Condensed Notes to the Financial Statements

for the Half-Year Ended 31 December 2016

All amounts are Australian Dollars

 

1. Summary of Significant Accounting Policies

 

   Statement of Compliance

 

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 'Interim Financial Reporting'. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS34 'Interim Financial Reporting'. The half-year report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the most recent annual financial report.

 

Basis of preparation

The condensed consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts presented in Australian dollars, unless otherwise noted.

 

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Company's 2016 annual financial report for the financial year ended 30 June 2016, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

 

Adoption of new or revised accounting standards and interpretations

 

The Group has adopted all of the new and revised standards and interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current half-year. The Group has not early adopted any accounting standards or interpretations.

 

The adoption of all new and revised standards and interpretations has not resulted in any changes to the Group's accounting policies and has no effect on the amounts reported for the current or prior half-years.

 

 

Exploration and Evaluation Costs

 

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are carried forward in respect of an area that has not at 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 relating to, the area of interest are continuing.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Notes to the Financial Statements

for the Half-Year Ended 31 December 2016

All amounts are Australian Dollars

 

1. Summary of Significant Accounting Policies (Continued)

 

Impairment of Exploration and Evaluation Assets

 

The ultimate recoupment of the value of exploration and evaluation assets, is dependent on the successful development and commercial exploitation, or alternatively, sale, of the exploration and evaluation assets.

 

Impairment tests are carried out when there are indicators of impairment in order to identify whether the asset carrying values exceed their recoverable amounts. There is significant estimation and judgement in determining the inputs and assumptions used in determining the recoverable amounts.

 

The key areas of judgement and estimation include:

 

·      Recent exploration and evaluation results and resource estimates;

·      Environmental issues that may impact on the underlying tenements;

·      Fundamental economic factors that have an impact on the operations and carrying values of assets and liabilities.

 

Segment Reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance.

 

Financial assets

 

Classification

 

The group classifies its financial assets in the following categories:

·      financial assets at fair value through profit or loss,

·      loans and receivables,

·      held-to-maturity investments, and

·      available-for-sale financial assets.

 

The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at the end of each reporting period. See note 7 for details about each type of financial asset.

 

Recognition and derecognition

 

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.

 

When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss as gains and losses from investment securities.

 

Measurement

 

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

 

1. Summary of Significant Accounting Policies (Continued)

 

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value are recognised as follows:

·      for financial assets at fair value through profit or loss' - in profit or loss within other income or other expenses

·      for available-for-sale financial assets that are monetary securities denominated in a foreign currency - translation differences related to changes in the amortised cost of the security are recognised in profit or loss and other changes in the carrying amount are recognised in other comprehensive income

·      for other monetary and non-monetary securities classified as available-for-sale - in other comprehensive income.

 

 

Impairment

 

The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired.

 

If there is objective evidence of impairment 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 profit or loss.

 

Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent period.

 

If the fair value of a debt instrument classified as available-for-sale increases in a subsequent period and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.

 

 

 

Condensed Notes to the Financial Statements

for the Half-Year Ended 31 December 2016

All amounts are Australian Dollars

 

	Consolidated 31 December 2016	Consolidated      31 December 2015
	$	$
2.    Corporate Costs
Accounting, Company Secretary and Audit fees	71,362	157,051
Director fees	60,000	60,000
Consulting fees	332,864	391,661
Travel fees	-	15,074
Legal fees	33,632	69,499
	497,858	693,285

 

	Consolidated 31 December 2016	Consolidated 31 December 2015
3.    Costs associated with abandoned acquisitions	$	$
Opening Balance	-	-
Costs Incurred	138,733	1,405,370
Reimbursement from Joint Participation Agreement*	-	(243,924)
	138,733	1,161,446

 

*Reimbursement of costs relate to the contributions received from High Peak Royalties Limited (ASX.HPR) under the Joint Participation Agreement.

