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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Mosman Oil And Gas Limited | LSE:MSMN | London | Ordinary Share | AU0000XINET1 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.0015 | 9.09% | 0.018 | 0.017 | 0.019 | 0.0185 | 0.017 | 0.0175 | 327,269,130 | 13:08:56 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Crude Petroleum & Natural Gs | 2.25M | -2.13M | -0.0005 | -0.40 | 801.84k |
From Apr 2019 to Apr 2024
TIDMMSMN
RNS Number : 4086G
Mosman Oil and Gas Limited
25 November 2020
25 November 2020
Mosman Oil and Gas Limited
("Mosman" or the "Company")
Final Results
Mosman Oil and Gas Limited (AIM: MSMN) the oil exploration, development, and production company, announces its final results for the year ended 30 June 2020.
Summary
-- Revenue increased c35% to $1.49m -- Gross Profit increased 86% to GBP0.71m
-- Net loss for the year of $4.8m, primarily attributed to a $4.1m Impairment on the carrying value of assets following the demise of the oil price in 2020
-- Gross Project Production increased 50% to 92,170 BOE (1) -- Net Production to Mosman increased 24% to 23,117 BOE (1)
(1) BOE/boe - barrels of oil equivalent
(2) Gross Project Production - means the production of BOE at a total project level (100% basis) before royalties (where Mosman is the Operator) and where Mosman is not the operator the total gross production for the project
(3) Net Production - Net to Mosman's Working interest after royalties
Post period US highlights
-- Stanley-4 drilled and placed on production in September 2020.
-- Increasing to five producing projects with the Falcon-1 well at Champion completed in November, which is expected to significantly increase production.
The Company expects to publish its annual report later this week which will be posted and made available on the Company's website at www.mosmanoilandgas.com/financial-reports .
John W Barr, Chairman of Mosman commented : " Whilst 2020 has undoubtedly been challenging, Mosman remains resolute in delivering on its strategic objectives to build our production base with a clear focus on increasing production and cashflow whilst also being in a position to evaluate further acquisition targets.
"The small team is nimble and working with our partners and we are building stronger foundations from which we plan to build more robust scale in the year ahead.
"We acknowledge it has been a turbulent year for shareholders and would like to take this opportunity to thank them for their continued support whilst reassuring them of our confidence to achieve growth in both production and value for the business."
Enquiries:
Mosman Oil & Gas Limited NOMAD and Joint Broker John W Barr, Executive Chairman SP Angel Corporate Finance LLP Andy Carroll, Technical Director Stuart Gledhill / Richard Hail jwbarr@mosmanoilandgas.com / Adam Cowl acarroll@mosmanoilandgas.com +44 (0) 20 3470 0470 Alma PR Joint Broker Justine James Monecor (London) Ltd +44 (0) 20 3405 0205 trading as ETX Capital +44 (0) 7525 324431 Thomas Smith mosman@almapr.co.uk +44 (0) 20 7392 1432 Updates on the Company's activities are regularly posted on its website: www.mosmanoilandgas.com
Chairman's Letter
Overview of the 2020 financial year
Looking back at my closing remarks for the last Financial Year, I outlined how Mosman's focus for the year ahead was to deliver on the strategic objectives the Board had set out, building on the progress made through project acquisitions to increase production and how we were excited by the opportunity this presented for the next phase of growth. Nothing at that time could have predicted the 2020 year that lay before us all. It has proven to be one of the most difficult on record with the Global Pandemic affecting most aspects of our lives.
This has been a very challenging year for junior oil and gas companies, with turbulent markets and commodity fluctuations, navigating lock downs and the broader implications on many aspects of both day to day life and business. Mosman takes its Health and Safety requirements very seriously and to date we are not aware of any health or wellbeing issues in our small team.
As we stand today, Mosman can now look forward with greater optimism. We have secured an established production base, and continue to build on this, with further project acquisitions and acquisition targets with a clear plan for the drilling programme to increase production in 2021.
Mosman's strategic objectives remain consistent: to identify opportunities which will provide operating cash flow and have development upside, in conjunction with progressing exploration of existing exploration permits.
This is being delivered by increasing production and gross profit in the USA, and exploration in the Amadeus Basin in Australia.
USA
In the United States, Mosman currently has four producing projects, with a fifth expected shortly at the Falcon-1 well on the Champion project.
In March 2020, Mosman conducted a full review of all operations with the objective to reduce costs and protect income. Cost reductions were implemented and production continued with an emphasis on margin rather than volume to mitigate against the challenges of the pandemic, whilst at the same time ensuring production continued on the four initial projects.
Net Production attributable to Mosman in the full year to 30 June 2020 was 23,143 boe (barrels of oil equivalent), compared to 18,216 in 2019. This modest increase in production volumes was suppressed mainly due to the pandemic, as operations were curtailed as the oil price drastically fell.
