seismic acquisition is now scheduled for H1 2019 following the award of a contract to Synterra Technologies, a leading global provider of geophysical services and subject to environmental approvals. The TP/15 Joint Venture remains fully committed to the development of the Xanadu Discovery and a five-year permit renewal application has been submitted to the Department of Mines, Industry Regulation and Safety (DMIRS) with the Xanadu 3D seismic survey fulfilling the Year One commitment of the five-year work program. Figure 5 - Xanadu 40 km2 3D Seismic Survey Acquisition area overlying a full tensor gradiometric image, highlighting updip and downdip potential 2018 ANNUAL REPORT Page | 9 WHITEBARK ENERGY LTD Review of Operations 1.3.2 Warro Gas Project: RL-7: WBE 100% The Warro Project, located northeast of Perth, has 8-10 trillion cubic feet (Tcf) in place and potentially 1.7 – 3.6 Tcf of recoverable gas (Refer ASX announcement 19 November 2015). On 26th June 2018, Whitebark announced the return to full ownership and control of the Warro Field after Alcoa agreed to relinquish its 43% interest earned in the asset. As part of the transfer, Alcoa has agreed to provide future funding to cover its share of plug and abandonment liabilities in the event any of the wells are not used in future development scenarios. The Warro partnership between Whitebark (and its predecessors and subsidiaries) and Alcoa has spanned a decade including the drilling of four wells and the acquisition of 90km2 of 3D seismic. This will allow Whitebark greater ability and flexibility to progress the asset once the current fracking moratorium in WA is lifted, a prospect that the company is confident will be the outcome of the state imposed inquiry. In September 2017, the West Australian State Government implemented a moratorium on fracking onshore in the state. An independent scientific inquiry has been implemented and during the fourth quarter of 2017, the expected conclusion date was amended from 2018 to 2020. During this time, the Warro Project is in a shut in and suspended state under an approved environmental management plan. Figure 6 - Xanadu & Warro Location Map The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of oil and gas reserves that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. 2018 ANNUAL REPORT Page | 10 WHITEBARK ENERGY LTD Reserves and Resources Statement 2 Reserves and Resources Statement The following summarises Whitebark Energy Limited’s (WBE) Proved Reserves (1P), Proved plus Probable Reserves (2P) and contingent and prospective resources as of the evaluation date of 30 June 2018. Unless otherwise stated, all estimates are quoted as net WBE share. Reserves at 30 June 2018 Alberta, Canada Reserves at 30 June 2018 (Mbbl) Proved Crude Oil (1P) Mbbl Proved and Probable Crude Oil (2P) Mbbl Developed Undeveloped Total 81.7 112.5 194.2 103.1 223.4 326.5 Reserves Reconciliation (Mbbl) Proved Crude Oil (1P) Mbbl Proved and Probable Crude Oil (2P) Mbbl Reserves at 30 June 2017 Revisions and reclassifications Additions through acquisitions Production Reserves at 30 June 2018 Reserves at 30 June 2018 (MMcf) Developed Undeveloped Total Reserves Reconciliation (MMcf) Reserves at 30 June 2017 Revisions and reclassifications Additions through acquisitions Production Reserves at 30 June 2018 80.7 26.8 97.5 -10.7 194.2 104.4 52.1 180.8 -10.7 326.5 Proved Natural Gas (1P) MMcf Proved and Probable Natural Gas (2P) MMcf 4369.7 397.4 4767.1 5357.1 3083.6 8440.7 Proved Natural Gas (1P) MMcf Proved and Probable Natural Gas (2P) MMcf 3117.7 612.9 1493.1 -456.6 4767.1 3903.5 643.4 4350.4 -456.6 8440.7 2018 ANNUAL REPORT Page | 11 WHITEBARK ENERGY LTD Reserves and Resources Statement Reserves at 30 June 2018 (Mbbl) Developed Undeveloped Total Reserves Reconciliation (Mbbl) Reserves at 30 June 2017 Revisions and reclassifications Additions through acquisitions Production Reserves at 30 June 2018 Proved Natural Gas Liquids (1P) Mbbl Proved and Probable Natural Gas Liquids (2P) Mbbl 113 22.4 135.4 139.4 163.5 302.9 Proved Natural Gas Liquids (1P) Mbbl Proved and Probable Natural Gas Liquids (2P) Mbbl 60.3 6.4 72.1 -3.4 135.4 75.8 8.7 221.8 -3.4 302.9 The revisions and reclassifications to the 1P and 2P reserves is comprised primarily of revisions in forecast performance as a result of well recompletions, drilling of new wells and pipeline construction to add stranded production to the network. Changes in forward price estimates, production costs and recovery rates will also dictate the need for revision and reclassification of reserves Contingent and Prospective Resources at 30 June 2018 – Gas Initially In Place (TCF) Warro Field, Western Australia Contingent (status unclarified and on hold) Prospective 1C 2.4 Low 2.0 4.4 2C 3.2 Medium 4.1 7.3 3C 4.5 High 7.3 11.6 Both deterministic and probabilistic methods at the field level have been used to estimate contingent resources. Xanadu, Western Australia At the time of writing, Xanadu-1 had been declared an oil discovery however, technical work in progress needs to be completed before a statement on Reserves and Resources can be made. Reserves and Contingent Resource Estimates – Governance The Company’s reserves and contingent resources estimates are prepared in accordance with the SPE Petroleum Resources Management Guidelines. Qualified Petroleum Reserves and Resources Evaluator Statement The reserve and contingent resource estimate in this annual report (Reserves and Resources Statement) is based on, and fairly represents, information and supporting documentation prepared by a qualified petroleum reserves and resources evaluator. The Reserves and Resources Statement as a whole has been approved by Mr Stephen Keenihan. Mr Keenihan is a holder of shares and options in and is Executive Director of the Company. Mr Keenihan has sufficient experience that is relevant to the style and nature of hydrocarbon resources and to the activities discussed in this report, and is a member of the following professional organisations; Society of Petroleum Engineers, Petroleum Exploration 2018 ANNUAL REPORT Page | 12 WHITEBARK ENERGY LTD Reserves and Resources Statement Society of Australia, American Association of Petroleum Geologists. Mr Keenihan has consented to the inclusion of information in this report in the form and context in which it appears. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of oil and gas reserves that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Reserves and Resources Statement is based on, and fairly represents, information and supporting documentation prepared by the respective Competent Persons below. Alberta, Canada The information in this report that relates to the oil and gas reserves of Salt Bush Energy Limited (subsidiary of Whitebark Energy Limited) was compiled by technical employees of McDaniel and Associates Ltd a leading independent Canadian Petroleum Consulting Firm, and subsequently reviewed by Mr Stephen Keenihan BSc (Hons) Geology/Geophysics, whom have consented to the inclusion of such information in this report in the form and context in which it appears. Mr Keenihan is consulting to the Company and has more than 40 years relevant experience in the petroleum industry and is a member of The Society of Petroleum Engineers (SPE). The reserves included in this report have been prepared using definitions and guidelines consistent with the 2007 Society of Petroleum Engineers (SPE)/World Petroleum Council (WPC)/American Association of Petroleum Geologists (AAPG)/Society of Petroleum Evaluation Engineers (SPEE) Petroleum Resources Management System (PRMS). Their sources information included in this report are based on, and fairly represent, information and supporting documentation reviewed by Mr Keenihan. Mr Keenihan is qualified in accordance with the requirements of ASX Listing Rule 5.41 and consents to the inclusion of the information in this report of the matter based on this information in the form and context in which it appears. Warro Field, Western Australia The information in this Announcement is based on and fairly represents the information and supporting documentation prepared by Mr Stephen Keenihan, a Director of Whitebark Energy Ltd, who has consented to its inclusion in the form and context as it is presented. It has been produced for the Company, at its request, for adoption by the Directors. Mr Keenihan has sufficient experience that is relevant to the style and nature of hydrocarbon resources and to the activities discussed in this document, and is a member of the following professional organisations; Society of Petroleum Engineers, Petroleum Exploration Society of Australia, American Association of Petroleum Geologists and Australian Institute of Company Directors. His qualifications, experience and industry membership meet the requirements for a qualified petroleum reserves and resources evaluator as defined in Chapters 19 of the ASX Listing Rules. Terminology and standards adopted by the Society of Petroleum Engineers “Petroleum Resources Management System” have been applied in producing this document. 2018 ANNUAL REPORT Page | 13 WHITEBARK ENERGY LTD Directors Report 3 Directors’ Report 3.1 Directors’ Meetings Board meetings held during the year and the number of meetings attended by each Director was as follows: Director Charles Morgan David Messina Stephen Keenihan Board of Directors Present 3 4 4 Held 4 4 4 Board and Management Committees In view of the current composition of the Board (which comprises a non-executive chairman and two executive directors) and the nature and scale of the Company’s activities, the Board has considered that establishing formally constituted committees for audit, board nominations, remuneration and general management functions would contribute little to its effective management. 3.2 Corporate Governance In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Whitebark Energy Limited support and have adhered to the principles of sound corporate governance. The Board recognises the recommendations of the Australian Securities Exchange Corporate Governance Council, and considers that the Company is in compliance with those guidelines which are of importance to the commercial operation of a junior listed resource Company. During the financial year, shareholders continued to receive the benefit of an efficient and cost- effective corporate governance policy for the Company. 3.3 Directors’ Information Charles Morgan| Non-executive Chairman Appointed 9 October 2015 Experience and expertise: Mr Morgan has extensive experience in equity capital markets and has been involved with numerous projects over a 25 year period. The bulk of these were in the resources/oil & gas industries and in the technology sector. Mr Morgan is an Executive Chairman of Grand Gulf Energy Limited. David Messina | Managing Director Appointed 20 April 2016 Experience and expertise: Experienced international executive with proven entrepreneurial skills and solid track record in developing and managing a diverse range of businesses, raising finance, stakeholder engagement and delivering results to shareholders. Mr Messina has over twenty years’ multi-sector experience in the Energy and Agricultural industries, holding senior positions at the board and executive management level. Having lived and worked in numerous countries he has acquired global management experience with both start-up and mature businesses. 2018 ANNUAL REPORT Page | 14 WHITEBARK ENERGY LTD Directors Report Stephen Keenihan BSc (Hons)| Executive Director Appointed 23 March 2011 as Managing Director; Appointed 20 August 2013 as Executive Director; Appointed 9 October 2015 as Managing Director; Appointed 20 April 2016 as Executive Director Experience and expertise: Mr Keenihan has more than 45 years’ experience in the energy industry, within and outside Australia. He has primarily been involved with oil and gas activities but also a broad range of experience in other energy and electricity projects including coal, gas, wind, biofuels and geothermal. He has previously held management roles with Apache Energy, Griffin Energy, Novus Petroleum, WMC Petroleum and LASMO. He has extensive expertise in oil and gas exploration activities and experience covering a broad range of disciplines including development, operations, commercial and marketing activities both operated and non-operated. Prior to March 2011, Mr Keenihan led a small team of oil and gas professionals who acquired the Warro Gas Field in Western Australia. The Warro operator, Latent Petroleum, merged in 2011 with Whitebark Energy, with Mr Keenihan leading the Company and extending its interests internationally in oil and gas in Canada since that date until 20 August 2013. Mr Keenihan is also a Non-Executive Director of Grand Gulf Energy Limited, which is an active oil and gas explorer and producer in the USA. Kevin Ronald Hart FCA, BComm|Company Secretary Appointed 30 November 2016 Experience and expertise: Mr Hart was appointed to the position of Company Secretary on 30 November 2016. He is a Chartered Accountant and holds a Bachelor of Commerce degree from the University of Western Australia. He has over 30 years’ experience in accounting and the management and administration of public listed entities in the mining and exploration industry. Mr Hart is currently a partner in an advisory firm, Endeavour Corporate, which specialises in the provision of Company secretarial and accounting services to ASX listed entities. 4 Remuneration Report (Audited) This Remuneration Report outlines the remuneration arrangements which were in place during the period, and remain in place as at the date of this report, for the key management personnel of Whitebark Energy Limited. For the purposes of this report, “key management personnel” is defined as persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any Director (whether executive or otherwise) of the Company. 4.1 Remuneration Policy Key management personnel remuneration is based on commercial rates and the existing level of activities in the Group at this point of time. Should the extent of those activities change, the remuneration of key management personnel would be amended to reflect that change. 4.2 Principles of Compensation Remuneration is referred to as compensation throughout this report. Under overall authority of the Board, key management personnel and other executives have authority and responsibility for planning, directing and controlling the activities of the Company and the consolidated entity. Key management personnel include the most highly remunerated executives for the Company and the consolidated entity. Compensation levels for key management personnel of the Company and relevant key management personnel of the consolidated entity are competitively set to attract and retain appropriately qualified and experienced key management personnel. The Company from time to time obtains independent advice on the appropriateness of compensation packages of both the Company and consolidated entity given trends in comparative companies both locally and internationally and the objectives of the Company’s compensation strategy. The compensation structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The compensation structures take into account: • • The capability and experience of the key management personnel; The key management personnel’s ability to control the relevant assets’ performance; 2018 ANNUAL REPORT Page | 15 WHITEBARK ENERGY LTD Directors Report • The amount of incentives within each key management person’s compensation. Compensation packages may include a mix of fixed and variable compensation and short and long-term performance- based incentives. In addition to their salaries, the consolidated entity also provides non-cash benefits to its key management personnel. 4.2.1.1 Fixed Compensation Fixed compensation consists of base compensation, which is calculated on a total cost basis and includes any Fringe Benefit Tax charges related to employee benefits. 4.2.1.2 Performance-linked Compensation The Company currently has no performance based remuneration built into key management personnel remuneration packages. 4.2.1.3 Long-term Incentive Incentive options have been issued in the past to key management personnel and other employees of the Company. The ability to exercise the options is conditional upon the key management personnel and other employees achieving certain vesting conditions. These vesting conditions are set for each key management personnel and employee and are based primarily on the length of time spent providing their services to the Company. 4.2.1.4 Service Contracts On appointment to the Board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the terms, including compensation, relevant to the office of the director. Remuneration and other terms of employment for the executive directors and other non-director key management personnel are also formalised in service agreements. Each of these agreements provide for the provision of bonuses, other benefits including health and superannuation, and participation in the issuance of options. Other major provisions of the agreement relating to remuneration are set out below. Directors and Key Personnel Term of agreement Base fee or salary including superannuation Termination benefit Directors Stephen Keenihan Executive Director Charles Morgan Non-Executive Chairman David Messina Managing Director Non-Executive Directors On-going commencing 1 January 2017 $2,000 per day On-going commencing 9 October 2015 $75,000pa Term is for 2 years from 1 July 2017 $430,000pa Nil Nil Nil Total compensation for all non-executive Directors is to be approved by the Company in general meeting as detailed in the Company’s Constitution. 2018 ANNUAL REPORT Page | 16 WHITEBARK ENERGY LTD Directors Report 5 Directors and Executive Officers’ Remuneration (Consolidated Entity) The following table sets out remuneration paid to Directors and key executive personnel of the Company and the consolidated entity during the reporting period: Remuneration 2018 Executive directors Stephen Keenihan* David Messina Non-Executive Directors Charles Morgan** Total Salary and Fees AUD Cash Bonus AUD Superannuation AUD Share based payments AUD Total AUD 174,400 402,518 - - - 171,418 345,818 25,000 263,486 691,004 91,000 667,918 - - 122,442 213,442 - 25,000 557,346 1,250,264 *Consists of $36,000 directors fees and $138,400 consultancy fees **Consists of $75,000 directors fees and $16,000 consultancy fees Value of options as a proportion of remuneration 50% 38% 57% Value of options as a proportion of remuneration Remuneration 2017 Executive directors Stephen Keenihan** David Messina*** Non-Executive Directors Charles Morgan**** Executive officers Jo-Ann Long* Total Salary and Fees AUD Cash Bonus AUD Superannuation AUD Share based payments AUD Total AUD 288,620 373,025 - - - - - - 288,620 373,025 75,000 - - - 75,000 280,816 - 1,017,461 - 15,000 - 15,000 - 295,816 1,032,461 0% 0% 0% *Resigned 30 November 2016 **Consists of $36,000 directors fees and $252,620 consultancy fees ***Consists of $36,000 directors fees and $337,025 consultancy fees ****Consists of $75,000 directors fees 6 Equity Instruments 6.1 Options Granted as Compensation The following options were granted to key management personnel during the year ended 30 June 2018: Grant date Exercisable Expiry date Exercise price 24-Jul-17 24 July 2017 to 31 May 2021 31-May-21 $0.015 Number of options Value of Share Based Payments 100,000,000 $ 633,019 These options vest over a period of 1 - 3 years. 6.2 Option Holdings of Key Management Personnel (Consolidated Entity) Details of options and rights held directly, indirectly or beneficially by key management personnel and their related parties are as follows: Options Executive directors Stephen Keenihan David Messina Non-Executive Directors Charles Morgan Total Balance at beginning of year 01-Jul-17 Granted as Remuneration Net Other Changes Balance at end of year 30-Jun-18 Total Not Exercisable - 28,000,000 - 28,000,000 - 52,000,000 52,000,000 - 28,000,000 52,000,000 14,000,000 34,666,667 - 20,000,000 - - 100,000,000 - 20,000,000 10,000,000 100,000,000 100,000,000 58,666,667 20,000,000 2018 ANNUAL REPORT Page | 17 WHITEBARK ENERGY LTD Directors Report 6.3 Other Transactions of Key Management Personnel Details of equity instruments (other than options and rights) held directly, indirectly or beneficially by key management personnel and their related parties are as follows: Shares held in Whitebark Energy Ltd Shares Executive directors Stephen Keenihan David Messina Non-Executive Directors Charles Morgan Total Balance at beginning of year 01-Jul-17 Granted as Remuneration On Exercise of Options Net Other Changes Balance at end of year 30-Jun-18 72,947,334 10,362,000 - - - - - - 72,947,334 10,362,000 62,100,294 145,409,628 - - - - - - 62,100,294 145,409,628 The aggregate amounts recognised during the year relating to directors’ related parties (included in table at 5) were as follows: TB & S Consulting Pty Ltd (i) Mtani Pty Ltd (ii) Transactions value year end 30-Jun-17 30-Jun-18 Balance outstanding as at 30-Jun-18 30-Jun-17 174,400 - 174,400 288,620 373,025 661,645 70,933 - 70,933 125,867 66,187 192,054 i. ii. TB & S Consulting Pty Ltd is a Company associated with Mr Stephen Keenihan. The charges from TB & S Consulting are for director’s fees and consulting fees. Mtani Pty Ltd is a Company associated with Mr David Messina. The charges from Mtani Pty Ltd are for director’s fees and consulting fees. The terms and conditions of the transactions were no more favourable than those available, or which might be reasonably available, on similar transactions to non-director related entities on an arms-length basis. 