 

	Consolidated 31 December 2016	Consolidated      30 June 2016
4.    Available-for-sale assets	$		$
Shares held in Gem International Resources Inc.	410,088			-
Shares held in Hemisphere Energy Corporation	348,575			-
	758,663			-

 

 

	Consolidated 31 December 2016	Consolidated      30 June 2016
5.    Trade and other receivables	$		$
Deposits	150,955			150,533
GST receivable	51,708			43,419
Other deposits	-			163
	202,663			194,115

 

 

	Consolidated 31 December 2015		Consolidated      30 June 2015
6.    Other assets	$		$
Prepayments		24,464	22,546
Share applications		-	423,549
	24,464		446,095

Condensed Notes to the Financial Statements

for the Half-Year Ended 31 December 2016

All amounts are Australian Dollars

 

	Consolidated 31 December 2016	Consolidated      30 June 2016
7.    Capitalised mineral exploration expenditure	$	$
Costs brought forward	10,955,203	11,733,041
Exploration costs incurred during the year	310,842	1,480,667
Exploration expenditure impaired	-	(1,456,942)
Exploration expenditure written off	-	(1,293,295)
FX movement	63,938	491,732
Carrying value at the end of the period	11,329,983	10,955,203
	Consolidated 31 December 2016	Consolidated      30 June 2016
8.    Trade and other payables	$	$
Trade creditors	161,820	66,448
Other creditors and accruals	65,055	111,244
	226,875	177,692

 

			Consolidated 31 December 2016	Consolidated      30 June 2016
9.    Contributed Equity			$	$
Ordinary Shares
Total shares at 31 Dec 16 206,591,008 (30 June 2016: 215,591,008) ordinary shares fully paid			24,335,869	25,235,869
a) Shares movements during the half-year			Value of shares $	No. of shares
Balance at 30 June 2016			25,235,869	215,591,008
	Cancellation of shares on selective share buyback*		(900,000)	(9,000,000)
Balance at 31 December 2016			24,335,869	206,591,008
*Note that the selective share buyback was for a nominal value of $1 only. The accounting adjustment required of $900,000 was to reverse the fair value of consideration recognised on acquisition of Petroleum Portfolio Pty Ltd which was subsequently reversed as a result of the shareholders' approval of the selective share buy back on 2 August 2016. Following the above transaction, the share capital was reduced by 9,000,000 shares and was cancelled pursuant to section 257H of the Corporation's Act 2001 Cth.                 Condensed Notes to the Financial Statements for the Half-Year Ended 31 December 2016 All amounts are Australian Dollars
			Consolidated 31 December 2016	Consolidated      30 June 2016
			No. of Options	No. of Options
9.    Contributed Equity (Continued)
Options
During the period no options were issued:			7,859,372	7,859,372
Of the 7,859,372 options on issue as at 31 December 2016, the following are held by directors of the Company:
J W Barr		2,500,000
A Carroll		2,000,000
J Young		1,500,000
Option details
Number of options		Exercise date	Exercise price ($)
3,800,000		28 November 2017	0.58
3,200,000		13 January 2019	0.15
859,372		20 March 2019	0.08 Great British pence
7,859,372

 

10        Segment Information

 

The Group has identified its operating segments based on the internal reports that are reviewed and used by the board to make decisions about resources to be allocated to the segments and assess their performance.

 

Operating segments are identified by the board based on the Oil and Gas projects in Australia, and New Zealand. Discrete financial information about each project is reported to the board on a regular basis.

 

The reportable segments are based on aggregated operating segments determined by the similarity of the economic characteristics, the nature of the activities and the regulatory environment in which those segments operate.

 

The Group has two reportable segments based on the geographical areas of the mineral resource and exploration activities in Australia and New Zealand. Unallocated results, assets and liabilities represent corporate amounts that are not core to the reportable segments.

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Notes to the Financial Statements

for the Half-Year Ended 31 December 2016

All amounts are Australian Dollars

 

10        Segment Information (Continued)

 