Production
Hot Features
Premium
Gross Project Production(2) Net Production to Mosman
BOE(1) (3)
BOE(1)
------------------ ---------------------------- -------------------------
Stanley 70,808 11,359
Greater Stanley 485 97
Welch 13,420 10,287
Arkoma 7,457 1,374
------------------ ---------------------------- -------------------------
Total Production 92,170 23,117
------------------ ---------------------------- -------------------------
(1) BOE/boe - barrels of oil equivalent
(2) Gross Project Production - means the production of BOE at a total project level (100% basis) before royalties (where Mosman is the Operator) and where Mosman is not the operator the total gross production for the project
(3) Net Production - Net to Mosman's Working interest after royalties
Notwithstanding the smaller than expected rise in production volumes, sales increased by $387,569 (c.35%) to $1,493,664. Importantly, partially because of the swift action by the Board in the third quarter of the year, with gross profit increased to over $710,000, which sets us in good stead for the year ahead.
The focus in East Texas includes the Stanley, Greater Stanley, Champion and Challenger projects:
Stanley
The Stanley Project has provided valuable experience at a modest working interest. The natural flowing wells have low lifting costs. Stanley-3 is still producing from the original completion zone. On two wells, work-overs have been undertaken to improve production rates, with mixed success. Stanley-2 is shut-in waiting on artificial lift to be installed, and Stanley-1 is currently shut-in following an unsuccessful workover. In September 2020, a new well was drilled at Stanley-4 and was immediately placed on production.
Greater Stanley
The interest in Greater Stanley was acquired in 2020, as part of the plan to focus on the East Texas area. The Duff lease, is Held By Production as there are two wells and nominal production. The first activity will be to workover one existing well.
Champion
The Falcon-1 well was successfully drilled and cased in September 2020. The wireline logs indicate good porosity and hydrocarbons in the primary and secondary Frio sandstone target zones interbedded with shale between circa 7100 to 7550 feet TVD. The mud logs also showed hydrocarbons in these zones with an increase in mud gas readings from a background of circa 30 units to over 3000 units in the primary zone.
Oil and gas were produced at rates up to 80 bopd and 2.78 mmcfd (c463 boepd) equating to a combined total of c543 boepd. The well is now shut in to obtain more pressure data.
The Company is now planning the next well at Champion.
Challenger
The Cinnabar Lease is "Held By Production". Two wells drilled in the Lease have produced significant quantities of oil but are now usually shut-in. Mosman will become the Operator of the Cinnabar Lease, will review operations and the possible workover of one or both of the wells to increase production. There are four development drilling locations identified using 3D seismic on the Cinnabar Lease. Contract operator services will be provided by a Contour Exploration and Production LLC who has the right to acquire a 12% WI in the Lease.
Welch
Performance at Welch in the year was sound. This asset remains for sale at an appropriate price. The sale of the asset will continue the shift in the Company's focus to East Texas operations.
A sale was agreed in May 2020, however, the purchaser failed to complete the purchase, and the buyer forfeited the US$90,000 deposit. In the current year, US$60,000 was received, with US$30,000 post year end. The purchaser is now seeking the return of the deposit and the matter is scheduled to be heard in Court in due course.
Arkoma
At Arkoma, Mosman owns a 27% interest in wells as part of a three-way joint venture. The asset has been disappointing in 2020.
Other Matters
Currently there is evaluation work in progress on potential additions to the portfolio and if an opportunity crystalizes then shareholders will be informed.
Australia
Mosman has continued to conduct technical work on its Central Australian exploration projects, focused on the 100% owned EP-145, in the Amadeus Basin.
Due to the pandemic all non-essential access was refused and therefore the team has been unable to make progress. Mosman understands the rationale for the action and is monitoring the position as to when the team will be able to gain access .
Given the lack of access the progress on any joint venture has been slow, as any potential partner would
seek to visit the ground.
Given the access constraints an extension of the exploration permit was granted.
In May 2020, Mosman agreed a Farmout on EPA 155, with Westmarket Oil & Gas Pty Ltd, which will undertake technical work to earn a 70% WI interest in the permit and will takes responsibility for Native Title negotiations.
Infrastructure in the Northern Territory (NT) continues to improve, specifically, the Northern Gas Pipeline which has now been completed, and now a second pipeline is under consideration to allow NT gas to supply to the Eastern States gas market.
CORPORATE
Financial Report
Overall, the Company loss for the year increased, which was principally due to the Board taking a conservative approach and impairing the value of many of the oil and gas assets. This was previously reflected in the six monthly financial period to 31 December 2019 which reported a loss after the impairments.
Thus, in the 2021 year, whilst remaining prudent on expenditure we have already made several key decisions and proceeded with drilling new wells and workovers funded by recent capital raisings and the proposed sale of assets.
The Board continues to focus on achieving a cash flow positive position on a Company level. Given the current financial position, the results of recent drilling and the ongoing focus to control costs, this is now becoming an increasingly achievable objective.
Overall, in the year to 30 June 2020, the Company made a loss of $4,837,410 after impairments of $4,142,876.