7 Company Performance, Shareholder Wealth and Director and Executive Remuneration The remuneration policy has been tailored to increase goal congruence between the shareholders, key management personnel, and other employees. However, the Company continues to investigate alternative means for achieving this goal to the benefit of all stakeholders. There is no direct relationship between the remuneration policy and Company performance. 8 Voting and Comments Made at the Company’s 2017 Annual General Meeting Whitebark Energy Ltd received 95% of “yes” votes on its remuneration report for the 2017 financial year. The Company did not receive any specific feedback at the AGM on its remuneration report. 9 Use of Remuneration Consultants During the financial year ended 30 June 2018, the Company did not engage remuneration consultants to review its existing remuneration policies and provide recommendations on how to improve both the short-term incentives (‘STI’) program and long-term incentives (‘LTI’) program. End of Audited Remuneration Report 10 Principal Activities The principal activity of the consolidated entity during the course of the financial period was the evaluation of oil and gas exploration projects in Western Australia and production of oil and gas in Alberta, Canada. 2018 ANNUAL REPORT Page | 18 WHITEBARK ENERGY LTD Directors Report 11 Results and Dividends The consolidated entity’s loss after tax attributable to members of the Company for the financial year ending 30 June 2018 was $5,664,449 (30 June 2017 loss: $40,074,224). No dividends have been paid or declared by the Company during the period ended 30 June 2018. 12 Financial Position The net assets of the consolidated entity at 30 June 2018 were $3,699,732 (30 June 2017: $7,119,635) of which $1,090,415 (30 June 2017: $4,856,883) represents cash and cash equivalents. The Directors believe that the consolidated entity is in a stable financial position with sufficient cash to fund its current operations and commitments expected to occur in the next financial year. 13 Earnings / (Loss) Per Share The basic earnings/(loss) per share for continuing operations of the consolidated entity for the financial year ending 30 June 2018 was (0.6101) cents per share (30 June 2017: 4.7966 cents loss per share). 14 Events Subsequent to Reporting Date On 1 August 2018 Whitebark Energy announced a renounceable entitlement offer. The offer was made to eligible shareholders on the basis of one New Share for every two shares held on the record date. Each new share had an offer price of 0.4 cents. Eligible shareholders were also offered one free attaching new option for every one new share subscribed for and issued under the offer. On 28 August 2018 the renounceable rights issue closed substantially over-subscribed. The company raised $1,980,862 (before costs) and issued 495,215,367 shares and 515,215,367 options (including 20,000,000 options issued to CPS Capital Pty Ltd). To accommodate some of the oversubscription the Company placed (on 31 August 2018) an additional 87,500,000 fully paid ordinary shares at $0.004 and 87,500,000 attaching options to raise an additional $350,000 (before costs). Other than the above, no material matters or circumstances have arisen since the end of the financial year which have significantly affected or may significantly affect the operations, results or state of affairs of the consolidated entity. 15 Likely Developments and Expected Results There are no likely developments of which the directors are aware which could be expected to significantly affect the results of the Group’s operations in subsequent financial years not otherwise disclosed in the Principal Activities and Operating and Financial Review or the Significant Events after the Balance Date sections of the Directors’ Report. The Company continues to look for acquisition opportunities as they arise. 16 Environmental Regulations The operations of the Group are subject to environmental regulation from two government bodies. The Australian assets are monitored under the laws of the State of Western Australia. The Group holds various environmental licenses issued under these laws, to regulate its exploration activities in Australia. These licenses include conditions and regulations in relation to specifying limits on discharges into the air, surface water and groundwater, rehabilitation of areas disturbed during the course of exploration activities and the storage of hazardous substances. All environmental performance obligations are monitored by the board of directors and subjected from time to time to Government agency audits and site inspections. There have been no material breaches of the Group’s licenses and all mining and exploration activities have been undertaken in compliance with the relevant environmental regulations. The Canadian assets are subject to regulation by the Alberta Energy Regulator (AER). The AER ensures companies are prepared to meet their obligations at the end of a project’s life including environmental obligations. 2018 ANNUAL REPORT Page | 19 WHITEBARK ENERGY LTD Directors Report 17 Directors and Executives Interests As at the date of this report, the interests of the Directors and Executives at any time during the financial year in the shares and options of Whitebark Energy Limited (“the Company”) were: Directors Charles Morgan Stephen Keenihan* David Messina Shares Options 62,100,294 72,947,334 10,362,000 20,000,000 28,000,000 52,000,000 * Held in the name of Stephen Leslie Keenihan & Sheridan Jay Keenihan . 18 Share Options 18.1 Options Granted to Officers of the Company The following options have been granted to officers of the Company during the financial year: Grant date 24-Jul-17 Exercisable 24 July 2017 to 31 May 2021 Expiry date 31-May-21 Exercise price $0.015 Number of options 100,000,000 No options have been granted to officers of the Company since the end of the financial year to the date of this Directors’ report. Unissued shares under options As at the date of the report, there were 112,675,000 unlisted options on issue detailed as follows: Grant Date 17-Nov-15 28-Apr-17 24-Jul-17 Exercisable 17 November 2015 28 April 2017 to 1 April 2021 24 July 2017 to 31 May 2018 Expiry date 10-Jul-18 1-Apr-21 31-May-21 Exercise price Number of options $0.060 1,675,000 $0.015 11,000,000 $0.015 100,000,000 All options expire on the earlier of their expiry date or termination of employment. Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company. 18.2 Shares Issued on Exercise of Options During the financial year there were no ordinary shares issued as a result of the exercise of options. 19 Indemnification and Insurance of Officers and Auditors 19.1 Indemnification An indemnity agreement has been entered into with each of the Directors and Company Secretary of the Company named earlier in this report. Under the agreement, the Company has agreed to indemnify those officers against any claim or for any expenses or costs which may arise as a result of work performed in their respective capacities to the extent permitted by law. There is no monetary limit to the extent of this indemnity. 19.2 Insurance Premiums During the financial year the Company has paid insurance premiums in respect of Directors’ and officers’ liability and legal expenses’ insurance contracts, for current Directors and officers. The insurance premiums relate to costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever their outcome and other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty or improper use of information or position to gain a personal advantage. The premiums were paid in respect of the following Directors and Officers: Stephen Keenihan, Charles Morgan, David Messina and Kevin Hart. There were no legal proceedings entered into on behalf of the Company or the consolidated entity by any of the Directors or executive officers of the Company. 2018 ANNUAL REPORT Page | 20 WHITEBARK ENERGY LTD Directors Report Details of the amount of the premium paid in respect of the insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract. The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify any current or former officer or auditor of the Group against a liability incurred as such by an officer or auditor. 20 Corporate Structure Whitebark Energy Limited is a Company limited by shares that is incorporated and domiciled in Australia. The Company is listed on the Australian Securities Exchange under code WBE. 21 Non-Audit Services During the year KPMG, the Company’s auditor, performed certain other services in addition to their statutory duties. The Board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of those non-audit services during the year is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons: All non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Directors to ensure they do not impact upon the impartiality and objectivity of the auditor; and The non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards. 22 Auditor’s Independence Declaration The Auditor’s Independence Declaration is set out on page 22 and forms part of the Directors’ report for the financial year ended 30 June 2018. Signed in accordance with a resolution of the Directors. Perth, 26 September 2018 David Messina Managing Director 2018 ANNUAL REPORT Page | 21 WHITEBARK ENERGY LTD Auditors Independence Declaration 2018 ANNUAL REPORT Page | 22 WHITEBARK ENERGY LTD Independent Audit Report 2018 ANNUAL REPORT Page | 23 WHITEBARK ENERGY LTD Independent Audit Report 2018 ANNUAL REPORT Page | 24 WHITEBARK ENERGY LTD Independent Audit Report 2018 ANNUAL REPORT Page | 25 WHITEBARK ENERGY LTD Independent Audit Report 2018 ANNUAL REPORT Page | 26 WHITEBARK ENERGY LTD Independent Audit Report 2018 ANNUAL REPORT Page | 27 WHITEBARK ENERGY LTD Independent Audit Report 2018 ANNUAL REPORT Page | 28 WHITEBARK ENERGY LTD Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2018 Revenue Cost of goods sold Gross Profit Other income Finance income Gain/(loss) on disposal of available-for-sale financial assets Profit/(loss) on disposal of assets Gain on bargain purchase Expenses Administrative expenses Finance costs Impairment expense Share based payment expense Other operating expenses Loss before income tax expense from continuing operations Income tax benefit Loss after income tax expense for the period Discontinued operations Profit/(loss) for the year from discontinued operations Profit/(loss) for the year Loss attributable to: Members of the parent entity Non-controlling interest Other comprehensive income, net of tax Items reclassified through profit and loss: Unrealised gain on marketable securities Foreign currency translation Total other comprehensive income for the period Total comprehensive loss for the period Total comprehensive loss attributable to: Members of the parent entity Non-controlling interest Loss per share Basic and diluted (cents per share) Continuing operations Discontinued operations The accompanying notes form part of these financial statements. Notes 5 6 7 8 9 10 22 11 12 13 33 14 16 17 30-Jun-18 AUD 1,630,809 (1,613,293) 17,517 4,364 59,823 246,660 (741) 911,367 (2,479,469) (109,055) (1,330,642) (588,403) (2,395,869) 30-Jun-17 AUD 101,436 (105,886) (4,450) 16,836 106,079 (13,242) (31,223) 1,289,406 (1,758,750) (74,466) (52,055,432) (29,455) (744,418) (5,664,449) (53,299,115) - (5,664,449) 9,348,766 (43,950,349) - (5,664,449) 3,876,125 (40,074,224) (5,664,449) - (5,664,449) (40,064,362) (9,862) (40,074,224) (200,000) 200,000 120,254 (48,484) (79,746) 151,516 (5,744,195) (39,922,708) (5,744,195) (39,912,846) - (9,862) (5,744,195) (39,922,708) (0.6101) - (0.6101) 18 (4.7966) (0.0012) (4.7978) 2018 ANNUAL REPORT Page | 29 WHITEBARK ENERGY LTD Statement of Financial Position as at 30 June 2018 Assets Current Assets Cash and cash equivalents Trade and other receivables Other current assets Assets classified as available-for-sale Total current assets Non-current Assets Property, plant and equipment Exploration and evaluation assets Total non-current assets Total assets 19 20 21 25 23 24 26 27 Liabilities Current Liabilities Trade and other payables Provisions Total current liabilities Non-current liabilities Provisions Decommissioning liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity attributable to equity holders of the Consolidated Entity 27 28 29 30 30-Jun-18 AUD 30-Jun-17 AUD 1,090,415 125,060 97,989 - 1,313,464 4,856,883 280,574 240,886 400,000 5,778,343 8,152,319 2,556,696 10,709,015 12,022,479 5,225,806 2,077,749 7,303,555 13,081,898 658,007 102,342 760,349 3,995 7,558,403 7,562,398 8,322,747 3,699,732 651,783 65,480 717,263 37,132 5,207,868 5,245,000 5,962,263 7,119,635 54,382,657 756,926 (51,439,851) 3,699,732 52,646,771 1,629,955 (47,157,091) 7,119,635 The accompanying notes form part of these financial statements. 2018 ANNUAL REPORT Page | 30 - - - - - - - - - - - (5,664,449) 46,600 (246,600) 120,255 120,255 (5,744,195) - 1,735,886 588,403 2,324,289 3,699,732 Total Equity AUD 50,960,471 - (40,064,362) (9,862) WHITEBARK ENERGY LTD Statement of Changes in Equity for the year ended 30 June 2018 Share based payments reserve Available-for- sale reserve Accumulated Losses Non- controlling interest Total Equity AUD 96,822 AUD 200,000 AUD (47,157,091) AUD - AUD 7,119,635 Foreign currency translation reserve AUD 1,333,133 - - - 120,255 120,255 120,255 AUD 52,646,771 - - - - - - - - - - - - - 46,600 (246,600) - (200,000) (200,000) (5,664,449) - - - - (5,664,449) - 1,735,886 - 1,735,886 54,382,657 (1,381,687) - - (1,381,687) 71,702 - - 588,403 588,403 685,224 - - - - - 1,381,687 - - 1,381,687 (51,439,851) For the year ended 30 June 2018 Share Capital Balance at 1 July 2017 Total comprehensive income for the period Loss attributable to members of the parent entity Revaluation of marketable securities Gain on marketable securities Foreign currency translation differences Total other comprehensive income Total comprehensive income for period Transactions with owners, recorded directly in equity Contributions by and distributions to owners Transfer relating to disposal of subsidiaries Net proceeds from share issue Share option expense Total contributions by and distributions to owners Balance at 30 June 2018 For the year ended 30 June 2017 Share Capital Balance at 1 July 2016 Total comprehensive income for the period Loss attributable to members of the parent entity Loss attributable to non-controlling interests Other comprehensive income Foreign currency translation differences Total other comprehensive income Total comprehensive income for period Transactions with owners, recorded directly in equity Contributions by and distributions to owners Disposal of Non-controlling interest Share options vested Gain on marketable securities Total contributions by and distributions to owners Balance at 30 June 2017 Foreign currency translation reserve AUD 1,381,617 - - (48,484) (48,484) (48,484) AUD 52,646,771 - - - - - Share based payments reserve Available-for- sale reserve Accumulated Losses Non- controlling interest AUD 67,367 AUD - AUD (7,092,729) AUD 3,957,445 - - - - - - - - - - (40,064,362) - - (9,862) - - (40,064,362) - - (9,862) (48,484) (48,484) (40,122,708) - - - - 52,646,771 - - - - 1,333,133 - 29,455 - 29,455 96,822 - - 200,000 200,000 200,000 - - - - (47,157,091) (3,947,583) - - (3,947,583) - (3,947,583) 29,455 200,000 (3,718,128) 7,119,635 The accompanying notes form part of these financial statements. 2018 ANNUAL REPORT Page | 31 WHITEBARK ENERGY LTD Statement of Cash Flows for the year ended 30 June 2018 Note 30-Jun-18 AUD 30-Jun-17 AUD Cash flows from operating activities Receipts from customers Interest received Receipt for Research and Development Rebate Payment for production Payment to suppliers and employees Net cash (used in)/provided by operating activities Cash flows from investing activities Proceeds from sale of plant and equipment Proceeds from sale of undeveloped land Proceeds from sale of securities Proceeds from deed of termination (Warro JV) Payment for securites Cash disposed of on loss of control of subsidiary Acquisition of interest in joint operation Payment for plant and equipment Payment for development Payment for exploration assets Net cash used in investing activities Cash flows from financing activities Proceeds from share placement Proceeds from repayment of borrowings Net cash from financing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of movement in exchange rates on cash held Cash and cash equivalents at 30 June 2018 31 22 1,372,923 86,670 - (1,176,230) (2,789,387) (2,506,024) 13,832 197,393 446,660 48,692 - - (341,997) (85,969) (1,786,073) (1,538,888) (3,046,350) 1,735,886 7,000 1,742,886 (3,809,488) 4,856,883 43,020 1,090,415 5,351 57,347 9,348,766 - (2,809,286) 6,602,178 - - - - (200,000) (125,538) (4,024,287) - - (717,284) (5,067,109) - - - 1,535,069 3,321,814 - 4,856,883 The accompanying notes form part of these financial statements. 2018 ANNUAL REPORT Page | 32 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 1 Reporting entity Whitebark Energy Limited (the ‘Company’) is domiciled and incorporated in Australia. The address of the Company’s registered office is Level 2, 6 Thelma Street, West Perth WA 6005. The consolidated financial report of the consolidated entity for the period ended 30 June 2018 comprises the Company and its subsidiaries. The consolidated entity is involved in oil and gas exploration and production in Western Australia and Alberta, Canada. The financial report was authorised for issue by the directors on 26 September 2018. 2 Basis of preparation (a) Statement of Compliance The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (‘AASBs’) (including Australian Accounting Interpretations), other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with the International Financial Reporting Standards (IFRS). Whitebark Energy Limited is a for-profit entity for the purpose of preparing the financial statements. (b) Going concern The accounts have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business. The Consolidated Entity reported a loss after tax of $5,664,449 for the year ended 30 June 2018 (2017: loss of $40,074,224). Included within this loss was the exploration and development expenditure write off or impairment of $1,157,845 (2017 $48,670,684) and the property, plant and equipment write off or impairment of $172,797 (2017: $3,384,748). The net working capital surplus of the Consolidated Entity at 30 June 2018 was $553,115 (2017: surplus of $5,061,080) and the net decrease in cash held during the year was $3,766,468 (2017: increase of $1,535,069). The Group has raised $2.1m in August 2018. The funds will be used to continue the Group’s growth strategy in Canada, including new well and facility upgrades. Whilst not immediately required, the Group may need to raise additional funds to meet its ongoing obligations and subject to the results of its ongoing exploration activities, expand or accelerate its work programs. Additional sources of funding available to the Group include capital raising from new or existing shareholders, or through farm- in or similar arrangements. If necessary the Group can delay exploration expenditures and directors can also institute cost saving measures to further reduce corporate and administrative costs or explore divestment opportunities. The Directors have reviewed the Group’s overall financial position and are of the opinion that the use of the going concern basis of accounting is appropriate as they believe the Group has sufficient funds available for at least 12 months and when required will be able to raise further funding. (c) Basis of measurement The financial report is prepared on the historical costs basis except for the following assets and liabilities that are stated at their fair value: financial instruments held for trading and financial instruments classified as available-for-sale. (d) Functional and presentation currency These consolidated financial statements are presented in Australian dollars, which is the functional currency of the Company. The functional currency of the Company’s United States of American subsidiary is USD and CAD for the Canadian subsidiary. The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. 2018 ANNUAL REPORT Page | 33 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 (e) Critical accounting estimates and judgements The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. These accounting policies have been consistently applied by each entity in the consolidated group. The Company’s accounting policy for the recognition of rehabilitation provisions requires significant estimates including the magnitude of possible works for removal or treatment of waste materials and the extent of work required and the associated costs of rehabilitation work. These uncertainties may result in future actual expenditure, different from the amounts currently provided. The provision recognised for each production well is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for operating sites are recognised in the balance sheet by adjusting the rehabilitation asset and provision. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes: Note 23 and 24 – Impairment expense (see note 3(k)) Note 27 – Provisions (see note 3(r)) Note 33 – Share-based payment (see note 3(q)(iii)) Note 24 – Exploration and evaluation expenditure (see note 3(d)) (f) New and revised standards that are effective for these financial statements A number of new and revised standards were effective for the annual period beginning on or after 1 July 2017. When these Standards were first adopted for the year ending 30 June 2018, there was no material impact on the financial statements. 3 Summary of accounting policies (a) Basis of consolidation The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2018. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. (b) Business combination The Group applies the acquisition method in accounting for business combinations in accordance with AASB 3. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. 2018 ANNUAL REPORT Page | 34 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of (a) fair value of consideration transferred, (b) the recognised amount of any non-controlling interest in the acquiree, and (c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately. (c) Foreign currency (i) Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Australian dollars at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was determined. (ii) Financial statements of foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to Australian dollars at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to Australian dollars at rates approximating to the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised in other comprehensive income in a separate component of equity. (d) Exploration and evaluation expenditure Exploration and evaluation costs, including the costs of acquiring licences and the costs of acquiring the rights to explore, are capitalised as exploration and evaluation assets on an area of interest basis. Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either: • • the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see impairment of non-financial assets note 3(k)). For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest. Once the technical feasibility and commercial viability of the extraction of petroleum resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from exploration and evaluation expenditure to property plant and equipment assets. (e) Determination of recoverability of asset carrying values The recoverability of development and production asset carrying values are assessed at a cash-generating unit (“CGU”) level. Determination of what constitutes a CGU is subject to management judgements. The asset composition of a CGU can directly impact the recoverability of the assets included therein. The key estimates used in the determination of cash flows from oil and natural gas reserves include the following: • Reserves – Assumptions that are valid at the time of reserve estimation may change significantly when new information becomes available. Changes in forward price estimates, production costs or recovery rates may change the economic status of reserves and may ultimately result in reserves being restated. 2018 ANNUAL REPORT Page | 35 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 • Oil and natural gas prices – Forward price estimates are used in the cash flow model. Commodity prices can fluctuate for a variety of reasons including supply and demand fundamentals, inventory levels, exchange rates, weather, and economic and geopolitical factors. • Discount rate – The discount rate used to calculate the net present value of cash flows is based on estimates of an approximate industry peer group weighted average cost of capital. Changes in the general economic environment could result in significant changes to this estimate. (f) Reserve estimates Proved plus probable reserves are defined as the “best estimate” of quantities of oil, natural gas and related substances estimated to be commercially recoverable from known accumulations, from a given date forward based on drilling, geological, geophysical and engineering data, the use of established technology and specified economic conditions. It is equally likely that the actual remaining quantities recovered will be greater than or less than the sum of the estimated proved plus probable reserves. The estimates are made using all available geological and reservoir data as well as historical production data. Estimates are reviewed as appropriate. Revisions occur as a result of changes in prices, costs, fiscal regimes and reservoir performance or changes in the Company’s plans with respect to future development or operating practices. (g) Restoration, rehabilitation and environmental costs and decommissioning obligations Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are accrued at the time of those activities and treated as exploration and evaluation expenditure. Restoration, rehabilitation and environmental obligations recognised include the costs of reclamation and subsequent monitoring of the environment. Costs are estimated on the basis of future assessed costs, current legal requirements and current technology, which are discounted to their present value. The present value of the costs is included as part of the cost of the exploration and evaluation asset or the Property plant and equipment asset. Estimates are reassessed at least annually. Changes in estimates are dealt with prospectively, with any amounts that would have been written off or provided against under accounting policy for exploration and evaluation immediately written off. Amounts recorded for decommissioning obligations and the related accretion expense requires the use of estimates with respect to the amount and timing of decommissioning expenditures. Actual costs and cash outflows can differ from estimates because of changes in laws and regulations, public expectations, market conditions, discovery and analysis of site conditions and changes in technology. Other provisions are recognized in the period when it becomes probable that there will be future cash outflow. (h) Development expenditure Development expenditure represents the accumulated exploration, evaluation, land and development expenditure incurred by or on behalf of the Group in relation to areas of interest in which mining of hydrocarbon resource has commenced. When further development expenditure is incurred in respect of an asset after commencement of production, such expenditure is carried forward as part of the asset only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production. Amortisation of costs is provided on the unit-of-production method with separate calculations being made for each hydrocarbon resource. The unit-of-production basis results in an amortisation charge proportional to the depletion of the estimated recoverable reserves. In some circumstances, where conversion of resources into reserves is expected, some elements of resources may be included. Development and land expenditure still to be incurred in relation to the current reserves are included in the amortisation calculation. Where the life of the assets are shorter than the reserves life their costs are amortised based on the useful life of the assets. The estimated recoverable reserves and life of the development and the remaining useful life of each class of asset are reassessed at least annually. Where there is a change in the reserves/resources amortisation rates are correspondingly adjusted. (i) Trade and other receivables Other receivables are recorded at amounts due less any allowance for doubtful debts. 2018 ANNUAL REPORT Page | 36 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 (j) Cash and cash equivalents Cash and cash equivalents comprise cash balances, short term bills and call deposits. Cash equivalents include deposits and other 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. Bank overdrafts that are repayable on demand and form an integral part of the consolidated entity’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flow. (k) Impairment of non-financial assets (excluding exploration and evaluation assets) The carrying amounts of the consolidated entity’s non-financial assets, other than deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit and loss. Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amount of the assets in the unit (group of units) on a pro rata basis. Reversals of impairment Impairment losses are reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimate used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (l) Share capital (i) Dividends Dividends are recognised as a liability in the period in which they are declared. (ii) Transaction costs Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax benefit. (m) Earnings per share (i) Basic earnings per share Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by weighted average number of ordinary shares outstanding during the financial year, adjusted for the bonus elements in ordinary shares issued during the year. (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated 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. (n) Property, plant and equipment Buildings, IT equipment and other equipment (comprising fittings and furniture) are initially recognised at acquisition cost or manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the Group’s management. Buildings and IT equipment also include leasehold property held under a finance lease (see note 38). Buildings, IT equipment and other equipment are subsequently measured using the cost model, cost less subsequent depreciation and impairment losses. Developed and producing assets are measured at cost less accumulated depreciation and accumulated impairment losses. Costs incurred subsequent to the determination of technical feasibility and commercial viability and the costs of replacing parts of property, plant and equipment are recognized as oil and natural gas interests when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other costs are recognised in expenses as incurred. Such capitalised oil and gas interests generally represent 2018 ANNUAL REPORT Page | 37 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 costs incurred in developing proven and/or probable reserves and bringing on or enhancing production from such reserves. The carrying amount of any replaced or sold component is derecognised. The costs of periodic servicing of property plant and equipment is recognised as an expense. (o) Depletion and depreciation The net carrying value of developed and producing assets are depleted using the unit of production method by reference to the ratio of production in the period to the related proven and probable reserves, taking into account estimated future development costs necessary to bring those reserves into production. Future development costs are estimated taking into account the level of development required to produce the reserves. These estimates are reviewed by independent reserve engineers on an annual basis. Proven and probable reserves are estimated using independent reserve engineer reports and represent the estimated quantities of oil, natural gas and natural gas liquids which 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 producible. In determining reserves for use in the depletion and impairment calculations, a boe conversion ratio of six thousand cubic feet of natural gas (“mcf”) to one barrel of oil (“bbl”) is used as an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in the reserve reports are derived by converting natural gas to oil in the ratio of six mcf of gas to one barrel of oil. For other assets, depreciation is recognized on a straight-line basis to write down the cost less estimated residual value of buildings, IT equipment and other equipment. The following useful lives are applied: • IT equipment: 4 years • Other equipment: 4-5 years In the case of leasehold property, expected useful lives are determined by reference to the lesser of comparable owned assets useful lives and the lease term. Material residual value estimates and estimates of useful life are updated as required, but at least annually. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit and loss. (p) Fair value measurement The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs). For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this 2018 ANNUAL REPORT Page | 38 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements. AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised into as follows: Level 1 – Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 – Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 – Measurements based on unobservable inputs for the asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market date, the asset or liability is included in Level 3. The Group would change the categorisation within the fair value hierarchy only in the following circumstances: If a market that was previously considered active (Lvel 1) became inactive (Level 2 or Level 3) or vice versa; or (i) (ii) If significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa. When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (ie transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred. (q) Employee benefits (i) Long term employee benefits The Company’s liabilities for long service leave are included in both short term employee benefits and other long term benefits as they are not expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related services. They are measured at the present value of the expected future payments to be made to employees. The expected future payments incorporate anticipated future wage and salary levels, experience of employee departures and periods of service, and are discounted at rates determined by reference to market yields at the end of the reporting period on high quality corporate bonds that have maturity dates that approximate the timing of the estimated future cash outflows. Any re-measurements arising from experience adjustments and changes in assumptions are recognised in profit or loss in the periods in which the changes occur. The Company presents employee benefit obligations as current liabilities in the statement of financial position if the Company does not have an unconditional right to defer settlement for at least twelve (12) months after the reporting period, irrespective of when the actual settlement is expected to take place. (ii) Short term employee benefits Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. Examples of such benefits include wages and salaries, non-monetary benefits and accumulating sick leave. Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the liabilities are settled. (iii) Share-based payment transactions The share option program allows the consolidated entity’s employees and consultants to acquire shares of the Company. The fair value of options granted is recognised as an employee benefit or consultant expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Binomial and Black Scholes option-pricing models, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting. 2018 ANNUAL REPORT Page | 39 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 (r) Provisions A provision is recognised in the statement of financial position when the consolidated entity has a present, legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability. (s) Trade and other payables Trade and other payables are non-interest bearing liabilities stated at cost and settled within 30 days. (t) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of returns, trade allowances and duties and taxes paid. (i) Net financial income Net financial income comprises interest on borrowings calculated using the effective interest method, interest receivable on funds invested and dividend income. Interest income is recognised in the profit and loss as it accrues, using the effective interest method. Dividend income is recognised in the profit and loss on the date the entity’s right to receive payments is established which in the case of quoted securities is the ex-dividend date. (ii) Sales revenue Revenue from the sale of oil and natural gas will be recorded when the significant risks and rewards of ownership of the product is transferred to the buyer, which is usually when legal title passes to the external party and when collection is reasonably assured. Royalty income is recognised in petroleum and natural gas revenues as it accrues in accordance with the terms of the overriding royalty agreements. (u) Income tax The Company and its wholly-owned Australian resident entities are part of a tax-consolidated group. As a consequence, all members of the tax-consolidated group are taxed as a single entity. The head entity within the tax-consolidated group is Whitebark Energy Ltd. Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. Included in the income tax benefit are research and development grants provided during the year. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of the reporting period. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. 2018 ANNUAL REPORT Page | 40 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. Amounts receivable from the Australian Tax Office in respect of research and development tax concession claims are recognised in the income statement at the time the claim is lodged and received with the Australian Tax Office. (v) Segment reporting An operating segment is a component of the consolidated entity that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the consolidated entity’s other components. Based on the information used for internal reporting purposes by the chief operating decision maker, being the executive management that makes strategic decisions, at 30 June 2018 the group’s assets are in two reportable geographical segments being Australia and Canada. (w) Goods and services tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flow on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (x) Financial instruments (i) Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. Non-derivative instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below. A financial instrument is recognised if the consolidated entity becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the consolidated entity’s contractual rights to the cash flows from the financial assets expire or if the consolidated entity transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. They arise when the consolidated entity provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non- current assets. Loans and receivables are included in receivables in the statement of financial position. 2018 ANNUAL REPORT Page | 41 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 Financial Liabilities Non-derivative financial liabilities are subsequently measured at amortised cost. (iii) Available-for-sale (AFS) financial assets Available-for-sale (AFS) financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group’s AFS financial assets include listed securities. Available-for-sale (AFS) financial assets are measured at fair value. Gains and losses are recognised in other comprehensive income and reported within the AFS reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income. Interest is calculated using the effective interest method and dividends are recognised in profit or loss within ‘finance income’. (iv) Impairment The consolidated entity assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in the profit and loss. Impairment losses recognised in the profit and loss on equity instruments classified as available-for-sale are not reversed through the profit and loss. If there is evidence of impairment for any of the consolidated entity’s financial assets carried at amortised cost, the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in the profit and loss. (v) De-recognition Financial assets are de-recognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are de-recognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. Accounting for net finance income is discussed in note 3(t)(i). (y) Interest in other entities Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. A joint operation is a joint arrangement in which the parties with joint control have rights to the assets and obligations for the liabilities relating to that arrangement. The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. (z) Adoption of new and revised accounting standards Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. (i) New standards and interpretations not yet adopted The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2018, but have not been applied in preparing this financial report. 