(i)       Segment performance
				New Zealand $	Australia $		Total $
Half-Year Ended 31 December 2016
Revenue
Interest revenue				-	1,629		1,629
Other income				2,108	-		2,108
Segment revenue				2,108	1,629		3,737
Segment Result
-     Corporate costs				(23,850)	(474,008)		(497,858)
-     Administrative costs				(25,211)	(47,700)		(72,911)
-     Foreign exchange gain/(loss)				-	(77,671)		(77,671)
Segment net profit/(loss) before tax				(46,953)	(597,750)		(644,703)
Reconciliation of segment result to net loss before tax
Amounts not included in segment result but reviewed by the Board
-			Projects abandoned	(2,126)	(136,607)		(138,733)
Unallocated items
-		Employee benefits					(35,158)
-		Occupancy					(22,712)
-		Finance					(7,092)
Net Loss before tax from continuing operations							(848,398)
				New Zealand $	Australia $	Total $
Half-Year Ended 31 December 2015
Revenue
Interest revenue				-	664	664
Other income				1,931	-	1,931
Segment revenue				1,931	664	2,595
Segment Result
-     Corporate costs				(21,139)	(672,146)		(693,285)
-     Administrative costs				(44,560)	(123,039)		(167,599)
-     Depreciation				(2,184)	(5,601)		(7,785)
-     Exploration expenses				-	(28,823)		(28,823)
-     Foreign exchange gain/(loss)				-	(135,915)		(135,915)
Segment net profit/(loss) before tax				(65,952)	(964,860)		(1,030,812)
10        Segment Information (Continued)
Reconciliation of segment result to net loss before tax
Amounts not included in segment result but reviewed by the Board
-      Exploration expenditure written off				-	(1,456,942)	(1,456,942)
-      Projects abandoned				(855,594)	(305,852)	(1,161,446)
Unallocated items
-	Employee benefits					(33,381)
-	Finance					(433)
Net loss before tax from continuing operations						(3,683,014)

 

(ii)       Segment assets
As at 31 December 2016
Segment assets as at 1 July 2016		7,332,986	3,622,217	10,955,203
Segment asset increases for the year
-	Capitalised Exploration and evaluation	(14,580)	325,422	310,842
-	FX movement Exploration and evaluation	63,938	-	63,938
		7,382,344	3,947,639	11,329,983
Reconciliation of segment assets to total assets:
Other assets		415,207	3,044,151	3,459,358
Total assets from continuing operations		7,797,551	6,991,790	14,789,341

 

 

(iii)     Segment liabilities
As at 31 December 2016
Segment liabilities as at 1 July 2016	9,155	180,383	189,538
Segment liability increases/(decreases) for the year	(6,096)	57,587	51,491
	3,059	237,970	241,029
Reconciliation of segment liabilities to total liabilities:
Other liabilities	-	-	-
Total liabilities from continuing operations	3,059	237,970	241,029

 

11        Expenditure Commitments

 

(a)       Exploration

 

The Company has certain obligations to perform minimum exploration work on Oil and Gas tenements held.  These obligations may vary over time, depending on the Company's exploration programs and priorities.  At 31 December 2016, total exploration expenditure commitments for the next 12 months are as follows:

 

 

 

 

 

 

 

 

Condensed Notes to the Financial Statements

for the Half-Year Ended 31 December 2016

All amounts are Australian Dollars

 

11        Expenditure Commitments (Continued)

 

Entity	Tenement	Consolidated 31 December 2016	Consolidated      30 June 2016
		$	$
Petroleum Creek Limited	PEP 38526	24,045	572,028
Trident Energy Limited	EP 145	200,000	121,500
Oilco Pty Ltd	EPA 155	-	10,000
Oilco Pty Ltd	EP 156	-	155,000
Mosman Oil and Gas (NZ) Ltd	PEP 57067	312,590	-
Mosman Oil and Gas (NZ) Ltd	PEP 57068	201,981	1,239,394
Mosman Oil and Gas (NZ) Ltd	PEP 57058	48,091	-
		786,707	2,097,922

 

 

These obligations are subject to variations by farm-out arrangements, sale of the relevant tenements or seeking expenditure exemption for previous year's expenditure. The Company has the option to elect to not carry out the minimum work program commitments pertaining to a specific permit, in which case the Company will relinquish its interest in the relevant permit.

 

(b)       Capital Commitments

 

The Company had no capital commitments at 31 December 2016 (2015 - $Nil).

 

12        Subsequent Events

 

Material transactions arising since 31 December 2016 which will significantly affect the operations of the Company, the results of those operations, or the state affairs of the Company in subsequent financial periods are as follows:

 

13        Dividends

 

No dividends have been paid or proposed during the half year ended 31 December 2016.