Of significance, some $706,215 was spent on investing activities on assets in the portfolio during the year, continuing to reflect the Group's growth strategy. Furthermore, the Board has deferred payment of both Directors fees for the 2020 financial year, as well as 50% of consulting fees for the period of March to August 2020, collectively totaling $225,000 (with $191,000 accrued to 30 June 2020), and reflects the practical decisions made in a difficult year.
The net proceeds of funds raised during the year was $585,139.
Overhead costs continue to be tightly controlled. Mosman continues to operate with a very small number of Employees and Consultants. The Company operates in three countries and in four-time zones, and the role played by the Employees and Consultants is vital in achieving Mosman's strategic objective. Accordingly, I again express my profound gratitude for everyone's efforts in the year.
Matters subsequent to the reporting period
Other Matters
Norseman Silver Inc (previously named GEM International Resources Inc)
After the year end Mosman sold shares in this Company and realized cash of in excess of $258,000. Mosman still holds 510,000 shares and will dispose of those shares in due course. As of the date of this report, the market value of the shares on hand is approximately $133,000.
Conversion of unpaid Directors Fees and Consulting Fees to Shares
Further to previous announcements, the Directors are proposing to convert a total of $225,000 of Director's fees and consulting fees to shares, and will seek approval at the 2020 AGM.
Outlook
Whilst 2020 has undoubtedly been challenging, Mosman remains resolute in delivering on its strategic objectives to build our production base with a clear focus on increasing production and cash flow whilst also being in a position to evaluate further acquisition targets.
The small team is nimble and working with our partners and we are building stronger foundations from which we plan to build more robust scale in the year ahead.
We acknowledge it has been a turbulent year for shareholders and would like to take this opportunity to thank them for their continued support whilst reassuring them of our confidence to achieve growth in both production and value for the business.
Yours truly,
John W. Barr
Executive Chairman
24 November 2020
Operations Overview
A summary of the current oil and gas projects as at today is below:
MAJOR USA PROJECTS
Asset/ Project Mosman Interest(1) Location Status
------------------- --------- -----------------
Arkoma 27% Oklahoma Producing
------------------- --------- -----------------
Welch 100% Texas Producing
------------------- --------- -----------------
Stanley 16.5% Texas Producing
------------------- --------- -----------------
Greater Stanley
-1 and 2 20% & 25% Texas Producing
------------------- --------- -----------------
Challenger 85.0% (net) Texas Planning
------------------- --------- -----------------
Champion 50.0% Texas Drilled recently
------------------- --------- -----------------
AUSTRALIAN EXPLORATION PROJECTS
Asset/Project Mosman Location Status Permit Licence Comments
Interest(1) Number Renewal
Date
------------- --------- ------------ ---------- ------------ -------------------
Extension to
year 3 approved
due to access
21(st) restrictions
Australia, 100% EP 145 August as a result
Amadeus Basin NT Exploration 2021 of Covid-19
------------- --------- ------------ ---------- ------------ -------------------
70% of Working
Interest farmed
out to Westmarket
Australia, Oil & Gas Pty
Amadeus Basin 30% NT Application EPA 155 Application Ltd, June 2020
------------- --------- ------------ ---------- ------------ -------------------
(1.) Mosman's ownership is working interest before royalties. The interest shown is approximate, as there are small variations on individual wells
Consolidated Statement of Financial Performance
Year Ended 30 June 2020
All amounts are in Australian Dollars
Notes Consolidated Consolidated
2020 2019
$ $
Revenue 1,493,664 1,106,095
Cost of sales 2 (782,727) (821,000)
-------------------- --------------------
Gross profit 710,937 285,095
Interest i ncome 28,447 39,715
Other income 152,809 43,320
Administrative expenses (173,552) (180,688)
Corporate expenses 3 (901,576) (771,506)
Directors fees (120,000) (120,000)
Exploration expenses incurred, not capitalised (71,604) (8,125)
Employee b enefits expense (55,064) (69,392)
Evaluation and due diligence (153,493) (162,447)
Finance costs (5,177) (2,250)
Loss on f oreign e xchange - (3,953)
Loss on sale of joint venture assets - (156,105)
Amortisation expense (102,222) (82,958)
Depreciation expense (4,039) (5,765)
Impairment expense 12 & 13 (4,142,876) -
Costs associated with abandoned acquisitions - (13,777)
Loss from ordinary activities before income tax expense (4,837,410) (1,208,836)
Income tax expense 5 - -
Net l oss for the year (4,837,410) (1,208,836)
-------------------- --------------------
Other c omprehensive profit
Items that may be reclassified to profit or loss:
Gain on financial assets at fair value through other
- comprehensive income (FVOCI) 4 38,887 -
- Foreign currency gain 4 142,410 109,977
Total comprehensive income attributable to members of the entity (4,656,113) (1,098,859)
==================== ====================
Basic loss per share (cents per share) 25 (0.50) cents (0.20) cents
Diluted loss per share (cents per share) 25 (0.50) cents (0.20) cents
The accompanying notes form part of these financial statements.