2018 ANNUAL REPORT Page | 42 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 • AASB 9 Financial Instruments and the relevant amending standards (December 2014) (applicable for annual reporting periods commencing on or after 1 July 2018). This standard introduces a single approach to determine whether a financial asset is measured at amortized cost or fair value and replaces the multiple rules in IAS 39. The approach is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. For financial liabilities, AASB 9 retains most of the IAS 39 requirements; however, where the fair value option is applied to financial liabilities, the change in fair value resulting from an entity’s own credit risk is recorded in other comprehensive income instead of net earnings, unless this creates an accounting mismatch. In addition, a new expected credit loss model for calculating impairment on financial assets replaces the incurred loss impairment model used in IAS 39. The new model results in more timely recognition of expected credit losses. AASB 9 also includes a simplified hedge accounting model, aligning hedge accounting more closely with risk management. Whitebark Energy does not currently apply hedge accounting. The adoption of AASB 9 will not require any material adjustments to the Company’s financial statements. • AASB 16 Leases (applicable for annual reporting periods commencing on or after 1 July 2019). This standard requires entities to recognize lease assets and lease obligations on the statement of financial position. For lessees, AASB 16 removes the classification of leases as either operating leases or finance leases, effectively treating all leases as finance leases. Certain short-term leases (less than 12 months) and leases of low value assets are exempt from the requirements, and may continue to be treated as operating leases. Classification will determine how and when a lessor will recognize lease revenue, and what assets would be recorded. The company is currently party to only short term leases. Based on this fact the amendments are not expected to have an impact on the transactions and balances recognised in the financial statements on first adoption. • AASB 15 Revenue from Contracts with Customers (applicable for annual reporting periods commencing on or after 1 July 2018). This standard establishes a single revenue recognition framework that applies to contracts with customers. The standard requires an entity to recognize revenue to reflect the transfer of goods and services for the amount it expects to receive, when control is transferred to the purchaser. Expanded disclosure requirements are also part of the standard. The standard is required to be either adopted retrospectively in full or using a modified approach where prior numbers remain and the retrospective effect is an adjustment to retained earnings. It is expected that the standard will have no impact on the opening retained earnings/(accumulated loss), however there will be additional disclosures required in the Revenue note. The standard will result in a change in presentation between processing income and operating expenses with no impact on earnings. 2018 ANNUAL REPORT Page | 43 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 4 Segment reporting During the period the group operated in two business segments (two geographical areas) – exploration, development and production of oil and gas – Australia and Canada. The group has identified its operating segment based on the internal report that is reviewed and used by the Board of directors (chief operating decision maker) in assessing performance and determining the allocation of resources. 2018 Revenue Sales to external customers Total Sales Revenue Financial income Other income Total Revenue Segment result Depletion, depreciation and amortisation Impairment of assets Profit before income tax expense Income tax Profit after income tax expense Assets Total current assets Total non-current assets Total assets Liabilities Total current liabilities Total non-current liabilities Total liabilities 2017 Revenue Sales to external customers Total Sales Revenue Financial income Other income Total Revenue Segment result Depletion, depreciation and amortisation Impairment of assets Profit before income tax expense Income tax Profit after income tax expense Assets Total current assets Total non-current assets Total assets Liabilities Total current liabilities Total non-current liabilities Total liabilities Australia 30-Jun-18 - - 38,290 4,364 42,654 (3,467,409) (17,156) - (3,484,565) 1,076,805 1,660,290 2,737,095 (335,802) (1,298,753) (1,634,555) Canada 30-Jun-18 Total Segment 30-Jun-18 Unallocated 30-Jun-18 Consolidated 30-Jun-18 1,630,809 1,630,809 21,533 - 1,652,343 (82,028) (764,462) (1,330,642) (2,177,131) 1,630,809 1,630,809 59,823 4,364 1,694,997 (3,549,437) (781,618) (1,330,642) (5,661,696) 236,659 9,048,725 9,285,384 1,313,464 10,709,015 12,022,479 (424,547) (6,263,645) (6,688,192) (760,349) (7,562,398) (8,322,747) - - - - - (2,753) - - (2,753) - - - - - - 1,630,809 1,630,809 59,823 4,364 1,694,997 (3,552,190) (781,618) (1,330,642) (5,664,449) - (5,664,449) 1,313,464 10,709,015 12,022,479 (760,349) (7,562,398) (8,322,747) Australia 30-Jun-17 Canada 30-Jun-17 Discontinued 30-Jun-17 Total Segment 30-Jun-17 Unallocated 30-Jun-17 Consolidated 30-Jun-17 - - 103,312 16,836 120,148 1,089,877 (24,917) (52,123,882) (51,058,922) 101,436 101,436 - - 101,436 (2,235,670) - - (2,235,670) 2,406 101,436 101,436 105,718 16,836 223,990 3,876,125 - - 3,876,125 2,730,332 (24,917) (52,123,882) (49,418,467) - - - - - (4,523) - - (4,523) 101,436 101,436 105,718 16,836 223,990 2,725,809 (24,917) (52,123,882) (49,422,990) 9,348,766 (40,074,224) Australia 30-Jun-17 Canada 30-Jun-17 Discontinued 30-Jun-17 Total Segment 30-Jun-17 Unallocated 30-Jun-17 Consolidated 30-Jun-17 5,582,943 1,350,288 6,933,231 (448,185) (42,445) (490,630) 195,400 5,953,267 6,148,667 (269,078) (5,202,555) (5,471,633) - - - - - - 5,778,343 7,303,555 13,081,898 (717,263) (5,245,000) (5,962,263) - - - - - - 5,778,343 7,303,555 13,081,898 (717,263) (5,245,000) (5,962,263) The Canada column discloses the companies proportionate share of all assets and liabilities held in the unincorportated PLJV. 5 Revenue from continuing operations Product sales Royalties 2018 ANNUAL REPORT 30-Jun-18 AUD (1,950,312) 319,502 (1,630,809) 30-Jun-17 AUD 101,436 - 101,436 Page | 44 6 Cost of goods and services sold WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 Production expenditure 7 Other income Indirect overhead 8 Finance income Interest income Unrealised commodity gain Foreign currency gain 9 Loss on disposal of available-for-sale financial assets Loss on disposal of financial assets - Carnaby Energy Limited Gain on disposal of financial assets - Norwest Energy Limited 10 Profit/ (loss) on disposal of assets Loss on write off of depreciable assets - Latent Petroleum Pty Ltd Loss on disposal of motor vehicle - Latent Petroleum Pty Ltd 11 Administration expenses Directors' fees Administration and finance support General and administration 30-Jun-18 AUD (1,613,293) (1,613,293) 30-Jun-17 AUD (105,886) (105,886) 30-Jun-18 AUD 30-Jun-17 AUD 4,364 4,364 16,836 16,836 30-Jun-18 AUD 30-Jun-17 AUD 38,299 11,907 9,617 59,823 105,718 - 361 106,079 30-Jun-18 AUD 30-Jun-17 AUD - 246,660 246,660 (13,242) - (13,242) 30-Jun-18 AUD 30-Jun-17 AUD - (741) (741) (31,223) - (31,223) 30-Jun-18 AUD 30-Jun-17 AUD (111,000) (819,407) (1,549,062) (2,479,469) (148,184) (415,942) (1,194,624) (1,758,750) 2018 ANNUAL REPORT Page | 45 12 Finance costs Interest expense Decommissioning liabilities - accretion Establishment fee - facility 13 Impairment expenses Impairment - Warro Joint Venture Impairment - Canadian assets WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 30-Jun-18 AUD 30-Jun-17 AUD (71) (108,984) - (109,055) (403) - (74,063) (74,466) 30-Jun-18 AUD - (1,330,642) (1,330,642) 30-Jun-17 AUD (48,670,684) (3,384,748) (52,055,432) In determining our impairment position of the Canadian assets the Company evaluated its developed and producing CGUs and its exploration and evaluation assets for indicators of impairment. The developed and producing CGUs consist of production facilities, wells, land and associated reserves. The recoverable amount of the CGU’s has been established by reference to an independently prepared Reserve Report. An impairment amount of $172,797 has been charged in relation to the developed and producing assets. The exploration and evaluation assets recoverability is dependent on the successful development and commercial exploitation or sale of the respective areas of interest. An impairment amount of $1,157,845 has been charged in relation to exploration and evaluation assets. This amount is in relation to capital costs associated with leases that expired or were relinquished up to 30 June 2018 where no future exploration or development was anticipated (Refer notes 23 and 24). For the year ended 30 June 2017 the Company determined its impairment position and the appropriateness of continuing to carry forward costs in relation to the Warro Project by considering the then current market conditions for junior mining exploration companies, the Company’s market capitalisation along with the announcement made by the Company’s JV partner, Alcoa Corporation in early January 2017 that it had recorded an impairment charge against the carrying value of the Warro project recorded in Alcoa’s accounts. As a result of this review of the Warro project, it was considered prudent that the Company make an impairment charge of $48,670,684 in the 30 June 2017 year. In determining the impairment position of the Canadian assets for the year ended 30 June 2017 the Company evaluated its developed and producing CGU for indicators of impairment. The developed and producing CGU consisted of production facilities, wells, land and associated reserves. The recoverable amount of the CGU’s had been established by reference to an independently prepared Reserve Report. An impairment amount of $3,384,748 was charged in relation to the developed and producing assets for the year ended 30 June 2017. 14 Other expenses Depletion, depreciation and amortisation Project costs Legal fees Tax advisory services Consultancy fees Bad debt expense Revision of Rehab and Abandonment provision Workover expense 30-Jun-18 AUD 30-Jun-17 AUD (781,618) (485) (91,137) (11,030) (163,532) - (1,244,767) (103,300) (2,395,869) (24,917) (340,430) (26,504) (254,050) (74,574) (23,943) - - (744,418) 2018 ANNUAL REPORT Page | 46 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 15 Auditor remuneration Audit and review of financial statements -auditors of Whitebark Energy Limited - Grant Thornton Australia Remuneration for audit and review of financial statements -auditors of Whitebark Energy Limited - KPMG Remuneration for audit and review of financial statements Other services -auditors of Whitebark Energy Limited - Grant Thornton Australia Taxation compliance Taxation advice Due diligence services -auditors of Whitebark Energy Limited - KPMG -Legal advice 16 Income tax benefit Current income tax expense/(benefit) Aggregate income tax expense/(benefit) Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax from continuing operations Tax at the statutory rate of 27.5% Adjustment for tax rate difference (Canada 25%) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Share-based payments Gain on deconsolidation Impairment Sundry items Deferred tax asset on losses/(recouped) not recognised - Australia Deferred tax asset on losses not recognised - Canada Deferred tax asset on temporary differences not recognised - Australia Deferred tax asset on temporary differences not recognised - Canada Research and development tax offset Income tax benefit 30-Jun-18 AUD 30-Jun-17 AUD (42,025) (72,773) (50,738) - - - - (60,000) (152,763) (9,550) (1,950) (2,000) - (86,273) 30-Jun-18 AUD 30-Jun-17 AUD (9,348,766) (9,348,766) - - (5,664,448) (1,557,723) 54,428 (1,503,295) (49,422,991) (13,591,322) 56,623 (13,534,699) 161,811 - - 1,827 8,100 (1,075,721) 12,754,570 67,831 (1,339,657) (1,779,919) 862,849 648,219 (67,475) (103,936) - 809,302 176,585 361,247 432,785 (9,348,766) - (9,348,766) A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. It is in the opinion of management of the Company that there will be no taxable profits generated in the near future and the deferred tax asset is not to be recognised. 2018 ANNUAL REPORT Page | 47 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 Closing balance of unrecognised Deferred Tax Assets on tax losses carried forward and temporary differences: Australian Operations Deferred tax assets - temporary differences Deferred tax assets - tax losses Deferred tax assets - capital losses Deferred tax liabilities - temporary differences Net deferred tax asset 503,234 6,902,177 3,642 (423,087) 6,985,966 120,892 6,643,676 (70,958) 6,693,610 Overseas Operations Deferred tax assets - temporary differences Deferred tax assets - tax losses Deferred tax assets - capital losses Deferred tax liabilities - temporary differences Net deferred tax asset 1,566,236 815,907 - (958,785) 1,423,358 1,301,967 167,688 - (868,998) 600,657 During the year ended 30 June 2017, a Research and Development tax incentive of $9.3 million was recorded in relation to the Warro Project. 17 Discontinued operations Whitebark Energy disposed of its shareholding in Carnaby Energy Limited (13,750,000 ordinary shares) on the 26th June 2017 for nil consideration. The results of the discontinued operations included in the statement of profit and loss and other comprehensive income are set out below. Results of the discontinued operations for the period: Revenue Expenses Loss before tax Attributable income tax benefit Gain on sale of discontinued operations Profit for the year from discontinued operations Cash flows from discontinued operations Net cash flows from operating activities Net cash flows from investing activities Net cash flows Effects on disposal on the financial position of the group Current assets Cash and cash equivalents Trade and other receivables Current Liabilities Trade and other payables Net assets and liabilities disposed of Non-controlling interest of Carnaby Energy Limited Gain on sale of discontinued operation 30-Jun-18 AUD 30-Jun-17 AUD - - - - - - - - - - - - - - - - 8,728 (38,224) (29,496) - (29,496) 3,905,621 3,876,125 68,599 - 68,599 30-Jun-16 (125,851) (292) 90,561 (35,582) 3,941,203 3,905,621 2018 ANNUAL REPORT Page | 48 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 18 Earnings/(loss) per share The calculation of basic loss per share at 30 June 2018 of 0.6101 cents per share (30 June 2017 basic loss: 4.7978 cents per share) was based on the loss attributable to the ordinary shareholders of $5,664,449 (30 June 2017 loss: $40,074,224) and a weighted average number of ordinary shares outstanding during the year ended 30 June 2018 of 928,383,515 (30 June 2017: 835,264,337 shares) being calculated as follows: Earnings per share Loss attributable to the ordinary shareholders Profit/(loss) for the period Attributed to: Members of the parent entity Non-controlling interests Weighted average number of ordinary shares Opening balance Movement during the year Earnings/(loss) - cents per share Continuing operations Discontinued operations 30-Jun-18 AUD 30-Jun-17 AUD (5,664,449) (40,074,224) (5,664,449) - (40,064,362) (9,862) 835,264,337 93,119,178 928,383,515 (0.6101) (0.6101) - (0.6101) 835,264,337 - 835,264,337 (4.7978) (4.7966) (0.0012) (4.7978) 112,675,000 options (refer Note 33) are not included in calculating diluted EPS because the effect is anti-dilutive. 19 Cash and cash equivalents Cash at bank Term deposits 30-Jun-18 AUD 1,030,142 60,273 1,090,415 30-Jun-17 AUD 816,883 4,040,000 4,856,883 Effective interest rates were 2.5% - 2.75% and average maturity was 45 days. 20 Trade and other receivables Trade and other receivables 30-Jun-18 AUD 125,060 125,060 30-Jun-17 AUD 280,574 280,574 All amounts are short term. The net carrying value of trade receivables is considered a reasonable approximation of fair value. 21 Other current assets Prepayments 30-Jun-18 AUD 97,989 97,989 30-Jun-17 AUD 240,886 240,886 2018 ANNUAL REPORT Page | 49 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 22 Business Combination On 30th April 2018 Whitebark Energy Ltd acquired a 30% working interest in certain oil and gas properties located in Alberta, Canada, for cash consideration of $328,266CAD. The purchase was accounted for using the acquisition method of accounting under IFRS 3 – Business Combinations, whereby, the net assets acquired and the liabilities assumed are recorded at fair value as follows: Costs associated with the acquisition of the 30% working interest have been included in the Statement of Profit or Loss. The estimated fair values of the assets and liabilities acquired is as follows: Property, plant and equipment including production facilities and producing wells Exploration and evaluation Decommissioning obligations assumed 23 24 28 Cash paid to Vendor by Whitebark Energy Limited Gain on bargain purchase 30-Jun-18 AUD 1,621,004 57,476 (425,116) 1,253,364 341,997 911,367 The above amounts of identifiable assets acquired and liabilities assumed have been determined from information currently available to management of the Company and incorporates estimates, which may be subject to adjustment. The discount rate used to calculate the decommissioning obligations assumed at acquisition date is the market rate of 14%. The acquired net assets contributed petroleum and natural gas revenues of $150,000 and operating profit of $19,000 since 30 April 2018. Had the acquisition closed on 1 July 2017 Whitebark’s estimated petroleum revenue would have increased by approximately $770,000 and operating income would have increased by approximately $340,000. On 23rd May 2017 Whitebark Energy Ltd completed the acquisition of 20% working interest in the assets of Point Loma Resources Ltd in Alberta, Canada. The property plant and equipment fair value is based on the discounted proved plus probable reserves acquired as determined by an independent reserves evaluation. The exploration and evaluation assets, comprising undeveloped land, is based on internal estimates with reference to recent Crown sales. The decommissioning obligations assumed are based on the Alberta Energy Regulator’s estimated abandonment liability amount discounted by the credit adjusted interest rate of 10%. Costs associated with the acquisition of the 20% working interest have been included in the Statement of Profit or Loss. The estimated fair values of the assets and liabilities acquired is as follows: Property, plant and equipment including land, production facilities and producing wells Exploration and evaluation Decommissioning obligations assumed 23 24 28 Cash paid to Vendor by Whitebark Energy Limited 30-Jun-17 AUD 5,638,548 1,900,117 (2,224,972) 5,313,693 4,024,287 1,289,406 Gain on bargain purchase Other costs amounting to $63,836 are included as part of the fair value of assets acquired. The gain on bargain purchase has arisen primarily due to the variation in the accounting treatment of decommissioning liabilities being measured at their acquisition date fair value in accordance with IFRS 13 for business combinations and then subsequent to initial measurement (ie. Day 2), these provisions are measured using the principles in IAS 37. The acquired net assets contributed petroleum and natural gas revenues of $101,436 and operating loss of $4,450 since 23 May 2017. Had the acquisition closed on 1 July 2016 Whitebark’s estimated petroleum revenue for the year to 30 June 2017 would have been approximately $1,370,000 and operating income would have increased by approximately $305,000. 2018 ANNUAL REPORT Page | 50 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 23 Property, plant and equipment Plant and equipment at cost Less: accumulated depletion and depreciation Impairment Property, plant and equipment Reconciliation of carrying amounts Developed and Producing Opening balance Acquisition though business combination Asset retirement obligation asset Additions Foreign exchange Disposal Impairment Depletion Land and buildings Opening balance Disposal Depreciation expense Furniture and Fixtures Opening balance Disposal Additions Depreciation expense Office equipment Opening balance Additions Disposal Depreciation expense Software Assets Opening balance Depreciation expense Motor vehicles Opening balance Disposal Depreciation expense 30-Jun-18 AUD 12,541,168 (835,619) (3,553,230) 8,152,319 30-Jun-17 AUD 8,765,220 (64,078) (3,475,336) 5,225,806 5,177,307 1,621,004 450,566 1,795,901 214,804 (183,188) (173,984) (766,944) 8,135,465 - 5,638,548 2,982,896 35,542 (767) - (3,475,336) (3,576) 5,177,307 - - - - 301 - 1,377 (60) 1,618 10,116 816 - (3,872) 7,060 22,612 (14,436) 8,176 15,470 (13,832) (1,638) - 21,283 (21,237) (46) - 5,892 (5,516) - (75) 301 13,759 4,377 (3,738) (4,282) 10,116 37,048 (14,436) 22,612 22,022 - (6,552) 15,470 8,152,319 5,225,806 2018 ANNUAL REPORT Page | 51 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 Impairment test of property, plant and equipment The recoverable amount of property, plant and equipment is determined as the fair value less costs of disposal using a discounted cash flow method and is assessed at the CGU level. Key input estimates used in the determination of cash flows from oil and gas reserves include estimates regarding recoverable reserves, forward price estimates of crude oil and natural gas prices, royalties forward price estimates of production costs and required capital expenditures and discount rate. The company used a discount rate of 25% for the Thornbury CGU and 20% for the Mannville CGU. The following table outlines the forecast benchmark commodity prices used in the impairment calculation of property, plant and equipment at 30 June 2018. Forecast benchmark commodity price assumptions tend to be stable because short- term increases or decreases in prices are not considered indicative of long-term price levels, but are nonetheless subject to change. Edmonton Llight Crude Oil ($C/bbl) Edmonton Cond & Natural Gasolines ($/bbl) Alberta AECO Spot Price ($C/MMBtu) 2018 (6 months) 84.80 88.80 1.90 2019 79.30 82.40 2.30 2020 79.30 82.40 2.75 2021 80.60 83.80 3.10 2022 82.90 86.10 3.25 2023 84.50 87.80 3.30 2024 86.20 89.60 3.35 2025 87.90 91.30 3.45 2026 89.70 93.20 3.45 2027 91.60 95.20 3.55 2028 93.40 97.10 3.60 2029 95.20 98.90 3.70 The impairment test of property, plant and equipment at 30 June 2018 concluded that the estimated recoverable amount was lower than the carrying amount of the Thornbury/Portage CGU. As such, property, plant and equipment impairment existed for this CGU only. Carrying value at 30 June 2018 Less: Impairment Recoverable amount at 30 June 2018 6,863,047 - 6,863,047 1,463,255 (173,984) 1,289,271 Mannville Thornbury/Portage The fair value less costs of disposal values used to determine the recoverable amounts of the impaired property, plant and equipment assets are categorized as Level 3 on the fair value hierarchy as the key assumptions are not based on observable market data. The impairment tests completed during the year ended 30 June 2018 are sensitive to changes in any of the key judgements such as a revision in reserves, a change in forecast benchmark commodity prices, changes in expected royalties, change in operating costs, which could increase or decrease the recoverable amount of the assets and result in additional impairment expense or recovery of the impairment expense. 2018 ANNUAL REPORT Page | 52 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 24 Exploration and evaluation expenditure Exploration and evaluation assets Movement in exploration and evaluation expenditure Opening Balance Acquisition through business combination Additions - Canada Additions - Warro Joint Venture Expenditure incurred during the period Depreciation/amortisation for exploration assets Impairment for exploration and evaluation assets Disposal during the year Transfer to Property plant and equipment Foreign currency movement 30-Jun-18 AUD 2,556,696 30-Jun-17 AUD 2,077,749 2,077,749 57,476 199,946 - 1,338,779 - (1,157,496) (14,205) (9,828) 64,275 2,556,696 48,012,854 1,900,117 - 665,660 177,632 (7,830) (48,670,684) - - - 2,077,749 The ultimate recoverability of the value of exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale, of the underlying areas of interest. The Group undertakes at each reporting date, a review for indicators of impairment of these assets. Should an indicator of impairment exist, there is significant estimation and judgments in determining the inputs and assumptions used in determining the recoverable amounts. The key areas of estimation and judgement that are considered in this review included: • • • • Recent drilling results and reserves/resource estimates; Environmental issues that may impact the underlying tenements; The estimated market value of assets at the review date; Independent valuations of underlying assets that may be available; Fundamental economic factors such as prices, exchange rates and current and anticipated operating cost in • the industry; and • The group’s market capitalisation compared to its net assets. Information used in the review process is rigorously tested to externally available information as appropriate. Changes in these estimates and assumptions as new information about the presence or recoverability of a reserve becomes available, may impact the assessment of the recoverable amount of exploration and evaluation assets. If, after having capitalised the expenditure a judgement is made that recovery of the expenditure is unlikely, an impairment loss is recorded in the profit or loss in accordance with accounting policy 3(d). Warro Joint Venture During the year ended 30 June 2017 the company underwent a review of the impairment position of the Warro Project. As a result of this review the Company made an impairment charge of $48,670,684 in June 2017. 25 Assets classified as available-for-sale Available-for-sale financial assets: Listed equity securities 30-Jun-18 AUD 30-Jun-17 AUD - - 400,000 400,000 2018 ANNUAL REPORT Page | 53 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 26 Trade and other payables Current: Trade creditors Other payables Total trade and other payables 30-Jun-18 AUD 30-Jun-17 AUD 404,937 253,070 658,007 93,136 558,647 651,783 All amounts are short-term. The carrying value of trade payables and other payables are considered to be a reasonable approximation of fair value. 27 Provisions Current Provisions: Annual leave Long service leave Non-Current Provisions: Annual leave Long service leave 28 Decommissioning liabilities Balance at the beginning of the year Liabilities acquired - Canada Change in discount rate of liabilities acquired - Canada Liability acquired - Warro Project Change in discount rate of liabilities to 2.1% (2017 2%) Revision of estimates Accretion expense Expenditure Foreign currency movement Balance at the end of the year 30-Jun-18 AUD 30-Jun-17 AUD 61,824 40,518 102,342 - 3,995 3,995 106,337 30-Jun-18 AUD 5,207,868 425,116 534,734 1,293,459 (56,188) (27,981) 109,305 (100,436) 172,525 7,558,403 44,856 20,624 65,480 24,114 13,018 37,132 102,612 30-Jun-17 AUD - 2,224,972 2,982,896 - - - - - - 5,207,868 The Company’s decommissioning obligations result from its ownership interest in oil and natural gas well sites and facilities. The total decommissioning obligation is estimated based on the estimated costs to reclaim and abandon these wells and facilities and the estimated timing of costs to be incurred in future years. The Company has estimated the net present value of the decommissioning obligations to be $7,558,403 as at 30 June 2018 (2017: $5,207,868) based on an undiscounted total future liability of $9,841,593 (2017: $6,631,025). Subsequent to the initial measurement, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. The increase in the provision due to the passage of time is recognized as a finance cost whereas increases/decreases due to changes in the estimated future cash flows are capitalized where there is a future economic benefit associated with the asset. Actual costs incurred upon settlement of the decommissioning liabilities are charged against the provision to the extent the provision had been established. The weighted average time in which these payments are expected to be made is approximately 10 years. The discount factor, being the risk free interest rate of 2.1% for the Canadian obligation and 3.0% for the Australian obligation (2017: 2.0%) and the inflation rate is 2.0% for both Canadian and Australian obligations (2017: 2.0%) per annum. 2018 ANNUAL REPORT Page | 54 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 The liability acquired in relation to the Warro Project comprises amounts related to the Warro field. The provision arose in the 2018 financial year as a result of Alcoa withdrawing from the Joint Venture under which they were to satisfy the full obligation. The provision represents the present value of the Directors’ best estimate of the future sacrifice of economic benefits that will be required to restore and abandon the site. The estimated future obligation includes the costs of abandoning wells and restoring the affected areas. 29 Issued capital Ordinary Shares 30-Jun-18 AUD 54,382,657 30-Jun-17 AUD 52,646,771 The Company does not have authorised capital or par value in respect of its issued shares. The holders of ordinary shares are entitled to one vote per share at meetings of the Company. Reconciliation of movement in issued capital For the year ended 30 June 2018 Ordinary shares Opening balance Issue of shares for cash Closing balance Less share issue costs: Opening balance Current period costs Share issue costs at the end of the year For the year ended 30 June 2017 Ordinary shares Opening balance Closing balance Less share issue costs: Opening balance Share issue costs at the end of the year 30 Reserves Share based payments reserve Available for sale reserve Foreign currency translation reserve Balance at 1 July 2017 Exchange differences on translating foreign operations Transfer relating to disposal of subsidiaries Revaluation of marketable securities Gain on marketable securities Share options vested Balance at 30 June 2018 2018 ANNUAL REPORT AUD 53,757,488 1,862,000 55,619,488 (1,110,717) (126,114) (1,236,831) 54,382,657 AUD 53,757,488 53,757,488 (1,110,717) (1,110,717) 52,646,771 Issue price Number of shares 835,264,337 155,166,667 990,431,004 Number of shares 835,264,337 835,264,337 Issue price 30-Jun-18 AUD 30-Jun-17 AUD 685,224 - 71,702 756,926 96,822 200,000 1,333,133 1,629,955 Foreign currency translation reserve AUD 1,333,133 120,256 (1,381,687) - - 71,702 Share based payments reserve AUD Available for sale reserve AUD 96,822 200,000 - - - 588,402 685,224 - - 46,600 (246,600) - - Page | 55 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 Share based payments reserve The reserve represents the value of options issued under the compensation arrangement that the consolidated entity is required to include in the consolidated financial statements. This reserve will be reversed against share capital when the underlying options are exercised by the employee or consultant or expire. No gain or loss is recognised in the profit or loss on the purchase, sale, issue or cancellation of the consolidated entity’s own equity instruments. Foreign currency translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations where their functional currency is different to the presentation currency of the reporting entity. 31 Reconciliation of cash flow from operating activities Cash flows used in operating activities Profit/(loss) for the period Adjustments for: Depreciation, depletion and amortisation expense Accretion expense Gain on disposal of available for sale financial assets Profit on disposal of assets Gain on discount purchase Profit from discontinued operations (refer note 31) Impairment expense Revision of provision for rehabilitation and abandonment - Warro Bad debt expense Unrealised commodity gain Cash disposed of on loss of control of subsidiary Foreign exchange gain Equity settled share-based payment expenses Operating profit before changes in working capital and provisions (Increase)/Decrease in other receivables and prepayments Increase in trade and other payables Net cash provided/(used in) operating activities 32 Related Party Transactions 30-Jun-18 AUD 30-Jun-17 AUD (5,664,449) (40,074,224) 781,618 108,984 (246,660) 741 (911,757) - 1,331,480 1,244,767 - (11,907) - (31,880) 588,403 (2,810,660) 298,411 6,225 (2,506,024) 24,917 - 13,242 31,223 (1,289,406) (3,947,585) 52,146,021 - 23,943 - (125,538) (38,047) 29,455 6,794,001 (289,569) 97,746 6,602,178 Detailed disclosures relating to Directors and Key Management Personnel are set out in the Directors’ Report under the section entitled Remuneration Report. The totals of remunerations paid to Key Management Personnel of the Company and the consolidated entity during the year are as follows: Short-term employee benefits Post-employment benefits Share based payments 30-Jun-17 AUD (667,918) (25,000) (557,346) (1,250,264) 30-Jun-17 AUD (1,017,461) (15,000) - (1,032,461) The aggregate amounts recognised during the year relating to directors’ related parties and other related parties were as follows: 2018 ANNUAL REPORT Page | 56 TB & S Consulting Pty Ltd (i) Mtani Pty Ltd (ii) Westranch Holdings Pty Ltd (iii) Point Loma Resources Limited (iv) WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 Transactions value year end 30-Jun-17 30-Jun-18 Balance outstanding as at 30-Jun-17 30-Jun-18 174,400 - 1,338,120 2,499,158 4,011,678 288,620 373,025 152,632 164,870 979,147 70,933 - - 153,608 224,541 125,867 66,187 - (5,300) 186,754 i. TB & S Consulting Pty Ltd is a Company associated with Mr Stephen Keenihan. The charges from TB & S Consulting were for directors’ fees and consultancy fees. ii. Mtani Pty Ltd is a Company associated with Mr David Messina. The charges from Mtani Pty Ltd were for directors’ fees and consultancy fees. iii. Westranch Holdings Pty Ltd is the operator of the TP15 Joint Venture iv. Point Loma Resources Limited is the operator of the PLJV (Canada) The terms and conditions of the transactions were no more favourable than those available, or which might be reasonably available, on similar transactions to non-director related entities on an arms-length basis. 33 Share –based payments Options are granted and approved by the directors and shareholders. Options are granted to directors, employees, consultants and others. Entitlements to the options are exercisable as soon as they have vested and performance conditions have been met. There are no cash settlement alternatives. Options granted carry no dividend or voting rights. The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of any movements in share options issued during the year: Outstanding at the beginning of the year Granted during the year Forfeited during the year Exercised during the year Expired during the year No. 2018 12,675,000 100,000,000 - - - 112,675,000 WAEP 2018 No. 2017 WAEP 2017 0.015 0.015 - - - 0.015 1,675,000 11,000,000 - - - 12,675,000 0.06 0.015 - - - 0.021 The number of options vested and exercisable as at 30 June 2018 was 50,341,669 (2017: 5,341,668). The related party options granted during the year vest over a 3 year period. During the year 41,333,333 of the 100,000,000 options granted have vested. The outstanding balance of options over ordinary shares as at 30 June 2018 represented by: Grant Date 17-Nov-15 28-Apr-17 24-Jul-17 Exercisable 17 November 2015 28 April 2017 to 1 April 2021 24 July 2017 to 31 May 2021 Expiry date 10-Jul-18 1-Apr-21 31-May-21 Exercise price Number of options Value of share based payments $0.060 1,675,000 67,367 70,191 $0.015 11,000,000 633,019 $0.015 100,000,000 The outstanding balance of options over ordinary shares as at 30 June 2017 represented by: Grant date 17-Nov-15 28-Apr-17 Exercisable 17 November 2015 28 April 2017 to 1 April 2021 Expiry date 10-Jul-18 1-Apr-21 Exercise price Number of options Value of share based payments $0.060 1,675,000 67,367 70,191 $0.015 11,000,000 The weighted average remaining contractual life for the share options outstanding as at 30 June 2018 is three years. The exercise price for options outstanding at the end of the year is 1,675,000 at A$0.060 (2017: A$0.06) and 111,000,000 at A$0.015 (2017: 11,000,000 at A$0.015). Fair value of options granted Options granted during the year ended 30 June 2018; the fair value per option of options granted during the financial year was $0.015 with a weighted average of $0.015. The fair value at grant date is determined using the binomial and Black Scholes method of valuing options that takes into account the exercise price, the term of the option, the impact 2018 ANNUAL REPORT Page | 57 of dilution, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The following table lists the inputs to the model used for valuation of options: WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 Inputs to the model used for valuation of options: Dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected life of option (year) Option exercise price ($) Underlying share price 1.5c Options Nil 119% 1.96% 3.85 $0.015 $0.009 The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value. The expense recognised in profit or loss in relation to share-based payments is $588,403 (2017: $29,455). 34 Parent Company disclosures Current Assets Non-Current Assets Total Assets Current Liabilities Non-Current Liabilities Total Liabilities Net Assets Contributed Equity Share based payments reserve Available for sale reserve Accumulated losses Total Equity Results of Parent Entity for the year ended 30 June 2018 Profit/(Loss) for the year Other comprehensive income Total comprehensive income 30-Jun-18 AUD 908,926 2,981,625 3,890,551 190,819 - 190,819 30-Jun-17 AUD 4,563,918 425,000 4,988,918 335,063 - 335,063 3,699,732 4,653,855 54,382,657 685,224 - (51,368,149) 3,699,732 52,646,771 96,822 200,000 (48,289,738) 4,653,855 (1,270,651) (200,000) (1,470,651) (38,840,077) 200,000 (38,640,077) The Company has no contingent liabilities or commitments and no guarantees due to subsidiaries at 30 June 2018. 2018 ANNUAL REPORT Page | 58 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 35 Financial instruments Financial Risk Management Overview The consolidated entity has exposure to the following risks from its use of financial instruments: credit risk; liquidity risk; and • • • market risk. The consolidated entity’s management of financial risk is aimed at ensuring net cash flows are sufficient to: • Meet all its financial commitments; and • Maintain the capacity to fund the consolidated entity’s operating activities. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the consolidated entity through regular reviews of the risks. Market, liquidity and credit risk (including foreign exchange, commodity price and interest rate risk) arise in the normal course of business. These risks are managed under Board approved directives which underpin treasury practices and processes. This note presents information about the Company’s and consolidated entity’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. Credit risk Credit risk is the risk of financial loss to the consolidated entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the consolidated entity’s receivables from customers. Trade and other receivables The consolidated entity operates in the mining exploration and production sector. As at 30 June 2018 there were no significant concentrations of credit risk on the statement of financial position. Impairment losses None of the Company’s other receivables are past due (2017: nil). As at 30 June 2018 there is no allowance for impairment in respect to other receivables for the consolidated entity (2017: nil). Exposure to credit risk The carrying amount of the consolidated entity’s financial assets represents the maximum credit exposure. The consolidated entity’s maximum exposure to credit risk at the reporting date was: Financial Instruments Trade and other receivables Cash and cash equivalents 30-Jun-18 AUD 125,060 1,090,415 1,215,477 30-Jun-17 AUD 280,574 4,856,883 5,137,457 2018 ANNUAL REPORT Page | 59 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 Non-current assets Trade and other receivables 0 Other investments including 0 - - - - - - - - Carrying Amount Trade and other receivables 0 - 125,060 - 125,060 Carrying Amount Current assets Other investments including 0 - - - - Cash and cash equivalents 0 - - 1,090,415 1,090,415 Non-current assets Trade and other receivables Other investments including derivatives Trade and other receivables Current assets Other investments including derivatives Cash and cash equivalents Total Level 1 0 - 125,060 1,090,415 1,215,477 0 - - - - Total Level 1 - - - - - - - - - 400,000 280,574 - - - 280,574 400,000 - - 4,856,883 4,856,883 - 400,000 280,574 4,856,883 5,137,457 - - 400,000 30-Jun-2018 Financial assets measured at fair value Assets held for sale Financial assets not measured at fair value Trade and other receivables Cash and cash equivalents 30-Jun-2017 Financial assets measured at fair value Assets held for sale Financial assets not measured at fair value Trade and other receivables Cash and cash equivalents Liquidity risk Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due. The consolidated entity’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the consolidated entity’s reputation. The consolidated entity manages liquidity risks by maintaining adequate reserves by continuously monitoring forecast and actual cash flows. The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements: Carrying Amount Non-current liabilities Trade and other payables Loans and borrowings Current liabilities Trade and other Loans and borrowings Bank overdraft Total Level 1 - - - - - - 658,008 658,008 Carrying Amount Non-current liabilities Trade and other payables Loans and borrowings Current liabilities Trade and other Loans and borrowings Bank overdraft - - - - - - 651,783 651,783 - - - - 658,008 658,008 Total Level 1 651,783 651,783 - - 30-Jun-2018 Financial liabilities measured at fair value Financial liabilities not measured at fair value Trade and other payables 30-Jun-2017 Financial assets measured at fair value Financial assets not measured at fair value Trade and other payables Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the consolidated entity’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Commodity Risk The consolidated entity is exposed to commodity price risk through its revenue from the sale of hydrocarbons – gas, crude oil, condensate and LPG – which are priced against world benchmark commodity prices. 