Consolidated Statement of Financial Position
As at 30 June 2020
All amounts are in Australian Dollars
Notes Consolidated Consolidated
30 June 2020 30 June 2019
$ $
Current Assets
Cash and cash equivalents 7 372,479 823,959
Trade and other receivables 8 78,719 330,160
Inventory 44,508 77,961
Other financial assets 9 & 32 93,748 -
Other assets 10 16,959 35,756
Total Current Assets 606,413 1,267,836
-------------- --------------
Non-Current Assets
Property, plant & equipment 12 9,995 14,034
Oil and gas assets 13 2,061,131 3,905,106
Loans receivable 11 - 337,201
Other receivables 54,820 50,000
Capitalised o il and g as exploration 14 301,242 1,615,956
-------------- --------------
Total Non-Current Assets 2,427,188 5,922,297
-------------- --------------
Total Assets 3,033,601 7,190,133
-------------- --------------
Current Liabilities
Trade and other payables 15 358,091 569,234
Equity settled liabilities 16 191,000
Provisions 17 20,269 27,170
Total Current Liabilities 569,360 596,404
-------------- --------------
Total Liabilities 569,360 596,404
-------------- --------------
Net Assets 2,464,241 6,593,729
============== ==============
Shareholders' Equity
Contributed equity 18 30,691,497 30,164,872
Reserves 19 712,134 530,837
Accumulated losses 20 (28,939,390) (24,101,980)
Total Shareholders' Equity 2,464,241 6,593,729
============== ==============
The accompanying notes form part of these financial statements.
Consolidated Statement of Changes in Equity
Year Ended 30 June 2020
All amounts are in Australian Dollars
Accumulated Contributed Equity Reserves Non-Controlling Interest Total
Losses
$ $ $ $ $
Balance at 1 July 2019 (24,101,980) 30,164,872 530,837 - 6,593,729
============= =================== ========= ========================= ============
Comprehensive income
Loss for the period (4,837,410) - - - (4,837,410)
Other comprehensive income
for the period - - 181,297 - 181,297
------------- ------------------- --------- ------------------------- ------------
Total comprehensive loss for
the period (4,837,410) - 181,297 - (4,656,113)
Transactions with owners, in their capacity as owners, and other transfers:
New shares issued - 585,139 - - 585,139
Cost of raising equity - (58,514) - - (58,514)
Total transactions with
owners and other transfers - 526,625 - - 526,625
------------- ------------------- --------- ------------------------- ------------
Balance at 30 June 2020 (28,939,390) 30,691,497 712,134 - 2,464,241
============= =================== ========= ========================= ============
Balance at 1 July 2018 (22,921,464) 28,044,804 420,860 28,320 5,572,520
Comprehensive income
Loss for the year (1,180,516) - - (28,320) (1,208,836)
Other comprehensive income
for the period - - 109,977 - 109,977
------------- ------------------- --------- ------------------------- ------------
Total comprehensive loss for
the period (1,180,516) - 109,977 (28,320) (1,098,859)
Transactions with owners, in their capacity as owners, and other transfers:
New shares issued - 2,266,306 - - 2,266,306
Cost of raising equity - (146,238) - - (146,238)
Total transactions with
owners and other transfers - 2,120,068 - - 2,120,068
------------- ------------------- --------- ------------------------- ------------
Balance at 30 June 2019 (24,101,980) 30,164,872 530,837 - 6,593,729
============= =================== ========= ========================= ============
These accompanying notes form part of these financial statements
Consolidated Statement of Cash Flows
Year Ended 30 June 2020
All amounts are in Australian Dollars
Notes Consolidated 2020 Consolidated 2019
$ $
Cash flows from operating activities
Receipts from customers 1,557,395 1,134,767
Interest received & other income 114,439 83,034
Payments to suppliers and employees (2,157,505) (2,166,978)
Bonds refunded 10,000 71,807
Interest paid (5,177) (2,249)
------------------ ------------------
Net cash outflow from operating activities 26 (480,848) (879,619)
------------------ ------------------
Cash flows from investing activities
Proceeds from sale of joint venture assets - 106,944
Payments for oil and gas assets (469,432) (777,586)
Payments for exploration and evaluation - (124,937)
Deposit paid for acquisition - (641)
Acquisition of oil and gas production projects (236,783) (883,151)
Net cash outflow from investing activities (706,215) (1,679,371)
------------------ ------------------
Cash flows from financing activities
Proceeds from shares issued 585,138 2,266,306
Payments for costs of capital (58,514) (146,238)
Transactions with non-controlling interests - -
Proceeds from third party loans 67,064 (60,201)
Net cash inflow from financial activities 593,688 2,059,867
------------------ ------------------
Net decrease in cash and cash equivalents (593,375) (499,123)
------------------ ------------------
Effects of exchange rate changes on cash and cash equivalents 5 (2)
------------------ ------------------
Cash and cash equivalents at the beginning of the financial year 823,959 1,323,084
------------------ ------------------
Cash and cash equivalents at the end of the financial year 7 230,589 823,959
------------------ ------------------
The accompanying notes from part of these financial statements
Notes to the Financial Statements
Year Ended 30 June 2020
All amounts are Australian Dollars
1 Statement of Accounting Policies
The principal accounting policies adopted in preparing the financial report of Mosman Oil and Gas Limited (or "the Company") and Controlled Entities ("Consolidated entity" or "Group"), are stated to assist in a general understanding of the financial report. These policies have been consistently applied to all the years presented, unless otherwise indicated.
Mosman Oil and Gas Limited is a Company limited by shares incorporated and domiciled in Australia.
(a) Basis of Preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards (including Australian Interpretations) adopted by the Australian Accounting Standards Board and the Corporations Act 2001. Compliance with Australian Accounting Standards ensures that the financial statements also comply with International Financial Reporting Standards.
The financial report has been prepared on the basis of historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets.
Going Concern
The Group recognises that its ability to continue as a going concern to meet its debts when they fall due is dependent on the Group raising funds as required to pay its debts as and when they fall due, and the continuation of production which results in a gross profit The directors have reviewed the business outlook and are of the opinion that the use of the going concern basis of accounting is appropriate as they believe the Group will achieve this.
Further to the above, the Group have shown its ability to raise capital, with an additional $2,366,000 raised subsequent to year end.
The carrying value of all oil and gas assets was reviewed in early 2020, and as a result a significant impairment provision was created, given the background of the pandemic and the collapse of the oil price at the time. The Board has not reversed the impairment provision given the pandemic has not as yet reached its conclusion.
Other than the matters above, this financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that may be necessary should the Group be unable to continue as a going concern.
The financial report was authorised for issue by the Directors on 24 November 2020.
(b) Principles of Consolidation and Equity Accounting
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Mosman Oil and Gas Limited at the end of the reporting period. A controlled entity is any entity over which Mosman Oil and Gas Limited has the ability and right to govern the financial and operating policies so as to obtain benefits from the entity's activities.
Where controlled entities have entered or left the Group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. Details of Controlled and Associated entities are contained in Notes 29 and 30 to the financial statements.
In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the consolidated group have been eliminated in full on consolidation.
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. Mosman Oil and Gas Limited has a joint venture.
Joint ventures
Joint operations represent arrangements whereby joint operators maintain direct interests in each asset and exposure to each liability of the arrangement. The Group's interests in the assets, liabilities, revenue and expenses of joint operations are included in the respective line items of the financial statements.
Interests in joint ventures are accounted for using the equity method (see below), after initially being recognised at cost in the consolidated balance sheet.
Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the group's share of the post-acquisition profits or losses of the investee in profit or loss, and the group's share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.
When the group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the group and its associates and joint ventures are eliminated to the extent of the group's interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the group.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described in note 1(q).
(c) Use of Estimates and Judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. 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 and in any future periods affected.
Critical Accounting Estimates and Judgements
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.
Taxation
Balances disclosed in the financial statements and the notes related to taxation, are based on the best estimates of directors and take into account the financial performance and position of the Group as they pertain to current income tax legislation, and the directors understanding thereof. No adjustment has
been made for pending or future taxation legislation. The current tax position represents the best estimate, pending assessment by the tax authorities.
Exploration and Evaluation Assets
The accounting policy for exploration and evaluation expenditure results in expenditure being capitalised for an area of interest where it is considered likely to be recoverable by future exploitation or sale or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves.
This policy requires management to make certain estimates as to future events and circumstances . Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that the recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to profit and loss.
(d) Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively enacted at the balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised;
The carrying amount of deferred income tax assets is reviewed at each balance sheet date reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured 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 (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
(e) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of GST except:
(i) Where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset, or as part of the expense item as applicable;
(ii) Receivables and payables are stated with the amount of GST included;
(iii) The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position ;
(iv) Cash flows are included in the Statement of Cash Flow s on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows; and
(v) Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(f) Property , Plant and Equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised either in profit or loss, or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present (refer to Note 1(q) for details of impairment).
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset's employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.
(g) Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset's useful life to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
(h) Exploration and Evaluation Assets
Mineral exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest and is subject to impairment testing. These costs are carried forward only if they relate to an area of interest for which rights of tenure are current and in respect of which:
-- S uch costs are expected to be recouped through the successful development and exploitation of the area of interest, or alternatively by its sale; or
-- Exploration and/or evaluation activities in the area have not reached a stage which permits a reasonable assessment of the existence, or otherwise, of economically recoverable reserves and active or significant operations in, or in relation to, the area of interest is continuing.
In the event that an area of interest is abandoned accumulated costs carried forward are written off in the year in which that assessment is made. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.
Where a resource has been identified and where it is expected that future expenditures will be recovered by future exploitation or sale, the impairment of the exploration and evaluation is written back and transferred to development costs. Once production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.
Costs of site restoration and rehabilitation are recognised when the Company has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be reliably estimated.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
Exploration and evaluation assets are assessed for impairment if facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
For the purpose 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.