2018 ANNUAL REPORT Page | 60 WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 Currency risk The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. The parent company loans funds to a Canadian based subsidiary. The funds are loaned in Australian dollars and are subject to exchange rate fluctuations. Interest rate risk At the reporting date the interest rate profile of the Company’s and the consolidated entity’s interest-bearing financial instruments was: Variable rate instruments Financial assets 2018 2017 1,090,415 1,090,415 4,856,883 4,856,883 Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2017. 30 June 2018 Variable rate instruments Cash flow sensitivity 30 June 2017 Variable rate instruments Fair values Profit or loss 100bp increase AUD 100bp decrease AUD 100bp increase AUD 100bp decrease AUD Equity 10,904 10,904 48,569 48,569 (10,904) (10,904) (48,569) (48,569) 10,904 10,904 48,569 48,569 (10,904) (10,904) (48,569) (48,569) There is little or no difference between carrying amounts and fair values of financial assets and liabilities. Capital Management The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the consolidated entity defines as net operating income divided by total shareholders’ equity. Equity attributable to shareholders of the Company Equity Total assets Equity ratio 2018 54,382,657 54,382,657 2017 52,646,771 52,646,771 12,022,479 22% 13,081,898 25% There were no changes in the consolidated entity’s approach to capital management during the year. As at 30 June 2018, neither the Company nor its subsidiaries are subject to externally imposed capital requirements. 36 Consolidated entities (a) Parent entity The parent entity of the group is Whitebark Energy Limited, incorporated in Australia. Registered office: Level 2, 6 Thelma Street West Perth WA 6005 2018 ANNUAL REPORT Page | 61 (b) Subsidiaries The consolidated financial statements incorporate assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described under 1(a). WHITEBARK ENERGY LTD Notes to the Financial Statements for the year ended 30 June 2018 Name of Entity Subsidiaries of Whitebark Energy Ltd Tejon Energy Pty Ltd Tejon Energy Inc (100% subsidiary of Tejon Energy Pty Ltd) Latent Petroleum Pty Ltd Calor Energy Pty Ltd Kubla Oil Pty Ltd Salt Bush Energy Ltd 37 Contingent Liabilities There are no contingent liabilities at 30 June 2018. 38 Commitments Country of incorporation 2018 Equity holding % 2017 Equity holding % Australia USA Australia Australia Australia Canada 100 100 100 100 100 100 100 100 100 100 100 100 The Group leases a photocopier/printer under operating leases and is lessee to the premises situated at Level 2, 6 Thelma Street West Perth. The future minimum lease payments are as follows; 30-Jun-18 30-Jun-17 Within 1 year 15,013 59,583 Minimum Lease Payments Due After 5 years 1 to 5 years - 5,829 - - Total 15,012 65,412 Lease expense during the period amounted to $74,542 (2016: $98,450) representing the minimum lease payments. The rental agreement for the photocopier/printer is for a term of 36 months and will expire in June 2019. 39 Subsequent events On 1 August 2018 Whitebark Energy announced a renounceable entitlement offer. The offer was made to eligible shareholders on the basis of one new share for every two shares held on the record date. Each new share had an offer price of 0.4 cents. Eligible shareholders were also offered one free attaching new option for every one new share subscribed for and issued under the offer. On 28 August 2018 the renounceable rights issue closed substantially over-subscribed. The company raised $1,980,862 (before costs) and issued 495,215,367 shares and 515,215,367 options (including 20,000,000 options issued to CPS Capital Pty Ltd). To accommodate some of the oversubscription the Company placed (on 31 August 2018) an additional 87,500,000 fully paid ordinary shares at $0.004 and 87,500,000 attaching options to raise an additional $350,000 (before costs). Other than the above, no material matters or circumstances have arisen since the end of the financial year which have significantly affected or may significantly affect the operations, results or state of affairs of the consolidated entity. 2018 ANNUAL REPORT Page | 62 WHITEBARK ENERGY LTD Directors’ Declaration for the year ended 30 June 2018 1. In the opinion of the Directors of Whitebark Energy Ltd (“the Company”): a. The financial statements and notes set out on pages 29 to 62, are in accordance with the Corporations Act 2001, including: iii. iv. Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its performance for the financial year ended on that date; and Complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; b. c. the financial report also complies with International Financial Reporting standards as disclosed in note 2(a); there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 by the chief executive officer and chief financial officer for the financial year ended 30 June 2018. Dated at Perth this 26th day of September 2018. Signed in accordance with a resolution of the Directors. On behalf of the Directors David Messina Managing Director 2018 ANNUAL REPORT Page | 63 EXCHANGE LISTING Whitebark Energy Ltd shares are listed on the Australian Securities Exchange. The Company’s ASX code is WBE. WHITEBARK ENERGY LTD Shareholder Information SUBSTANTIAL SHAREHOLDERS (HOLDING NOT LESS THAN 5%) As at 25 September 2018 Rank 1. 2. Name MR CHARLES WAITE MORGAN MR STEPHEN LESLIE KEENIHAN + MRS SHERIDAN JAY KEENIHAN Units 93,150,441 82,999,999 % of Units 5.92 5.28 CLASS OF SHARES AND VOTING RIGHTS At 25 September 2018 there were 1,982 holders of 1,573,146,371 ordinary fully paid shares of the Company. The voting rights attaching to the ordinary shares are in accordance with the Company’s Constitution being that: a. each Shareholder entitled to vote may vote in person or by proxy, attorney or Representative; b. on a show of hands, every person present who is a Shareholder or a proxy, attorney or Representative of a shareholder has one vote; and c. on a poll, every person present who is a shareholder or a proxy, attorney or Representative of a shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or Representative, have one vote for the Share, but in respect of partly paid Shares, shall, have such number of votes as bears the proportion which the paid amount (not credited) is of the total amounts paid and payable (excluding amounts credited). DISTRIBUTION OF SHAREHOLDERS Spread of Holdings Ordinary Shares 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - 9,999,999,999 Total 10,349 130,219 545,983 42,975,982 1,529,483,838 1,573,146,371 The number of shareholders holding less than a marketable parcel is 1216. DISTRIBUTION OF LISTED OPTION HOLDERS Spread of Holdings Listed Options 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - over Total 1,801 42,603 112,407 7,987,747 594,570,809 602,715,367 The number of listed option holders holding less than a marketable parcel is 297. 2018 ANNUAL REPORT Page | 64 WHITEBARK ENERGY LTD Shareholder Information UNLISTED OPTIONS Securities Number of Securities on issue Number Holders of Options exercisable at 1.5 cents on or before 1 April 2021 Options exercisable at 1.5 cents on or before 31 May 2021 11,000,000 100,000,000 4 3 ESCROWED SECURITIES The Company does not have any securities on issue that are subject to escrow restrictions. LISTING OF 20 LARGEST SHAREHOLDERS AS AT 25 SEPTEMBER 2018 Rank Name MR CHARLES WAITE MORGAN 2 MR STEPHEN LESLIE KEENIHAN + MRS SHERIDAN JAY KEENIHAN 3 RUSSELL STEPHENSON + PAMELA STEPHENSON 4 VILLEMARETTE NOMINEES PTY LTD ORABANT PTY LTD 5 6 MR DARREN JOHN HALL 7 J & B SMITH SUPERANNUATION PTY LTD 8 MR DAVID DUNCAN MESSINA PROSPERION WEALTH MANAGEMENT PTY LTD 9 10 MS CHUNYAN NIU 11 BART SUPERANNUATION PTY LIMITED <4F INVESTMENTS SUPERFUND A/C> 12 ARGONAUT INVESTMENTS PTY LTD RBO PTY LTD 13 14 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 15 MR DONATO IACOVANTUONO 16 MORITZ INVESTMENTS PTY LTD 17 AET CT PTY LIMITED 18 ONE MANAGED INVESTMENT FUNDS LIMITED 19 20 MR MICHAEL DAVENPORT JONES TOTAL CATPAR PTY LTD Units % of Units 5.92 5.28 3.59 93,150,441 82,999,999 56,451,538 46,856,085 40,000,000 28,000,000 27,000,000 25,362,000 25,000,000 24,690,864 23,865,026 18,932,000 15,500,000 14,701,445 13,205,292 13,200,000 11,750,000 11,529,713 11,250,000 11,120,787 594,565,190 2.98 2.54 1.78 1.72 1.61 1.59 1.57 1.52 1.20 0.99 0.93 0.84 0.84 0.75 0.73 0.72 0.71 37.79 2018 ANNUAL REPORT Page | 65 WHITEBARK ENERGY LTD Shareholder Information LISTING OF 20 LARGEST LISTED OPTION HOLDERS AS AT 25 SEPTEMBER 2018 Rank 1 2 3 4 Name MR BIN LIU MS CHUNYAN NIU MR CHARLES WAITE MORGAN MR DAVID DUNCAN MESSINA PROSPERION WEALTH MANAGEMENT PTY LTD SCINTILLA STRATEGIC INVESTMENTS LIMITED TANGO88 PTY LTD ORABANT PTY LTD AET CT PTY LIMITED RUSSELL STEPHENSON + PAMELA STEPHENSON J & B SMITH SUPERANNUATION PTY LTD MR STEPHEN LESLIE KEENIHAN + MRS SHERIDAN JAY KEENIHAN MR JOHN PHILIP DANIELS MR MICHAEL FAULKNER MANDOLIN NOMINEES PTY LTD TOLTEC HOLDINGS PTY LTD MRS YAN WANG MR DONATO IACOVANTUONO YEOH SUPER PTY LTD MR DARREN JOHN HALL 4 4 7 8 9 10 11 12 13 13 13 13 17 18 19 20 TOTAL Units 60,000,000 35,240,000 31,050,147 25,000,000 25,000,000 25,000,000 15,000,000 13,000,000 11,750,000 11,290,307 11,000,000 10,052,665 10,000,000 10,000,000 10,000,000 10,000,000 7,500,000 7,000,000 6,900,000 6,500,000 341,283,119 % Units 9.95 5.85 5.15 4.15 4.15 4.15 2.49 2.16 1.95 1.87 1.83 1.67 1.66 1.66 1.66 1.66 1.24 1.16 1.14 1.08 56.63 2018 ANNUAL REPORT Page | 66 PERMITS Lease or Project Legal Description Interest Location AUSTRALIAN LAND INTERESTS Warro JV Xanadu JV RL7 TP15 100% 15% Western Australia Western Australia Rights 100% 100% WHITEBARK ENERGY LTD Permits Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Active WI % 16.00 3.00 2.85 18.00 30.00 30.00 19.50 15.00 10.20 4.80 30.00 30.00 Area Gilby 0400050335 Gilby 0401030226 Gilby Gilby 0401120262 0402040090 Gilby 0402080131 Gilby 0402100167 Gilby 0403030271 Gilby 0403090140 Gilby 0404010098 Gilby 0404050581 Gilby 0404080460 Gilby 0405010150 Gilby 0405120574 Gilby 0405120589 Gilby 0406060794 Gilby 0406060795 Gilby 0406060796 top from TWP 42-RGE 3-W5M 6 PNG from top ELLERSLIE to base ELLERSLIE TWP 40-RGE 28-W4M 12 PNG from surface to base MANNVILLE Excluding WELLBORE PROD TWP 42-RGE 2-W5M E19 WELLBORE PROD TWP 43-RGE 1-W5M 4 PNG from top LEA PARK to base MANNVILLE TWP 46-RGE 1-W5M W30 PNG from surface to top BELLY RIVER TWP 46-RGE 2-W5M 36(LSD 1,2) PNG from surface to base BELLY RIVER Excluding PNG from top BELLY RIVER to base BELLY RIVER TWP 40-RGE 28-W4M 11 PNG from base EDMONTON to base MANNVILLE Excluding WELLBORE PROD TWP 46-RGE 2-W5M 10 PNG from surface to base MANNVILLE Excluding PNG CARDIUM to base CARDIUM TWP 41-RGE 28-W4M E8 TWP 41-RGE 28-W4M W8 PNG from top GLAUCONITIC to base MANNVILLE WELLBORE PROD TWP 43-RGE 28-W4M E1 NG from base BELLY RIVER to base MANNVILLE Excluding NG CARDIUM to base CARDIUM TWP 45-RGE 2-W5M 4 NG LOWER MANNVILLE to base LOWER MANNVILLE TWP 41-RGE 28-W4M 3 PNG from surface to base MANNVILLE TWP 39-RGE 28-W4M 24 PNG from base EDMONTON to base MANNVILLE Excluding CBM TWP SW18,NE18 PNG from base BELLY RIVER to base MANNVILLE Excluding CBM MANNVILLE MANNVILLE Excluding WELLBORE TWP 40-RGE 1-W5M SE36 PNG from base EDMONTON to base MANNVILLE TWP 40-RGE 1-W5M SW36 PNG from base EDMONTON to base MANNVILLE TWP 40-RGE 1-W5M NE36 top base 27-W4M 40-RGE from from from top top to Gilby 0407110687 Gilby 0408020332 Gilby 0408030204 Gilby 0408030204 Gilby 0411020053 Gilby 0483070174 Gilby 0487020215 Gilby 0495110259 Gilby 0497080281 Gilby 0498040208 Gilby 0498040209 Gilby 0499040098 30.00 Gilby 0500100413 21.00 Gilby 0500100414 Gilby 0505080447 Gilby 0508080372 Gilby 0513110047 Gilby 0576080013 30.00 30.00 30.00 Active WI % 15.00 30.00 10.53 11.51 30.00 30.00 15.00 11.25 7.50 26.06 29.55 29.55 23.25 30.00 30.00 10.00 30.00 2.49 top from PNG from base EDMONTON to base MANNVILLE TWP 46-RGE 1-W5M 30 PNG from base BELLY RIVER to base MANNVILLE Excluding PNG CARDIUM to base CARDIUM Excluding WELLBORE TWP 40-RGE 1-W5M NE25 PNG from surface to base MANNVILLE TWP 43-RGE 1-W5M NW3 PET from top ELLERSLIE to base ELLERSLIE TWP 43-RGE 1-W5M SW3 PET from top ELLERSLIE to base ELLERSLIE TWP 46-RGE 2-W5M 36 PNG from top MANNVILLE to base MANNVILLE TWP 46-RGE 1-W5M E30 NG from surface to top BELLY RIVER TWP 41-RGE 1-W5M 10 PNG from surface to base MANNVILLE TWP 41-RGE 1-W5M 12 PNG from surface to base MANNVILLE TWP 42-RGE 3-W5M 24 PNG from base GLAUCONITIC to base MANNVILLE TWP S24,NW24 NG BEARPAW TWP S24,NW24 NG from base BELLY RIVER to base MANNVILLE Excluding NG CARDIUM to base CARDIUM TWP 46-RGE 2-W5M NE24 NG from base BELLY RIVER to base MANNVILLE Excluding NG CARDIUM to base CARDIUM TWP 39-RGE 6-W5M NW17 PNG from top VIKING to base VIKING Excluding WELLBORE PROD TWP 39-RGE 6-W5M 20 PNG from surface to base MANNVILLE TWP 40-RGE 6-W5M 21 PNG from base VIKING to base MANNVILLE TWP 46-RGE 6-W5M SE22,N22 PNG from base BELLY RIVER to base CARDIUM TWP 39-RGE 6-W5M 19 PNG from base CARDIUM to base MANNVILLE TWP 39-RGE 6-W5M 34 PNG from surface to base MANNVILLE from surface to base 2-W5M 2-W5M 46-RGE 46-RGE from from top top 2018 ANNUAL REPORT Page | 67 Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held WHITEBARK ENERGY LTD Permits Area Gilby 0589080419 Gilby 0799030408 Gilby 122791 Gilby 1450462 AB Gilby Gilby 1506168 21614 Gilby 21614 Gilby 26889 Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby 33854 5499110041 754283 AB 754283 AB Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold to base to base from surface from surface TWP 41-RGE 6-W5M 22 PNG from base VIKING to base MANNVILLE TWP 45-RGE 1-W5M 14(LSD 1, 8),N14 PNG from surface to base MANNVILLE TWP 41-RGE 2-W5M 31 PNG from top GLAUCONITIC to base MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 40-RGE 28-W4M NW13 NG from surface to basement TWP 46-RGE 2-W5M 24(LSD 16) NG BEARPAW TWP 46-RGE 2-W5M 24(LSD 9,10,15) NG BEARPAW TWP 45-RGE 1-W5M SW14 TWP 45-RGE 1-W5M 14(LSD 2,7) PNG from surface to base MANNVILLE TWP 41-RGE 3-W5M 36 WELLBORE PROD TWP 39-RGE 6-W5M 20 PNG from base MANNVILLE to base ROCK CREEK TWP 41-RGE 1-W5M NW15 PNG from surface to basement TWP 41-RGE 1-W5M NE15 PNG from surface to basement TWP 42-RGE 2-W5M SE19 WELLBORE PROD TWP 42-RGE 2-W5M NE19 WELLBORE PROD TWP 40-RGE 1-W5M SW26 ASSOC GAS MANNVILLE MANNVILLE TWP 40-RGE 1-W5M SE26 ASSOC GAS from surface to base BANFF TWP 40-RGE 1-W5M SE26 ASSOC GAS from surface to base BANFF TWP 40-RGE 1-W5M NW25 PNG from surface to base MANNVILLE TWP 40-RGE 1-W5M NW25 PNG from surface to base MANNVILLE TWP 40-RGE 1-W5M SW25 PNG from surface to base MANNVILLE TWP 40-RGE 1-W5M NE25 PNG from surface to base MANNVILLE Excluding MANNVILLE MANNVILLE TWP 40-RGE 1-W5M NE25 PNG from surface to base MANNVILLE TWP 40-RGE 1-W5M SW26 ASSOC GAS MANNVILLE MANNVILLE TWP 39-RGE 28-W4M SW25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to from to from to top base top base top base from PET to Active WI % 15.00 POOLED 30 Gilby Gilby Freehold Freehold 3.47 Gilby Freehold 30.00 Gilby Freehold 30.00 26.06 26.06 15.00 1.14 30.00 30.00 30.00 2.85 2.85 Gilby Gilby Gilby Gilby Freehold Freehold Freehold Freehold Gilby Freehold Gilby Freehold Gilby Gilby Freehold Freehold 13.60 Gilby Freehold Gilby Freehold 13.60 13.60 Gilby Freehold 30.00 Gilby Freehold 30.00 Gilby Freehold 30.00 Gilby Freehold 30.00 Gilby Freehold Gilby Freehold Gilby Freehold Gilby Gilby Gilby Freehold Freehold Freehold 30.00 13.60 30.00 30.00 Active WI % 30.00 30.00 7.50 7.50 30.00 30.00 2.85 4.80 7.50 10.50 10.53 10.50 11.51 21.00 21.00 30.00 30.00 30.00 30.00 13.60 13.60 2.85 2.85 4.80 28-W4M base MANNVILLE TWP 39-RGE 28-W4M NE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M NW25 PNG from base EDMONTON to base MANNVILLE TWP 42-RGE 28-W4M NE35 NG from top MANNVILLE to base MANNVILLE TWP 42-RGE 28-W4M NE35 NG from top MANNVILLE to base MANNVILLE TWP 40-RGE 1-W5M SW25 PNG from surface to base MANNVILLE TWP 40-RGE 1-W5M SW25 PNG from surface to base MANNVILLE TWP 42-RGE 2-W5M W19 WELLBORE PROD 43-RGE TWP NE1,SW1 NG from top ELLERSLIE to base ELLERSLIE NG from top GLAUCONITIC to base GLAUCONITIC TWP 42-RGE 28-W4M NW35 TWP 42-RGE 28-W4M S35 NG from top MANNVILLE to base MANNVILLE TWP 43-RGE 1-W5M 3 NG from top ELLERSLIE to base ELLERSLIE Excluding CBM TWP 43-RGE 1-W5M NW3 PET from top ELLERSLIE to base ELLERSLIE TWP 43-RGE 1-W5M SE3 PET from top ELLERSLIE to base ELLERSLIE TWP 43-RGE 1-W5M SW3 PET from top ELLERSLIE to base ELLERSLIE TWP 42-RGE 1-W5M 33 NG from top ELLERSLIE to base ELLERSLIE Excluding CBM TWP 42-RGE 1-W5M NE33 PET from top ELLERSLIE to base ELLERSLIE TWP 39-RGE 28-W4M SW25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M NE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M NW25 PNG from base EDMONTON to base MANNVILLE TWP 40-RGE 1-W5M SW26 ASSOC GAS MANNVILLE MANNVILLE TWP 40-RGE 1-W5M SW26 ASSOC GAS MANNVILLE MANNVILLE TWP 42-RGE 2-W5M SE19 WELLBORE PROD TWP 42-RGE 2-W5M NE19 WELLBORE TWP 43-RGE 28-W4M SE1 NG from base BELLY RIVER to base BANFF from to from to top base top base 2018 ANNUAL REPORT Page | 68 WHITEBARK ENERGY LTD Permits Area Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Gilby Freehold Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Gilby Freehold Gilby Freehold top top from from Excluding NG CARDIUM to base CARDIUM TWP 43-RGE 28-W4M SE1 NG from base BELLY RIVER to base BANFF Excluding NG CARDIUM to base CARDIUM TWP 40-RGE 1-W5M SW25 PNG from surface to base MANNVILLE TWP 39-RGE 28-W4M SW25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SW25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SW25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SW25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M NE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M NW25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M NE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M NW25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M NE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M NW25 PNG from base EDMONTON to basement TWP 40-RGE 1-W5M SE25 PNG from surface to base MANNVILLE TWP 39-RGE 28-W4M SW25 PNG from base EDMONTON to base MANNVILLE Excluding PET ELLERSLIE to base ELLERSLIE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 43-RGE 28-W4M SE1 NG from base BELLY RIVER to base BANFF Excluding NG CARDIUM to base CARDIUM TWP 39-RGE 28-W4M SW25 PNG from base EDMONTON to base MANNVILLE Excluding PET ELLERSLIE to base ELLERSLIE TWP 40-RGE 1-W5M SE25 PNG from surface to base from from from top top top Active WI % 4.80 30.00 30.00 30.00 30.00 30.00 30.00 Gilby Gilby Freehold Freehold Gilby Freehold Gilby Gilby Gilby Gilby Freehold Freehold Freehold Freehold 30.00 Gilby Freehold 30.00 30.00 30.00 30.00 Gilby Gilby Freehold Freehold Gilby Freehold 30.00 Gilby Freehold 30.00 30.00 Gilby Freehold 30.00 30.00 30.00 30.00 30.00 4.80 30.00 Gilby Freehold Gilby Gilby Gilby Gilby Freehold Freehold Freehold Freehold Gilby Freehold Gilby Freehold 30.00 Gilby Freehold top base top base top base top base top base from to from to from to from to from to MANNVILLE TWP 40-RGE 1-W5M SE25 PNG from surface to base MANNVILLE TWP 40-RGE 1-W5M SW26 ASSOC GAS MANNVILLE MANNVILLE TWP 40-RGE 1-W5M SW26 GAS ASSOC MANNVILLE MANNVILLE TWP 40-RGE 1-W5M SW25 PNG from surface to base MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 40-RGE 1-W5M NW25 PNG from surface to base MANNVILLE TWP 40-RGE 1-W5M SE26 ASSOC GAS MANNVILLE MANNVILLE TWP 40-RGE 1-W5M SE26 ASSOC GAS MANNVILLE MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 40-RGE 1-W5M SE26 ASSOC GAS MANNVILLE MANNVILLE TWP 40-RGE 1-W5M SW26 ASSOC GAS MANNVILLE MANNVILLE TWP 43-RGE 28-W4M 1(LSD 11,14) NG from base BELLY RIVER to base BANFF Excluding NG CARDIUM to base CARDIUM TWP 42-RGE 3-W5M SE7 PET from top ELLERSLIE to base ELLERSLIE PET from top NORDEGG to base NORDEGG TWP 42-RGE 3-W5M 7 NG from top ELLERSLIE to base ELLERSLIE NG from top NORDEGG to base NORDEGG TWP 41-RGE 1-W5M SE15 NG from surface HORSESHOE CANYON TWP 40-RGE 28-W4M SE13 PET from top MANNVILLE to base MANNVILLE TWP 40-RGE 28-W4M SW13 PET from top MANNVILLE to base MANNVILLE TWP 40-RGE S13,NE13,NW13 NG from top MANNVILLE to base MANNVILLE TWP 39-RGE 28-W4M SW25 PNG to base MANNVILLE Excluding from PET ELLERSLIE to base ELLERSLIE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 43-RGE 28-W4M 1(LSD 12,13) from to top base to base 28-W4M from top top Active WI % 30.00 13.60 13.60 30.00 30.00 30.00 13.60 13.60 30.00 13.60 13.60 4.80 1.13 1.13 30.00 30.00 30.00 30.00 30.00 30.00 4.80 2018 ANNUAL REPORT Page | 69 WHITEBARK ENERGY LTD Permits Area Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Active WI % Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Gilby Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold Freehold 0501020179 Gilby 0502080498 Gilby 0505070276 Gilby 0505070277 Gilby 0505080141 Gilby 0507050333 Gilby 0507050333 