(i) Accounts Payable
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition .
(j) Contributed Equity
Issued Capital
Incremental costs directly attributable to issue of ordinary shares and share options are recognised as a deduction from equity, net of any related income tax benefit.
(k) Earnings Per Share
Basic earnings per share ("EPS") are calculated based upon the net loss divided by the weighted average number of shares. Diluted EPS are calculated as the net loss divided by the weighted average number of shares and dilutive potential shares.
(l) Share-Based Payment Transactions
The Group provides benefits to Directors, KMP and consultants of the Group in the form of share-based payment transactions, whereby employees and consultants render services in exchange for shares or rights over shares ("equity settled") transactions.
The value of equity settled securities is recognised, together with a corresponding increase in equity.
Where the Group acquires some form of interest in an exploration tenement or an exploration area of interest and the consideration comprises share-based payment transactions, the fair value of the assets acquired are measured at grant date. The value is recognised within capitalised mineral exploration and evaluation expenditure, together with a corresponding increase in equity.
(m) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
(n) Financial Risk Management
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework, to identify and analyse the risks faced by the Group . These risks include credit risk, liquidity risk and market risk from the use of financial instruments. The Group has only limited use of financial instruments through its cash holdings being invested in short term interest bearing securities. The Group has no debt, and working capital is maintained at its highest level possible and regularly reviewed by the full board.
(o) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company determines the classification of its financial instruments at initial recognition.
Financial assets
From 1 July 2018, financial assets are classified at initial recognition a (i) subsequently measured at amortised cost, (ii) fair value through other comprehensive income (OCI) or (iii) fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designed upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if
they are acquired for the purpose of selling or repurchasing in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the Income Statement within finance costs. Transaction costs arising on initial recognition are expensed in the Income Statement.
Financial assets at fair value through other comprehensive income
The financial asset is held for both collecting contractual cash flows and selling the financial asset. Movements in the carrying amount are taken through other comprehensive income and accumulated in the fair value reserve, except for the recognition of impairment, interest income and foreign exchange difference which are recognised directly in profit or loss. Interest income is calculated using the effective interest rate method.
The Company's financial assets at fair value through other comprehensive income include it's investment in listed equities.
Financial assets at amortised cost
Financial asset at amortised costs are non-derivative financial assets with fixed or determinable payments that re not quoted in an active market.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gain and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Company's financial assets at amortised cost include 'trade and other receivables' and "cash and equivalents' in the Balance Sheet.
Financial liabilities
Financial liabilities are classified at initial recognition as (i) financial liabilities at fair value through profit or, (ii) loans and borrowings, (iii) payables or (iv) derivatives designated as hedging instruments, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net directly attributable transaction costs. The Company's financial liabilities include trade and other payables, loans and borrowings. These are subsequently measured at amortised cost using the effective interest method. Gain and losses are recognised in the Income Statement when the liabilities are derecognised. Amortisation is included as finance costs in the Income Statement.
Fair Value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models. The expression "fair value" - and derivatives thereof - wherever used in this report bears the meaning ascribed to that expression by the Australian Accounting Standards Board.
Impairment
At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the profit or loss.
(p) Oil and gas assets
The cost of oil and gas producing assets and capitalised expenditure on oil and gas assets under development are accounted for separately and are stated at cost less accumulated amortisation and impairment losses. Costs include expenditure that is directly attributable to the acquisition or construction of the item as well as past exploration and evaluation costs.
When an oil and gas asset commences production, costs carried forward are amortised on a units of production basis over the life of the economically recoverable reserves. Changes in factors such as estimates of economically recoverable reserves that affect amortisation calculations do not give rise to prior financial period adjustments and are dealt with on a prospective basis.
(q) Impairment of Assets
At each reporting date, the Group reviews the carrying values of its tangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating until to which the asset belongs.
(r) Employee Entitlements
Liabilities for wages and salaries, annual leave and other current employee entitlements expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.
Contributions to employee superannuation plans are charged as an expense as the contributions are paid or become payable.
(r) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will be the result and that outlay can be reliably measured.
(s) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 3 months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.
(t) Revenue and Other Income
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.
The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group's activities as described below. The group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Revenue from Joint Operations is recognised based on its share of the sale by joint operation.
Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument.
(u) Acquisition of Subsidiary Not Deemed a Business Combination
When an acquisition of assets does not constitute a business combination, the assets and liabilities are assigned a carrying amount based on their relative fair values in an asset purchase transaction and no deferred tax will arise in relation to the acquired assets and assumed liabilities as the initial exemption for deferred tax under AASB 12 applies. No goodwill will arise on the acquisition and transaction costs of the acquisition will be included in the capitalised cost of the asset.
(v) Foreign Currency Translation
Functional currency
Items included in the financial statements of the Group's operations are measured using the currency of the primary economic environment in which it operates ('the functional currency').
The functional currency of the Company and controlled entities registered in Australia is Australian dollars (AU$).