Gilby 0507050333 Gilby 0507050334 Gilby 5406060285 Gilby 5496050091 Leaman 0502110177 Leaman 0504030792 Leaman 0504040482 top from NG from base BELLY RIVER to base BANFF Excluding NG CARDIUM to base CARDIUM TWP 39-RGE 28-W4M SW25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M NE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M NW25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 39-RGE 28-W4M SE25 PNG from base EDMONTON to base MANNVILLE TWP 40-RGE 1-W5M SW25 PNG from surface to base MANNVILLE TWP 40-RGE 1-W5M SW25 PNG from surface to base MANNVILLE TWP 39-RGE 28-W4M SW25 PNG from base EDMONTON to base MANNVILLE PET from top ELLERSLIE to base ELLERSLIE TWP 40-RGE 1-W5M SW25 PNG from surface to base MANNVILLE TWP 41-RGE 1-W5M SW15 PNG from surface to basement TWP 55-RGE 17-W5M S7 PNG from base FISH SCALE to base ROCK CREEK TWP 55-RGE 17-W5M 5 PNG from surface to base CARDIUM TWP 55-RGE 17-W5M S7 PNG from surface to base CARDIUM TWP 55-RGE 17-W5M N7 PNG from base FISH SCALE to base ROCK CREEK TWP 55-RGE 17-W5M S6,NE6 PNG from surface to base CARDIUM TWP 54-RGE 18-W5M NE35 PNG from top CARDIUM to base CARDIUM TWP 54-RGE 18-W5M W35 PNG from top CARDIUM to base CARDIUM TWP 54-RGE 18-W5M 35 PNG from base CARDIUM to base SPIRIT RIVER PNG from base BLUESKY to base BLUESKY-BULLHEAD TWP 54-RGE 18-W5M 36 PNG from top CARDIUM to base CARDIUM TWP 55-RGE 17-W5M 8 PNG from base BLUESKY- BULLHEAD to base ROCK CREEK TWP 54-RGE 18-W5M SE35 PNG from top CARDIUM to base CARDIUM TWP 55-RGE 9-W5M 11 PNG from surface to base NORDEGG TWP 55-RGE 9-W5M 36 PNG from surface to base NORDEGG TWP 55-RGE 9-W5M 35 PNG from surface to base Leaman 0504100171 30.00 Leaman 0506070654 30.00 Leaman 0506070655 30.00 Leaman 0513020072 30.00 Leaman 0513040053 30.00 30.00 30.00 30.00 Leaman 0513080054 Leaman 0517090172 Leaman 0578080076 Leaman 0578080077 30.00 Leaman 0578080078 30.00 7.50 18.75 30.00 7.50 30.00 6 12.00 Leaman 0578100052 Leaman 0578120073 Leaman 0578120074 Leaman 0578120076 Leaman 0578120076 Leaman 057812A073 Leaman 0579120177 Leaman 0579120178 30.00 Leaman 0580020159 Leaman 0582010223 Leaman 0582010223 Leaman 0584080106 Leaman 0585080381 Leaman 0585080381 12.00 30.00 6 20.00 6.67 13.33 Leaman 0585090107 55-RGE 9-W5M NORDEGG TWP 55-RGE 9-W5M 14 PNG from base VIKING to base NORDEGG TWP 55-RGE 8-W5M NW18 PNG from surface to base NORDEGG TWP 55-RGE 9-W5M NE13 PNG from base MANNVILLE to base NORDEGG TWP 55-RGE 8-W5M S18,NE18 PNG from surface to base NORDEGG TWP S13,NW13 PNG from base MANNVILLE to base NORDEGG TWP 54-RGE 9-W5M 15 PNG from surface to base NORDEGG TWP 53-RGE 9-W5M E26 PNG from surface to base BASEMENT TWP 57-RGE 9-W5M 31 PNG from surface to base NORDEGG Excluding WELLBORE PROD TWP 57-RGE 10-W5M 35 PNG from top NORDEGG to base NORDEGG TWP 57-RGE 10-W5M N36 PNG from surface to base NORDEGG TWP 58-RGE 9-W5M S32 PNG from surface to base NORDEGG TWP 57-RGE 9-W5M S7,NE7 PNG from surface to base NORDEGG TWP 57-RGE 9-W5M 18 PNG from surface to base NORDEGG TWP 58-RGE 10-W5M SE1,N1 NG from NORDEGG TWP 58-RGE 10-W5M SE1,N1 NG from top NORDEGG to base NORDEGG TWP 57-RGE 9-W5M NW7 PNG from surface to base NORDEGG TWP 57-RGE 10-W5M 34 WELLBORE ONLY TWP 58-RGE 10-W5M 4 PNG from surface to base NORDEGG TWP 56-RGE 10-W5M 22 PNG from surface to base MANNVILLE TWP 58-RGE 9-W5M N20 PNG from surface to base NORDEGG Excluding WELLBORE TWP 58-RGE 9-W5M 29 PNG from surface to base NORDEGG TWP 53-RGE 8-W5M 27 PNG from surface to base EDMONTON TWP 57-RGE 9-W5M NW16 PNG from surface to base NORDEGG TWP 57-RGE 9-W5M 28 PNG from top NORDEGG to base NORDEGG Excluding CBM TWP 57-RGE 9-W5M 17 PNG from top NORDEGG to surface top to Active WI % 20.00 13.00 20.00 20.00 20.00 20.00 20.00 7.42 7.42 3.71 7.00 7.42 2.60 2.22 2.22 7.42 10.00 4.64 20.00 3.50 20.00 10.00 8.00 20.00 12.00 2018 ANNUAL REPORT Page | 70 WHITEBARK ENERGY LTD Permits Area Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Leaman 0585090109 Leaman 0585090110 Leaman 0585100503 Leaman 0586020328 Leaman 0590020438 Leaman 0590020438 Leaman 0591050577 Leaman 0591050578 Leaman 0593100167 Leaman 0593100169 Leaman 0594030698 Leaman 0594030701 Leaman 0594100562 Leaman 0594110221 Leaman 0595030610 Leaman 0595030612 Leaman 0595080624 Leaman 0595110324 Leaman 0596050319 Leaman 0596080466 Leaman 0597030415 Leaman 0597030415 58-RGE 10-W5M base NORDEGG TWP 57-RGE 9-W5M 29 PNG from surface to base NORDEGG Excluding WELLBORE TWP 57-RGE 9-W5M 32 PNG from top NORDEGG to base NORDEGG TWP 58-RGE 9-W5M 5 PNG from top NORDEGG to base NORDEGG TWP 57-RGE 9-W5M 10 PNG from surface to base NORDEGG TWP 57-RGE 9-W5M 33 PNG from surface to base NORDEGG TWP 58-RGE 9-W5M 4 PNG from surface to base NORDEGG TWP 58-RGE 10-W5M 13 PNG to base NORDEGG TWP SE15,N15 PNG from surface to base NORDEGG TWP 53-RGE 9-W5M 10 CBM from surface to base PEKISKO TWP 53-RGE 9-W5M 16 PNG from base VIKING to base PEKISKO Excluding CBM TWP 55-RGE 8-W5M 22 PNG from surface to base NORDEGG TWP 56-RGE 10-W5M 24 PNG from surface to base NORDEGG TWP 53-RGE 9-W5M N21,SE21 PNG from surface to base PEKISKO Excluding CBM from surface to base MANNVILLE TWP 54-RGE 9-W5M 10 PNG from top SURFACE to base MANNVILLE Excluding CBM TWP 55-RGE 8-W5M 9 PNG from surface to base NORDEGG TWP 55-RGE 8-W5M 15 PNG from surface to base NORDEGG TWP 55-RGE 8-W5M 4 PNG from surface to base NORDEGG Excluding WELLBORE TWP 55-RGE 8-W5M 23 PNG from surface to base NORDEGG TWP 54-RGE 8-W5M 2 PNG from surface to base MANNVILLE Excluding PNG NOTIKEWIN NOTIKEWIN TWP 58-RGE 9-W5M S22 TWP 58-RGE 9-W5M NE22 TWP 58-RGE 9-W5M NW22 NG from surface MANNVILLE TWP 54-RGE 9-W5M NE35 PNG from surface to base EDMONTON TWP NW35,S35 PNG from surface to base top base to base 9-W5M 54-RGE from to Active WI % 17.00 16.6 10.00 8.00 10.00 20.00 7.50 4.00 Leaman 0597090712 Leaman 0597100806 Leaman 0597100807 Leaman 0597100906 Leaman 0597100906 Leaman 0597120230 Leaman 0599050113 5.20 Leaman 10.00 Leaman 1043 1043 20.00 Leaman 112437 20.00 3.50 20.00 13.00 20.00 13.00 20.00 12.00 4.80 20.00 20.00 Leaman 112438 Leaman 12670 Leaman 1304B Leaman 1304B Leaman 21631 Leaman 21810 Leaman 21811 Leaman 26266 Leaman 31639 Leaman 31640 EDMONTON TWP 57-RGE 11-W5M SE4 PNG from surface to base MANNVILLE TWP 55-RGE 9-W5M 14 PNG from surface to base VIKING TWP 58-RGE 11-W5M 4 PNG from base EDMONTON to base VIKING TWP 55-RGE 9-W5M 13 PNG from surface to base MANNVILLE TWP 55-RGE 9-W5M 12 CBM from surface to base MANNVILLE WELLBORE ONLY top from from Tract 3 WELLBORE ONLY TWP 57-RGE 9-W5M 3 PNG from surface to base NORDEGG TWP 56-RGE 8-W5M 11 CBM from surface to base EDMONTON TWP 57-RGE 8-W5M N22,SE22 NG from top JURASSIC to base JURASSIC TWP 57-RGE 8-W5M 15 NG from top JURASSIC to base JURASSIC Excluding WELLBORE ONLY TWP 56-RGE 8-W5M W34 PNG from top SURFACE to base PEKISKO Excluding NG from top VIKING to base VIKING top Excluding NG DETRITAL SANDSTONE to base DETRITAL SANDSTONE TWP 57-RGE 8-W5M SW3 PNG from surface to base PEKISKO Excluding NG DETRITAL to base DETRITAL Excluding NG from top VIKING to base VIKING TWP 58-RGE 9-W5M S20 PNG from surface to base NORDEGG Excluding WELLBORE TWP 58-RGE 8-W5M SE10 NG from top NORDEGG to base NORDEGG TWP 58-RGE 8-W5M 4 NG from top NORDEGG to base NORDEGG NG from top PEKISKO to base PEKISKO TWP 54-RGE 8-W5M 12 PNG from surface to base NORDEGG TWP 58-RGE 8-W5M SW10 PNG from surface to base NORDEGG TWP 58-RGE 8-W5M N10 PNG from surface to base NORDEGG TWP 54-RGE 9-W5M 3 PNG from surface to base MANNVILLE Excluding PNG from top VIKING to base VIKING TWP 57-RGE 9-W5M 4 PNG from surface to base NORDEGG TWP 57-RGE 10-W5M NW13 Active WI % 6.00 20.00 5.00 20.00 20.00 8.00 20.00 14.67 14.67 13.33 13.33 3.50 20.00 20.00 20.00 20.00 20.00 19.30 3.33 5.96 2018 ANNUAL REPORT Page | 71 WHITEBARK ENERGY LTD Permits Area Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Active WI % Leaman 31640 Leaman 31640 Leaman 31640 Leaman 31640 Leaman 31640 Leaman 31640 Leaman 31640A Leaman 360 Leaman 37585 Leaman 37586 Leaman 37586 Leaman 38527 Leaman 5404040707 Leaman 5417030079 Leaman 5417030079 Leaman 5417030207 57-RGE 10-W5M PNG from top NORDEGG to base NORDEGG TWP E23,SW23 PNG from top NORDEGG to base NORDEGG TWP 57-RGE 10-W5M SW24 TWP 57-RGE 10-W5M N24 PNG from surface to base NORDEGG from 56-RGE 8-W5M TWP 57-RGE 10-W5M S13 PNG from top NORDEGG to base NORDEGG TWP 57-RGE 10-W5M E14 PNG from surface to base NORDEGG TWP 57-RGE 10-W5M 25 PNG from surface to base NORDEGG TWP 57-RGE 9-W5M 30 TWP 57-RGE 10-W5M 26 PNG from surface to base NORDEGG TWP 57-RGE 9-W5M 19 PNG from surface to base NORDEGG TWP N34,SW34 TWP 57-RGE 8-W5M S3 NG top DETRITAL SANDSTONE to base DETRITAL SANDSTONE TWP 57-RGE 10-W5M S36 PNG from surface to base NORDEGG TWP 58-RGE 10-W5M 3 PNG from surface to base NORDEGG TWP 58-RGE 10-W5M 10 PNG from surface to base NORDEGG TWP 56-RGE 8-W5M SE34 PNG from surface to base PEKISKO TWP 56-RGE 9-W5M N2,SW2 PNG from surface to base NORDEGG TWP 53-RGE 9-W5M W26 PNG from surface to base PEKISKO TWP 53-RGE 9-W5M 27,34 PNG from surface to basement Tract 2 TWP 53-RGE 9-W5M 28 PNG from base EDMONTON to base BASEMENT TWP NE16,S16,20,21 PNG from surface to base BASEMENT Excluding WELLBORE 9-W5M 57-RGE Leaman 5417090210 Leaman 5417110139 Leaman 5417120215 Leaman 5497020047 Tract 2 TWP 57-RGE 9-W5M NW16 PNG from base NORDEGG to base BASEMENT TWP 53-RGE 9-W5M 22 PNG from surface to base BASEMENT TWP 54-RGE 9-W5M 13,24 PNG from surface to base BASEMENT TWP 57-RGE 10-W5M 27 PNG from surface to base BASEMENT TWP 57-RGE 11-W5M 35 2.82 Leaman 5497040081 Leaman 815 3.76 5.96 Leaman 816 7.42 Leaman Freehold 9.08 7.42 7.42 13.33 Leaman Freehold Niton 0504030331 Niton 0597040239 Niton 5497010208 3.71 Niton 5497010208 4.64 Niton 5497020042 4.64 Niton 5497040009 13.33 Niton Freehold 13.33 20.00 20.00 20.00 20.00 20.00 20.00 10.00 Niton Freehold Other 0486010407 Other 0486010407 Other 29953 Other 3932 Other 0416050054 Other 0486030221 Other 049012A258 to top to base CBM from surface to base MANNVILLE TWP 56-RGE 10-W5M 23 PNG from base MANNVILLE to base NORDEGG TWP 57-RGE 8-W5M S9 NG from top JURASSIC to base JURASSIC NG from top PEKISKO to base PEKISKO Excluding WELLBORE ONLY TWP 57-RGE 8-W5M N9,16 NG from top JURASSIC to base JURASSIC TWP 57-RGE 10-W5M NW23 from surface PNG NORDEGG Excluding NG from surface to base EDMONTON TWP 58-RGE 9-W5M NW22 NG from surface NORDEGG TWP 56-RGE 12-W5M E23 PNG from base VIKING to base NOTIKEWIN TWP 56-RGE 12-W5M 14 PNG from surface to base ROCK CREEK Excluding CBM TWP 56-RGE 12-W5M 27 PNG from surface to base MANNVILLE Excluding WELLBORE TWP 56-RGE 12-W5M 26 PNG from surface to base NOTIKEWIN TWP 56-RGE 12-W5M 28 PNG from surface to base NOTIKEWIN TWP 56-RGE 12-W5M N22 PNG from surface to base MANNVILLE TWP 56-RGE 12-W5M S22 PNG from surface to base MANNVILLE Excluding CBM TWP 56-RGE 12-W5M W23 PNG from base VIKING to base NOTIKEWIN TWP 56-RGE 1-W5M E17 PNG from surface to base MANNVILLE TWP 56-RGE 1-W5M W17 PNG from surface to base MANNVILLE TWP 41-RGE 21-W4M NW24 PNG from top VIKING to base MANNVILLE Excluding WELLBORE TWP S24,NE24 PNG from top VIKING to base MANNVILLE Excluding WELLBORE TWP 26-RGE 14-W4M 1 PNG from surface to base BASEMENT TWP 25-RGE 14-W4M E36 NG from top VIKING to base VIKING NG from top BASAL COLORADO to base BASAL COLORADO NG BASAL BLAIRMORE to base BASAL BLAIRMORE TWP 25-RGE 14-W4M W36 PNG from surface to base MANNVILLE 21-W4M 41-RGE from top Active WI % 20.00 13.33 13.33 2.82 4.8 20.00 20.00 14.00 20.00 7.00 20.00 20.00 20.00 0.75 0.75 20.00 20.00 10.00 9.08 9.08 2018 ANNUAL REPORT Page | 72 Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Area Other 0497050619 Active WI % 9.08 WHITEBARK ENERGY LTD Permits from from surface to base TWP 25-RGE 14-W4M NE36 PNG from surface to base BANFF Excluding NG from top BASAL COLORADO to base BASAL COLORADO Excluding NG from top BASAL BLAIRMORE to base BASAL BLAIRMORE Excluding NG from top VIKING to base VIKING TWP 89-RGE 5-W6M 1 PNG top BLUESKY- BULLHEAD to base BLUESKY- BULLHEAD TWP 73-RGE 10-W6M W24 PNG from surface to base BLUESKY-BULLHEAD TWP 73-RGE 10-W6M E24 PNG from surface to base CHARLIE LAKE TWP 36-RGE 3-W5M SE29 PET from top BASAL QUARTZ to base BASAL QUARTZ PET from top OSTRACOD to base OSTRACOD TWP 35-RGE 3-W5M SW21 PNG from surface to base CARDIUM TWP 36-RGE 3-W5M SE5 PET from top CARDIUM to base CARDIUM TWP 36-RGE 3-W5M NE5 PET from top CARDIUM to base CARDIUM Excluding WELLBORE PROD TWP 36-RGE 3-W5M NW5 PET CARDIUM TWP 36-RGE 3-W5M SW5 PET from top CARDIUM to base CARDIUM TWP 36-RGE 3-W5M SE5 PET from top CARDIUM to base CARDIUM TWP 36-RGE 3-W5M SE5 PET from top CARDIUM to base CARDIUM TWP 56-RGE 15-W5M NW22 PNG from surface CARDIUM TWP 54-RGE 16-W5M NW33 PNG from surface to base BLUESKY-BULLHEAD TWP 62-RGE 25-W5M 35 PNG from surface to base PEACE RIVER Excluding WELLBORE TWP 62-RGE 4-W5M 3 PNG from surface to base VIKING TWP 62-RGE 4-W5M 14 PNG from surface to base VIKING TWP S30,NW30 NG from top BANFF to base BANFF TWP 65-RGE 26-W4M 17 PNG from surface to base BASEMENT TWP 65-RGE 26-W4M 18 PNG from surface to base BASEMENT TWP 67-RGE 26-W4M 22 PNG from surface to base BASEMENT TWP 67-RGE 26-W4M SE28 5-W5M 61-RGE top to Other 0582080144 Other 058208A144 Other 13198 20.00 Other 13533 20.00 20.00 19.25 20.00 5.00 5 10 9.5191 20.00 5.00 5.00 5.83 7.00 5.00 5.00 2.50 5.00 20.00 20.00 20.00 20.00 Other 14445 Other 22178 Other 22178 Other 22178 Other 22178A Other 29397 Other 34937 Other 38215 Other 5414070312 Other Other Freehold 0418020147 Paddle River 0182030004 Paddle River 0182030004 Paddle River 0182030004 Paddle River 0182030004 Paddle River 0182030006 Paddle River 018203A006 to top top from 2-W5M base UPPER PNG from surface to base BASEMENT TWP 61-RGE 4-W5M 31 PNG from surface to base MANNVILLE TWP 61-RGE 4-W5M 30 PNG from surface to base MANNVILLE TWP 61-RGE 5-W5M NE30 PNG MANNVILLE to base BANFF TWP 68-RGE 2-W5M NE19 PNG from surface to base MANNVILLE Excluding WELLBORE TWP 68-RGE 3-W5M SE36 PNG to from surface GILWOOD Excluding PNG from surface to base MANNVILLE TWP 68-RGE NW19,SE19 PNG from surface to base MANNVILLE Excluding WELLBORE TWP 68-RGE 2-W5M NW17 PNG from top GRAND RAPIDS to base BLUESKY-BULLHEAD TWP 68-RGE 2-W5M 30 PNG from surface to base MANNVILLE TWP 68-RGE 3-W5M SW36 from surface PNG GILWOOD Excluding PNG from surface to base MANNVILLE TWP 68-RGE 2-W5M S17,NE17 PNG from top GRAND RAPIDS to base BLUESKY-BULLHEAD TWP 68-RGE 2-W5M SW19 PNG from surface to base MANNVILLE Excluding WELLBORE TWP 61-RGE 4-W5M N36,SE36 PNG from surface to base VIKING TWP 61-RGE 7-W5M 19 TWP 24,N25,SE25 PNG from surface to base BASEMENT TWP 51-RGE 14-W4M NW27 WELLBORE TWP 48-RGE 27-W4M W16 PNG from surface to base NISKU TWP 57-RGE 6-W5M SE21 PNG from surface to base BELLY RIVER Excluding NG from top BELLY RIVER to base BELLY RIVER 57-RGE TWP N21,SW21 PNG from surface to base BELLY RIVER Excluding NG from top BELLY RIVER to base BELLY RIVER TWP 57-RGE 6-W5M 22 PNG from top NORDEGG to base NORDEGG TWP 57-RGE 6-W5M N15 NG from top NORDEGG to base NORDEGG TWP 58-RGE 6-W5M 3 PNG from surface to base BANFF TWP 58-RGE 6-W5M SW10 PNG from surface to base 6-W5M 8-W5M 61-RGE Active WI % 1.54 4.87 5.00 0.625 10.00 0.625 2.50 10.00 10.00 2.5 0.625 6.67 20.00 20.00 20.00 0.83 0.83 0.83 1.88 11.23 20.00 Other 0510060146 Other 0514110057 Other 0591040348 Other 0481100014 Other 0484090377 Other Freehold Other Freehold Other Freehold Other Freehold Other Freehold Other Freehold Other 018012A014 Other 0502030291 Other 5405120248 Other 0178100001 Other 0178100008 Other 0276080004 Other 0417020121 Other 0417020122 Other 0514080070 Other 0516050022 2018 ANNUAL REPORT Page | 73 Area Lessor/Crown # CANADIAN LICENCES Rights Held Paddle River 0401080193 Paddle River 0500080482 Paddle River 0507070449 Paddle River 0509010131 Paddle River 0511030353 Paddle River 0511030676 Paddle River 0511050342 Paddle River 0577030155 Paddle River 0579080256 Paddle River 0580060165 Paddle River 0581020085 Paddle River 0581020085 Paddle River 0581090185 Paddle River 0581090214 Paddle River 0581100188 Paddle River 0581100188 Paddle River 058407A286 Paddle River 058407A286 Paddle River 0587090394 Paddle River 0588020179 Paddle River 0589060122 Paddle River 0589060123 to from 58-RGE 6-W5M top base BANFF TWP 54-RGE 4-W5M 17 PNG from surface to base MANNVILLE Excluding PNG NOTIKEWIN NOTIKEWIN TWP 55-RGE 6-W5M 9 PNG from surface to base BELLY RIVER TWP 56-RGE 7-W5M 4 PNG from surface to base MANNVILLE TWP 55-RGE 7-W5M NE30 PNG from top MANNVILLE to base MANNVILLE Excluding WELLBORE PROD TWP 55-RGE 7-W5M 33 PNG from top MANNVILLE to base MANNVILLE TWP 55-RGE 7-W5M N28 PNG from top MANNVILLE to base MANNVILLE TWP 56-RGE 7-W5M N5 PNG from top MANNVILLE to base MANNVILLE TWP 57-RGE 6-W5M S15 NG from top NORDEGG to base NORDEGG TWP 58-RGE 6-W5M 20 PNG from surface to base NORDEGG Excluding CBM TWP 58-RGE 6-W5M N10,SE10 PNG from surface to base BANFF TWP N13,SW13 PNG from surface to base NORDEGG TWP 58-RGE 6-W5M 24 PNG from surface to base NORDEGG TWP 55-RGE 6-W5M 18,19 PNG from base BELLY RIVER to base NORDEGG CBM from surface to base NORDEGG TWP 55-RGE 7-W5M 21 PNG NORDEGG TWP 55-RGE 6-W5M 20 PNG from surface to base NORDEGG TWP 55-RGE 6-W5M 17 PNG from base BELLY RIVER to base NORDEGG Excluding CBM TWP 59-RGE 6-W5M N4,SW4 PNG from surface to base NORDEGG TWP 58-RGE 6-W5M 33 PNG from surface to base NORDEGG TWP 58-RGE 6-W5M 15 PNG from surface to base NORDEGG Excluding CBM TWP 56-RGE 7-W5M 27 PNG from surface to base NORDEGG TWP 58-RGE 6-W5M E21 PNG from surface to base NORDEGG TWP 58-RGE 6-W5M 22 PNG from surface to base BANFF Excluding CBM from surface top to WHITEBARK ENERGY LTD Permits Area Lessor/Crown # CANADIAN LICENCES Rights Held Active WI % 4.00 Paddle River 0589110368 Paddle River 0597040236 4.00 Paddle River 0598080338 20.00 Paddle River 26248 20.00 Paddle River 35970 Paddle River 5409100375 20.00 20.00 Paddle River 5411110203 20.00 Paddle River 5411110203 1.88 Paddle River 5411110204 20.00 20.00 20.00 Paddle River 5411110210 Paddle River 5411110210 Paddle River 5411110211 20.00 Paddle River 5414020096 5.30 Paddle River 5414070308 Paddle River 5414100229 5.10 11.78 11.78 15 20.00 20.00 20.00 20.00 20.00 Paddle River 5417090087 Paddle River 5417090088 Paddle River 5417090211 Paddle River 5495090111 TWP 58-RGE 6-W5M W21 PNG from surface to base NORDEGG TWP 55-RGE 7-W5M 32 PNG from top GLAUCONITIC to base GLAUCONITIC Excluding CBM TWP 58-RGE 6-W5M E16 PNG from surface to base NORDEGG TWP 58-RGE 6-W5M 17 PNG from surface to base NORDEGG TWP 58-RGE 6-W5M 18 PNG from surface to base NORDEGG TWP 55-RGE 7-W5M 31 PNG from surface to base MANNVILLE Excluding WELLBORE PROD TWP 55-RGE 6-W5M 34 PNG from base BELLY RIVER to base MANNVILLE TWP 55-RGE 6-W5M 27,28 PNG from surface to base MANNVILLE TWP 6-W5M 55-RGE 21,22,23,27,28,29,30,31,32,33 ,34,36 PNG from base MANNVILLE to base NORDEGG TWP 56-RGE 6-W5M 4 PNG from surface to base BANFF TWP 56-RGE 6-W5M 3,9,10 PNG from base BELLY RIVER to base BANFF TWP 56-RGE 6-W5M 5,6 PNG from surface to base BANFF TWP 56-RGE 7-W5M 1 PNG from surface to base NORDEGG TWP 54-RGE 7-W5M 21 PNG from surface to base BASEMENT TWP S29,NE29,S30,NW30 PNG from surface to base BASEMENT 7-W5M 55-RGE Tract 2 TWP 55-RGE 7-W5M NE30 PNG from surface to base BASEMENT Excluding PNG MANNVILLE MANNVILLE top base from to 55-RGE 6-W5M Tract 3 TWP 55-RGE 7-W5M NW29 PNG from base MANNVILLE to base BASEMENT TWP 29,30,31,32 PNG from surface to base MANNVILLE PNG from base NORDEGG to base BASEMENT TWP 56-RGE 6-W5M 7 TWP 56-RGE 7-W5M 2,11,12 PNG from surface to base BASEMENT TWP 54-RGE 7-W5M 17,20 PNG from surface to base BASEMENT TWP 56-RGE 7-W5M 31 PNG from surface to base Active WI % 20.00 20.00 20.00 20.00 15.00 20.00 20.00 20.00 20.00 20.00 20.00 18.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 2018 ANNUAL REPORT Page | 74 WHITEBARK ENERGY LTD Permits Area Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Paddle River 5497100192 Paddle River Freehold Paddle River Freehold Paddle River Freehold Thorsby 0494100828 Thornbury 0178050155 Thornbury 0179040029 Thornbury 0179040029 Thornbury 0179040029 Thornbury 0179040029 Thornbury 0500110212 Thornbury 0505060901 Thornbury 0505080596 Thornbury 0505080599 Thornbury 0506070714 Thornbury 0507010387 Thornbury 0507010388 Thornbury 0514120033 Thornbury 0517110127 Thornbury 0585050215 Thornbury 0585050217 Thornbury 0585050411 Thornbury 0586010365 Thornbury 0586010365 82-RGE 14-W4M NORDEGG TWP 55-RGE 7-W5M NW29 PNG from top SURFACE to base MANNVILLE Excluding CBM TWP 56-RGE 7-W5M SW5 PNG from top SURFACE to base OSTRACOD TWP 56-RGE 7-W5M SE5 PNG from top SURFACE to base OSTRACOD TWP 59-RGE 6-W5M SE4 PNG from surface to base NORDEGG TWP 50-RGE 3-W5M N17 TWP 50-RGE 3-W5M 17(LSD 5- 8) PNG from surface to base BELLY RIVER TWP 78-RGE 13-W4M 25 PNG from surface to base MANNVILLE TWP 82-RGE 14-W4M NE17 PNG from surface to base MANNVILLE TWP 82-RGE 14-W4M 27 PNG from surface to base MANNVILLE TWP 82-RGE 14-W4M 15,16 PNG from surface to base MANNVILLE TWP NW17,S17,21,22,28 PNG from surface to base MANNVILLE TWP 79-RGE 13-W4M 25 PNG from surface to base MANNVILLE TWP 80-RGE 14-W4M 23 PNG from surface to base MANNVILLE TWP 78-RGE 14-W4M 33 PNG from surface to base MANNVILLE TWP 78-RGE 15-W4M 36 PNG from surface to base MANNVILLE TWP 77-RGE 14-W4M 20 PNG from surface to base MANNVILLE TWP 79-RGE 15-W4M 16 PNG from surface to base MANNVILLE TWP 79-RGE 15-W4M 17 PNG from surface to base MANNVILLE TWP 78-RGE 14-W4M 21,27 PNG from base MANNVILLE to base BASEMENT TWP 80-RGE 15-W4M 15 PNG from surface to base BASEMENT TWP 80-RGE 13-W4M 1 PNG from surface to base MANNVILLE TWP 80-RGE 13-W4M 12 PNG from surface to base MANNVILLE TWP 76-RGE 10-W4M 36 TWP 76-RGE 9-W4M S20 PNG from surface to base MANNVILLE TWP 80-RGE 13-W4M 16 PNG from surface to base MANNVILLE TWP 80-RGE 13-W4M 21 PNG from surface to base MANNVILLE Active WI % 20.00 20.00 Thornbury 0586030342 Thornbury 0586030343 20.00 Thornbury 0586030344 15 20.00 20.00 10.00 10.00 10.00 10.00 16.