The functional currency of the controlled entities registered in the US is United States dollars (US$).
Foreign currency transactions are translated into the functional currency using the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the end of the reporting period. Foreign exchange gains and losses resulting from settling foreign currency transactions, as well as from restating foreign currency denominated monetary assets and liabilities, are recognised in profit or loss, except when they are deferred in other comprehensive income as qualifying cash flow hedges or where they relate to differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value was determined.
Presentation currency
The financial statements are presented in Australian dollars, which is the Group's presentation currency.
Functional currency balances are translated into the presentation currency using the exchange rates at the balance sheet date. Value differences arising from movements in the exchange rate is recognised in the statement of comprehensive income.
(w) Joint operations
A joint arrangement in which the Group has direct rights to underlying assets and obligations for underlying liabilities is classified as a joint operation.
Interests in joint operations are accounted for by recognising the Group's assets (including its share of any assets held jointly), its liabilities (including its share of any liabilities incurred jointly), its revenue from the sale of its share of the output arising from the joint operation, its share of the revenue from the sale of the output by the joint operation and its expenses (including its share of any expenses incurred jointly).
(x) New standards and interpretations
Account Standard and Interpretation
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Consolidated Consolidated
2020 2019
$ $
2 Cost of sales
Cost of sales 253,271 254,132
Lease operating expenses 529,456 566,868
782,727 821,000
---------------------- -------------
3 Corporate Costs
Accounting, Company Secretary and
Audit fees 193,841 224,884
Consulting fees - board 325,000 348,750
Consulting fees - other 116,024 109,549
Investor relations & marketing 81,297 -
Legal and compliance fees 185,414 88,323
---------------------- -------------
901,576 771,506
---------------------- -------------
4 Other comprehensive profit
Gain on shares at fair value through
other comprehensive income (FVOCI) 38,887 -
Foreign currency gain 142,410 109,977
181,297 109,977
--------------------- --------
5 Income Tax
No income tax is payable by the Group as it has incurred losses
for income tax purposes for the year, therefore current tax,
deferred tax and tax expense is $NIL (2019 - $NIL).
(a) Numerical reconciliation of income tax expense to prima
facie tax payable
Consolidated Consolidated
2020 2019
$ $
Loss before tax (4,837,410) (1,208,836)
Income tax calculated at 27.5% (2019:
27.5%) (1,330,287) (332,429)
Tax effect of amounts which are deductible/non-deductible
In calculating taxable income:
JV share of profit - (6,399)
Legal and consulting expenses - -
Impairment expense 744,811 -
Upfront exploration expenditure
claimed (18,310) (34,358)
Other (64,170) (137,518)
Effects of unused tax losses and tax
offsets not recognised as deferred
tax assets 667,956 510,704
------------- -------------
Income tax expense attributable to
operating profit NIL NIL
5 Income Tax (continued)
(b) Tax Losses
As at 30 June 2020 the Company had Australian tax losses of $11,719,814 (2019 : $10,875,861 ). The benefit of deferred tax assets not brought to account will only be realised if:
-- Future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised; and
-- The conditions for deductibility imposed by tax legislation continue to be complied with and no changes in tax legislation adversely affect the Company in realising the benefit.
(c) Unbooked Deferred Tax Assets and Liabilities
Consolidated Consolidated
2020 2019
$ $
Unbooked deferred tax assets comprise:
Capital Raising Costs 60,354 130,607
Provisions/Accruals/Other 51,797 31,482
Tax losses available for offset against
future taxable income 3,349,052 2,990,862
---------- ----------
3,461,203 3,152,951
========== ==========
6 Auditors Remuneration
Audit - Elderton Audit Pty Ltd
Audit of the financial statements 31,500 31,000
------- -------
31,500 31,000
------- -------
7 Cash and Cash Equivalents
Cash at Bank 230,589 823,959
Funds at call(1) 141,890 -
------------------ ------------------
372,479 823,959
------------------ ------------------
1. Funds received into trust from Blackstone Oil and Gas, Inc and subsequently deposited into
the Group's bank account on 7 July 2020.
8 Trade and Other Receivables
Deposits - 10,642
GST receivable 20,112 18,002
Cash calls receivable - 208,791
Accrued Revenue 54,235 84,516
Other receivables 4,372 8,209
------- --------
78,719 330,160
------- --------
9 Other financial assets
Shares in Norseman Silver Inc (2) 93,748 -
93,748 -
-------
2. Valued at fair value with gain/loss recorded through other comprehensive income.
10 Other assets
Prepayments 16,959 35,756
16,959 35,756
------- -------
11 Loans receivable
Loan to GEM International Resources Inc(1) - 119,034
Loan to Blackstone Oil and Gas, Inc(2) - 210,210
Other loans(3) - 7,957
--------
- 337,201
---------------------------------------------------------- --------
1. This loan was fully settled during the financial year.
2. This loan was partially recovered following legal action resulting in a US$107,500 settlement during the year, and the balance of the loan subsequently written off.