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 4.00 4.00 1.25 2.00 2.00 Thornbury 0586030344 Thornbury 0587070166 Thornbury 0589050395 Thornbury 058905A395 Thornbury 058905A395 Thornbury 0589120202 Thornbury 0590010409 Thornbury 0590010419 Thornbury 0590060342 Thornbury 0590060343 Thornbury 0590100432 Thornbury 0591050533 Thornbury 0591050534 Thornbury 0591050535 Thornbury 0593030387 Thornbury 0593030387 Thornbury 0593030391 Thornbury 0593040701 Thornbury 0593040701 Thornbury 0593050473 Thornbury 0593060378 Thornbury 0593060380 TWP 80-RGE 14-W4M 2 PNG from surface to base MANNVILLE Excluding WELLBORE TWP 80-RGE 14-W4M 10,11 PNG from surface to base MANNVILLE Excluding WELLBORE TWP 80-RGE 14-W4M 13 PNG from surface to base MANNVILLE TWP 80-RGE 14-W4M 12 PNG from surface to base MANNVILLE TWP 79-RGE 14-W4M 27 PNG from surface to base MANNVILLE TWP 80-RGE 13-W4M 3 PNG from surface to base MANNVILLE TWP 80-RGE 13-W4M 9 PNG from surface to base MANNVILLE TWP 80-RGE 13-W4M 4,10 PNG from surface to base MANNVILLE TWP 80-RGE 14-W4M 19 PNG from surface to base MANNVILLE Excluding WELLBORE TWP 79-RGE 13-W4M 23 PNG from surface to base MANNVILLE TWP 80-RGE 14-W4M 30 PNG from surface to base MANNVILLE TWP 80-RGE 12-W4M 4 PNG from surface to base MANNVILLE TWP 80-RGE 12-W4M 5 PNG from surface to base MANNVILLE TWP 82-RGE 13-W4M 3 PNG from surface to base MANNVILLE TWP 80-RGE 15-W4M 24 PNG from surface to base MANNVILLE TWP 80-RGE 15-W4M 25 PNG from surface to base MANNVILLE TWP 80-RGE 15-W4M 36 PNG from surface to base MANNVILLE TWP 79-RGE 15-W4M 4 PNG from surface to base MANNVILLE TWP 79-RGE 15-W4M 3 PNG from surface to base MANNVILLE TWP 78-RGE 15-W4M 35 PNG from surface to base MANNVILLE TWP 78-RGE 15-W4M 27 PNG from surface to base MANNVILLE TWP 26,28,33,34 PNG from surface to base MANNVILLE TWP 78-RGE 15-W4M 22,23 PNG from surface to base MANNVILLE TWP 79-RGE 12-W4M 17 PNG from surface to base MANNVILLE TWP 79-RGE 12-W4M 27 PNG from surface to base 15-W4M 78-RGE Active WI % 4.50 17.00 14.75 17.00 20.00 4.00 4.00 4.00 6.75 4.00 6.75 4.00 4.00 10.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 4.00 4.00 2018 ANNUAL REPORT Page | 75 WHITEBARK ENERGY LTD Permits Area Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Active WI % Thornbury 0593060381 Thornbury 0593060383 Thornbury 0593070520 Thornbury 0593070520 Thornbury 0593090784 Thornbury 0593090784 Thornbury 0594060666 Thornbury 0594110276 Thornbury 0595010782 Thornbury 0595010787 Thornbury 0595010787 Thornbury 0595060345 Thornbury 0595070450 Thornbury 0595090673 Thornbury 0595090673 Thornbury 0595110408 Thornbury 0595110411 Thornbury 0595110488 Thornbury 0596010191 Thornbury 0596060259 Thornbury 23015A Thornbury 29993 Thornbury 39567 MANNVILLE TWP 79-RGE 12-W4M 29 PNG from surface to base MANNVILLE TWP 79-RGE 13-W4M 26 PNG from surface to base MANNVILLE TWP 78-RGE 15-W4M 21 PNG from surface to base MANNVILLE TWP 78-RGE 15-W4M 29,32 PNG from surface to base MANNVILLE TWP 79-RGE 13-W4M 34 PNG from surface to base MANNVILLE TWP 79-RGE 13-W4M 27 PNG from surface to base MANNVILLE TWP 79-RGE 12-W4M 8 PNG from surface to base BASEMENT TWP 79-RGE 13-W4M 14 PNG from surface to base MANNVILLE TWP 79-RGE 15-W4M 9 PNG from top MCMURRAY to base MCMURRAY TWP 80-RGE 16-W4M 25 PNG from surface to base MANNVILLE TWP 80-RGE 15-W4M 30,31 TWP 80-RGE 16-W4M 36 TWP 81-RGE 15-W4M 6 PNG from surface to base MANNVILLE TWP 79-RGE 12-W4M 3 PNG from surface to base MCMURRAY TWP 79-RGE 15-W4M 20 PNG from surface to base MANNVILLE TWP 79-RGE 14-W4M 18 TWP 79-RGE 15-W4M 25 PNG from surface to base MANNVILLE TWP 15,19,28,29,30 TWP 14,23,24,26 PNG from surface to base MANNVILLE TWP 79-RGE 14-W4M 6,7 PNG from surface to base MANNVILLE TWP 80-RGE 14-W4M 7 PNG from surface to base MANNVILLE TWP 80-RGE 15-W4M 23,35 PNG from surface to base MANNVILLE TWP 79-RGE 12-W4M 30 PNG from surface to base MANNVILLE TWP 79-RGE 12-W4M 2 PNG from surface to base MCMURRAY TWP 78-RGE 15-W4M 4 PNG from surface to base MANNVILLE TWP 79-RGE 15-W4M 9 PNG from surface to base MANNVILLE Excluding PNG MCMURRAY MCMURRAY TWP 77-RGE 9-W4M 6 PNG from surface to base top base 14-W4M 15-W4M 79-RGE 79-RGE from to 4.00 Thornbury 39586 4.00 Thornbury 39586 20.00 Thornbury 5494100161 20.00 4.00 4.00 4.00 4.00 20.00 Thornbury 5494100161 Thornbury 5494100161 Thornbury 5495080116 Thornbury 5495090143 Thornbury 5495090143 20.00 Thornbury 5495090144 20.00 Thornbury 5495090144 16.00 20.00 20.00 20.00 Thornbury 5495090144 Thornbury 5495100048 Thornbury 5495100049 Thornbury 5495100050 Thornbury 5495100052 20.00 Thornbury 5495100054 20.00 20.00 Thornbury 5495100055 16.00 Thornbury 5495100160 16.00 3.33 20.00 1.07 Thornbury 5495100161 Thornbury 5495100161 Thornbury 5495100161 Thornbury 5495110058 Thornbury 5498010077 MANNVILLE TWP 80-RGE 18-W4M 24 PNG from surface to base GROSMONT TWP 80-RGE 18-W4M 13,14,23 PNG from surface to base GROSMONT TWP 77-RGE 14-W4M 19 PNG from surface to base MCMURRAY Excluding CBM TWP 77-RGE 14-W4M 30 PNG from surface to base MCMURRAY Excluding CBM TWP 77-RGE 15-W4M 25 PNG from surface to base MANNVILLE TWP 80-RGE 16-W4M 35 PNG from surface to base MANNVILLE TWP 79-RGE 14-W4M 5 PNG from surface to base MANNVILLE TWP 79-RGE 15-W4M 1 TWP 79-RGE 14-W4M 3,4 PNG from surface to base MANNVILLE TWP 80-RGE 15-W4M 20 PNG from surface to base MANNVILLE TWP 80-RGE 15-W4M 19 PNG from surface to base MANNVILLE TWP 80-RGE 15-W4M 11 PNG from surface to base MANNVILLE TWP 77-RGE 14-W4M 9,17 PNG from surface to base MANNVILLE Excluding CBM TWP 77-RGE 14-W4M 18 PNG from surface to base MANNVILLE Excluding CBM TWP 77-RGE 14-W4M 35 PNG from surface to base MANNVILLE Excluding CBM TWP 78-RGE 14-W4M 16 PNG from surface to base MANNVILLE TWP 78-RGE 14-W4M 26 PNG from surface to base MCMURRAY Excluding CBM TWP 78-RGE 15-W4M 13,14 PNG from surface to base MANNVILLE Excluding CBM 14-W4M 81-RGE TWP 4,5,6,7,8,9,16,18 PNG from surface to base MANNVILLE TWP 81-RGE 15-W4M 12 PNG from surface to base MANNVILLE TWP 81-RGE 15-W4M 13 PNG from surface to base MANNVILLE TWP 81-RGE 15-W4M 10 PNG from surface to base MANNVILLE TWP 81-RGE 15-W4M 24 PNG from surface to base MANNVILLE TWP 80-RGE 14-W4M 31 Active WI % 1.60 1.60 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 2018 ANNUAL REPORT Page | 76 WHITEBARK ENERGY LTD Permits Area Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Whitecourt 0500060518 Whitecourt 0500110822 Whitecourt 0501030376 Whitecourt 0501060447 Whitecourt 0501080238 Whitecourt 0506010361 Whitecourt 0507010723 Whitecourt 0577020072 Whitecourt 0577020073 Whitecourt 0578080151 Whitecourt 0578090138 Whitecourt 0578090138 Whitecourt 0588100423 Whitecourt 0589050108 Whitecourt 0590040492 Whitecourt 0593110766 Whitecourt 0594120281 Whitecourt 0594120282 Whitecourt 0595040193 60-RGE 60-RGE 11-W5M 11-W5M from base BLUESKY- PNG from surface to base MANNVILLE TWP 60-RGE 11-W5M N10 NG from top PEKISKO to base PEKISKO NG from top JURASSIC to base JURASSIC TWP 63-RGE 10-W5M 26 PNG from surface to base VIKING TWP 60-RGE 11-W5M 24 PNG from surface to base PEKISKO TWP S13,NE13 PNG from surface to base BELLY RIVER TWP 60-RGE 10-W5M 7 PNG from base NORDEGG to base PEKISKO TWP 63-RGE 20-W5M 5 PNG BULLHEAD to top DOIG TWP S13,NE13 PNG from base BELLY RIVER to base MANNVILLE TWP 60-RGE 11-W5M S15 PNG from surface to base PEKISKO Excluding CBM from surface to base BASEMENT TWP 60-RGE 11-W5M SE16 NG from top NORDEGG to base NORDEGG NG from top PEKISKO to base PEKISKO CBM from surface to base PEKISKO TWP 60-RGE 10-W5M SE7 PNG from surface to base NORDEGG TWP 59-RGE 10-W5M SW15 PNG from surface to base NORDEGG Excluding PNG MANNVILLE MANNVILLE TWP 59-RGE 10-W5M E15 PNG from surface to base NORDEGG Excluding PNG MANNVILLE MANNVILLE TWP 58-RGE 21-W5M NW23 PNG from surface to base CARDIUM TWP 59-RGE 10-W5M SE9 PNG from surface to base MANNVILLE Excluding CBM TWP 59-RGE 10-W5M 1 PNG from surface to base NORDEGG TWP 64-RGE 15-W5M 26,35 PNG from surface to base BLUESKY-BULLHEAD TWP 59-RGE 10-W5M 3 PNG from surface to base PEKISKO Excluding WELLBORE TWP 59-RGE 10-W5M 10 PNG from top JURASSIC to base JURASSIC CBM from surface to base PEKISKO WELLBORE ONLY TWP 64-RGE 14-W5M 26 top base top base from from to to Active WI % 7.50 10.00 10.00 Whitecourt 0596010415 Whitecourt 0597030792 5.00 Whitecourt 0597040244 10.00 10.00 1.25 2.45 Whitecourt 0597070666 Whitecourt 111573 Whitecourt 111573 Whitecourt 111573 4.20 Whitecourt 111574 Whitecourt 111575 10.00 Whitecourt 1183 10.00 Whitecourt 1183 10.00 16.00 Whitecourt 1183 1.20 Whitecourt 1183 Whitecourt 1183 Whitecourt 1183 10.00 10.00 4.00 Whitecourt 1184 Whitecourt 1184 Whitecourt 1184 Whitecourt 11916 4.00 20.00 to to from from 59-RGE 10-W5M top base top base PNG from surface to base BLUESKY-BULLHEAD Excluding CBM MANNVILLE MANNVILLE TWP 60-RGE 11-W5M NE32 PNG from base NORDEGG to base PEKISKO TWP 60-RGE 11-W5M S10 NG from top PEKISKO to base PEKISKO NG from top JURASSIC to base JURASSIC TWP 61-RGE 10-W5M 21 PNG from surface to base PEKISKO TWP 58-RGE 11-W5M 32 PNG from surface to base PEKISKO TWP 59-RGE 10-W5M NW15 PNG from surface to base NORDEGG Excluding PNG MANNVILLE MANNVILLE TWP 59-RGE 10-W5M SW22 PNG from surface to base NORDEGG TWP NE16,SE21 PNG from surface to base PEKISKO TWP 59-RGE 10-W5M N20 PNG from surface to base PEKISKO Excluding CBM TWP 59-RGE 10-W5M N21 PNG from surface to base PEKISKO TWP 59-RGE 10-W5M NE9 NG from top JURASSIC to base JURASSIC TWP 59-RGE 10-W5M S4,NE4 NG from top JURASSIC to base JURASSIC NG from top PEKISKO to base PEKISKO Excluding CBM from surface to base BASEMENT Excluding NG NORDEGG to base NORDEGG TWP 60-RGE S13,NE13 NG from top PEKISKO to base PEKISKO NG from top JURASSIC to base JURASSIC TWP 59-RGE 10-W5M S5 NG from top JURASSIC to base JURASSIC TWP 59-RGE 10-W5M S6 NG from top JURASSIC to base JURASSIC TWP N32,SE32 NG from top JURASSIC to base JURASSIC TWP 59-RGE 10-W5M SE9 NG from top JURASSIC to base JURASSIC TWP 60-RGE 11-W5M N34 NG from top JURASSIC to base JURASSIC TWP 60-RGE 11-W5M N35 NG from top JURASSIC to base JURASSIC TWP 58-RGE 11-W5M 35 PNG from surface to base 11-W5M 10-W5M 58-RGE from top Active WI % 2.25 7.50 2.00 10.00 10.00 10.00 10.00 4.00 10.00 4.00 4.00 5.00 10.00 10.00 10.00 4.00 10.00 10.00 10.00 2018 ANNUAL REPORT Page | 77 WHITEBARK ENERGY LTD Permits Area Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Whitecourt 120105 Whitecourt 120106 Whitecourt 120106B Whitecourt 120106B Whitecourt 120107 Whitecourt 120108 Whitecourt 124127 Whitecourt 1262 Whitecourt 1263 Whitecourt 1264 Whitecourt 1264 Whitecourt 127739 Whitecourt 127754 Whitecourt 127754 PEKISKO TWP 60-RGE 11-W5M SW8 NG from top NORDEGG to base NORDEGG CBM from surface to base NORDEGG TWP 60-RGE 11-W5M E17 PNG from top NORDEGG to base NORDEGG TWP 60-RGE 11-W5M E8 NG from top NORDEGG to base NORDEGG CBM from surface to base NORDEGG TWP 60-RGE 11-W5M W16 NG from top NORDEGG to base NORDEGG NG from top PEKISKO to base PEKISKO CBM from surface to base PEKISKO TWP 60-RGE 11-W5M E20 NG from top NORDEGG to base NORDEGG CBM from top PEKISKO to base PEKISKO Excluding WELLBORE TWP 60-RGE 11-W5M SW21 PNG from surface to top BASAL QUARTZ Excluding CBM TWP 59-RGE 12-W5M 26 NG from top NORDEGG to base NORDEGG TWP SE10,NW22 TWP S28,NW28 LOWER NG MANNVILLE to base LOWER MANNVILLE NG from top NORDEGG to base NORDEGG NG from top PEKISKO to base PEKISKO TWP 59-RGE 12-W5M E22 NG from top NORDEGG to base NORDEGG TWP 59-RGE 12-W5M S25 NG from top PEKISKO to base PEKISKO 12-W5M 11-W5M 59-RGE 59-RGE from top TWP 59-RGE 12-W5M N24 TWP 59-RGE 11-W5M SW30 NG from top PEKISKO to base PEKISKO TWP 59-RGE 12-W5M 35 TWP 60-RGE 12-W5M 2 PNG from surface to base NORDEGG Excluding NG NORDEGG to base NORDEGG Excluding NG from top LOWER MANNVILLE to base LOWER MANNVILLE from top Tract 2 TWP 60-RGE 12-W5M E3 PNG from surface to base NORDEGG TWP 60-RGE 11-W5M S7 PNG from surface to base PEKISKO Excluding NG from top PEKISKO to base PEKISKO Excluding NG NORDEGG to base NORDEGG TWP 60-RGE 11-W5M 6 from top Active WI % 4.20 4.2 4.20 4.20 Whitecourt 16143 Whitecourt 16143 Whitecourt 16143A Whitecourt 18323 Whitecourt 21400 4 Whitecourt 21400 Whitecourt 21400 7.42 5.00 8.49 Whitecourt 21400 Whitecourt 21401 7.13 Whitecourt 27886 Whitecourt 2985 Whitecourt 36939 Whitecourt 37822 Whitecourt 38001 Whitecourt 38001 Whitecourt 38477 Whitecourt 38477 Whitecourt 38477 Whitecourt 38477 8.54554 2 8.31 4.44 8.31 8.31 top top from from 58-RGE 60-RGE 11-W5M 11-W5M TWP 59-RGE 11-W5M E31 NG from top PEKISKO to base PEKISKO NG from top NORDEGG to base NORDEGG TWP 60-RGE 11-W5M N11 PNG from surface to base PEKISKO TWP N12,SE12,S14 PNG from surface to base PEKISKO TWP 60-RGE 10-W5M N7,SW7 PNG from surface to base NORDEGG TWP S25,NW25 PNG from top SURFACE to base NORDEGG TWP 59-RGE 12-W5M NE10 PNG from surface to base UPPER MANNVILLE TWP 59-RGE 12-W5M E15 PNG from surface to base UPPER MANNVILLE TWP 59-RGE 12-W5M W11 PNG from surface to base NORDEGG Excluding NG NORDEGG to base NORDEGG TWP 59-RGE 12-W5M W14 CBM UPPER MANNVILLE to base UPPER MANNVILLE PNG from surface to base NORDEGG Excluding PNG from top UPPER MANNVILLE to base UPPER MANNVILLE Excluding NG NORDEGG to base NORDEGG TWP 59-RGE N23,SW23 NG from top NORDEGG to base NORDEGG TWP 59-RGE 10-W5M NW22 PNG from surface to base NORDEGG TWP 60-RGE 11-W5M W28 PNG from top PEKISKO to base PEKISKO TWP 59-RGE 10-W5M SE16 PNG from surface to base NORDEGG TWP 60-RGE 11-W5M E1 PNG from surface to base PEKISKO Excluding NG JURASSIC to base JURASSIC TWP 58-RGE 10-W5M SW32 PNG from surface to base NORDEGG TWP 58-RGE 11-W5M NE25 PNG from top SURFACE to base NORDEGG TWP 60-RGE 12-W5M S13 PNG from surface to base LOWER MANNVILLE TWP 60-RGE 12-W5M NE11 PET NORDEGG TWP 60-RGE 12-W5M SE14 PNG LOWER MANNVILLE to base NORDEGG Excluding NG top NORDEGG to base NORDEGG TWP 60-RGE 12-W5M N12 from surface NG from surface to base to base 12-W5M from from from from base top top Active WI % 6.00 10.00 10.00 10.00 5.00 5.00 10.00 10.00 10.00 10.00 5 10.00 10.00 10.00 10.00 5.00 10.00 10.00 10.00 2018 ANNUAL REPORT Page | 78 WHITEBARK ENERGY LTD Permits Area Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Active WI % Whitecourt 38479 Whitecourt 38479 Whitecourt 38480 Whitecourt 38481 Whitecourt 38482 Whitecourt 38482 Whitecourt 38482 Whitecourt 38504 Whitecourt 38504 Whitecourt 38505 Whitecourt 38505 Whitecourt 38505 Whitecourt 38507 Whitecourt 38507 Whitecourt 38508 Whitecourt 38508 Whitecourt 38508 top top from 10-W5M SURFACE TWP 59-RGE 10-W5M 8 PNG from surface to base PEKISKO TWP 59-RGE 10-W5M 8 TWP 59-RGE 10-W5M 7 CBM from surface to base PEKISKO NG from top NORDEGG to base NORDEGG TWP 59-RGE 10-W5M NW4 PNG from base MANNVILLE to base PEKISKO Excluding NG NORDEGG to base NORDEGG Excluding CBM from surface to base BASEMENT TWP 59-RGE 10-W5M E22 PNG from surface to base NORDEGG TWP 59-RGE 10-W5M W9 NG from top PEKISKO to base PEKISKO TWP 59-RGE 10-W5M S20 PNG from surface to base PEKISKO Excluding CBM from surface to base BASEMENT TWP 59-RGE W16,17,SW21 PNG from surface to base PEKISKO TWP 59-RGE 12-W5M N25 NG from top BELLY RIVER to base BELLY RIVER NG LOWER from MANNVILLE to base LOWER MANNVILLE TWP NW30,W31 TWP 59-RGE 12-W5M 36 NG LOWER MANNVILLE to base LOWER MANNVILLE NG from top PEKISKO to base PEKISKO NG from top NORDEGG to base NORDEGG TWP 59-RGE 12-W5M W10 PNG from surface to base UPPER MANNVILLE TWP 59-RGE 12-W5M W15 PNG from surface to base UPPER MANNVILLE TWP 59-RGE 12-W5M SW22 PNG from surface to base PEKISKO Excluding NG from top LOWER MANNVILLE to base LOWER MANNVILLE Excluding NG NORDEGG to base NORDEGG Excluding NG from top PEKISKO to base PEKISKO TWP 59-RGE 10-W5M N5 PNG from top SURFACE to base PEKISKO TWP 59-RGE 10-W5M N6 PNG from base EDMONTON SANDSTONE to base NORDEGG TWP 60-RGE 11-W5M SW12 PNG from surface to base PEKISKO TWP 60-RGE 11-W5M NW1 PNG from surface to base PEKISKO TWP 60-RGE 11-W5M S11 PNG from surface to base 11-W5M 59-RGE from from top top 4.00 Whitecourt 38509 Whitecourt Whitecourt 38509 38509 Whitecourt 38509 Whitecourt 38509 Whitecourt 38509 Whitecourt 38510 Whitecourt 38510 Whitecourt Whitecourt 38510 38510 Whitecourt 38510 Whitecourt 38510 Whitecourt 38510 Whitecourt 38510 Whitecourt 38510 Whitecourt 38510 Whitecourt 38511 Whitecourt 38766 10.00 4.00 10.00 1.20 4.00 10.00 8.54554 2 10.00 5.00 5.00 10.00 10.00 10.00 10.00 10.00 6.00 PEKISKO TWP 60-RGE 11-W5M NW8 NG from top NORDEGG to base NORDEGG CBM from surface to base NORDEGG TWP 60-RGE 11-W5M W20 WELLBORE PROD TWP 60-RGE 11-W5M W17 PNG from top NORDEGG to base NORDEGG TWP 60-RGE 11-W5M SW29 CBM from base NORDEGG to base PEKISKO PNG from base NORDEGG to base PEKISKO TWP 60-RGE 11-W5M N7 NG from top NORDEGG to base NORDEGG TWP 60-RGE 11-W5M 18 PNG from surface to base NORDEGG TWP 60-RGE 11-W5M NW13 PNG from base BELLY RIVER to base MANNVILLE TWP 60-RGE 11-W5M NE16 CBM from surface to base PEKISKO NG from top NORDEGG to base NORDEGG NG from top PEKISKO to base PEKISKO TWP 60-RGE 11-W5M N15 WELLBORE PROD TWP 60-RGE 11-W5M E21 PNG from top BASAL QUARTZ to base PEKISKO Excluding CBM TWP 60-RGE 11-W5M E28 PNG from top PEKISKO to base PEKISKO TWP 60-RGE 11-W5M W26 PNG from surface to base PEKISKO Excluding PNG from top BELLY RIVER to base BELLY RIVER TWP 60-RGE 11-W5M E26 PNG from surface to base PEKISKO Excluding PNG from top BELLY RIVER to base BELLY RIVER TWP 60-RGE 11-W5M N14 PNG from surface to base PEKISKO TWP 60-RGE 11-W5M 22 PNG from surface to base PEKISKO 60-RGE 11-W5M Tract 2 TWP 60-RGE 11-W5M S35 PNG from surface to base NORDEGG TWP 23,27,SE33,S34 PNG from surface to base PEKISKO TWP 60-RGE 11-W5M 19 PNG from base MANNVILLE to base PEKISKO TWP 59-RGE 12-W5M NE14 PNG from surface to base NORDEGG Excluding NG NORDEGG to base NORDEGG Excluding PNG from top UPPER MANNVILLE to base UPPER MANNVILLE from top Active WI % 4.20 4 4.2 10.00 9.12599 3 10.00 1.2 4.20 2.45 2.78 5 10.00 10.00 10.00 10.00 10.00 1.28 7.50 2018 ANNUAL REPORT Page | 79 WHITEBARK ENERGY LTD Permits Area Lessor/Crown # CANADIAN LICENCES Rights Held Area Lessor/Crown # CANADIAN LICENCES Rights Held Whitecourt 38766 Whitecourt 38767 Whitecourt 38768 Whitecourt 38768 Whitecourt 5408090493 Whitecourt 5408090493 Whitecourt 5414110077 Whitecourt 5496080102 Whitecourt 5496080102 Whitecourt 5496080102 Whitecourt 5496120022 Whitecourt 931 top top from from 12-W5M 11-W5M 12-W5M Excluding CBM from surface to base NORDEGG TWP 59-RGE NE12,E13,NW13,SE23,S24 TWP 59-RGE 11-W5M 7,18,S19 PNG from surface to base NORDEGG Excluding CBM from surface to base NORDEGG Excluding NG NORDEGG to base NORDEGG TWP 59-RGE NE28,E33 NG from top PEKISKO to base PEKISKO TWP 59-RGE 12-W5M SE14 PNG UPPER MANNVILLE to base UPPER MANNVILLE Excluding CBM TWP 59-RGE E11,NW12,S12,SW13,SE14 NG from top NORDEGG to base NORDEGG TWP 63-RGE 20-W5M 8 PNG BULLHEAD to top DOIG TWP 63-RGE 20-W5M 17,19,20 PNG from base BLUESKY- BULLHEAD to base TRIASSIC TWP 65-RGE 15-W5M 9,16 PNG from base GILWOOD to base BASEMENT TWP 60-RGE 10-W5M 16 PNG from surface to base MANNVILLE TWP 60-RGE 10-W5M 9 PNG from surface to base MANNVILLE TWP 60-RGE 10-W5M 10 PNG from surface to base MANNVILLE TWP 61-RGE 10-W5M 16 PNG from surface to base PEKISKO Excluding WELLBORE PROD TWP 60-RGE 12-W5M SE12 NG from top PEKISKO to base PEKISKO from base BLUESKY- Active WI % 7.50 10.00 9.50892 5 8.57143 Whitecourt 931 Whitecourt Whitecourt Whitecourt Whitecourt 931 931 932 933 10.00 Whitecourt 934A 20.00 20.00 Whitecourt 934A Whitecourt 935 Whitecourt Freehold 1.60 1.60 3.33 4.00 8.31 Active WI % 8.31 8.31 8.31 8.31 8.31 8.54554 2 8.31 8.31 10.00 top from TWP 59-RGE 11-W5M W32 NG from top NORDEGG to base NORDEGG NG from top PEKISKO to base PEKISKO TWP 59-RGE 11-W5M 29,SE32 NG from top PEKISKO to base PEKISKO TWP 60-RGE 12-W5M 1,SW12 NG from top PEKISKO to base PEKISKO NG from top NORDEGG to base NORDEGG NG LOWER MANNVILLE to base LOWER MANNVILLE TWP 59-RGE 11-W5M N19 NG from top NORDEGG to base NORDEGG TWP 59-RGE 11-W5M E30 NG from top NORDEGG to base NORDEGG NG from top PEKISKO to base PEKISKO TWP 59-RGE 12-W5M S25 NG from top BELLY RIVER to base BELLY RIVER LOWER from NG MANNVILLE to base LOWER MANNVILLE TWP 59-RGE 12-W5M N24 TWP 59-RGE 11-W5M SW30 NG from top NORDEGG to base NORDEGG TWP NE32,W33 TWP 60-RGE 11-W5M W4,5 NG from top PEKISKO to base PEKISKO TWP 60-RGE 12-W5M SE2 NG LOWER MANNVILLE to base LOWER MANNVILLE NG from top NORDEGG to base NORDEGG NG from top PEKISKO to base PEKISKO 11-W5M 59-RGE from top top 2018 ANNUAL REPORT Page | 80 Level 2, 6 Thelma Street, West Perth, WA 6025 Phone: 08 6555 6000 www.whitebarkenergy.com

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