3. This loan was written off during the year.
12 Property, Plant and Equipment
Office Equipment and Furniture Total
$ $
Cost
Balance at 1 July 2019 165,713 165,713
Additions - -
Disposals - -
Effective movement in exchange rates - -
------------------------------- --------
Balance at 30 June 2020 165,713 165,713
------------------------------- --------
Depreciation
Balance at 1 July 2019 151,679 151,679
Depreciation for the year 4,039 4,039
Disposals - -
Effective movement in exchange rates - -
------------------------------- --------
Balance at 30 June 2020 155,718 155,718
------------------------------- --------
Carrying amounts
Balance at 30 June 2019 14,034 14,034
------------------------------- --------
Balance at 30 June 2020 9,995 9,995
------------------------------- --------
Consolidated Consolidated
2020 2019
$ $
13 Oil and Gas Assets
Cost brought forward 3,905,106 2,592,814
Acquisition of oil and gas assets during the year 236,783 883,151
Disposal of oil and gas assets on sale during the year - (133,503)
Capitalised equipment workovers during the year 402,901 645,602
Amortisation for the year (103,616) (82,958)
Impairment of oil and gas assets (2,380,043)
Carrying value at end of year 2,061,131 3,905,106
-------------- -------------
14 Capitalised Oil and Gas Expenditure
Cost brought forward 1,615,956 1,491,019
Exploration costs incurred during the year 66,582 124,937
Impairment of oil and gas expenditure (1,381,296) -
-------------- -------------
Carrying value at end of year 301,242 1,615,956
-------------- -------------
Consolidated Consolidated
2020 2019
$ $
15 Trade and Other Payables
Trade creditors 331,972 503,470
Other creditors and accruals 26,119 65,764
-------------- --------
358,091 569,234
-------------- --------
16 Equity Settled Liabilities
Unpaid Directors fees and Directors consulting fees 191,000 -
191,000 -
--------
The amount of $191,000 was outstanding as at 30 June 2020, as the Directors had agreed to not draw on Directors fees, and only half of the contracted amount of Consultancy fees were paid. It is proposed that the amount of $191,000 will be settled by the issue of shares. The matter will be placed before shareholders at the Annual General Meeting. If shareholders do not approve the payments by the issue of shares, then the amount will remain payable and will be paid from the Company's funds.
Consolidated Consolidated
2020 2019
$ $
17 Provisions
Employee provisions 20,269 27,170
20,269 27,170
------------- -------------
18 Contributed Equity
Ordinary Shares:
Value of Ordinary Shares fully paid
Movement in Contributed Equity Number of Contributed
shares Equity $
Balance as at 1 July 2018: 453,992,787 28,044,804
Date Nature of Transaction Issue Price
Shares issued
15/11/2018 (i) $0.00486 41,090,908 199,717
Shares issued
23/11/2018 (i) $0.00486 100,727,273 489,659
Shares issued
08/12/2018 (i) $0.00495 40,000,000 198,000
Shares issued
20/05/2019 (i) $0.00552 250,000,000 1,378,930
Capital raising costs - (146,238)
-------------- ------------
Balance as at 1 July 2019: 885,810,968 30,164,872
Shares issued
14/02/2020 (i) $0.00293 200,000,000 585,139
Capital raisings costs - (58,514)
-------------- ------------
Bala nce at end of year 1,085,810,968 30,691,497
============== ============
(i) Placements via capital raising as announced
19 Reserves
Consolidated Consolidated
2020 2019
$ $
Options reserve 471,818 471,818
Asset revaluation reserve (363,525) (402,412)
Foreign currency translation reserve 603,841 461,431
------------- -------------
712,134 530,837
------------- -------------
Options Reserve
Nature and purpose of the Option reserve
The options reserve represents the fair value of equity instruments issued to employees as compensation and issued to external parties for the receipt of goods and services. This reserve will be reversed against issued capital when the underlying shares are converted and reversed against retained earnings when they are allowed to lapse.
Consolidated Consolidated
2020 2019
Movement in Options Reserve $ $
Options Reserve at the beginning of
the year 471,818 471,818
Options issued - -
Options expired - -
Options Reserve at the end of the year 471,818 471,818
------------- -------------
Foreign Currency Translation Reserve
Nature and purpose of the Foreign Currency Translation Reserve
Functional currency balances are translated into the presentation currency using the exchange rates at the balance sheet date. Value differences arising from movements in the exchange rate is recognised in the Foreign Currency Translation Reserve.
Consolidated Consolidated
Movement in Foreign Currency Translation
Reserve 2020 2019
$ $
Foreign Currency Translation Reserve
at the beginning of the year 461,431 351,454
Current year movement 142,410 109,977
------------- -------------
Foreign Currency Translation Reserve
at the end of the year 603,841 461,431
------------- -------------
Asset Revaluation Reserve
Changes in the fair value of investments classified as fair value through other comprehensive income (FVOCI) financial assets are taken to the available-for-sale investments revaluation reserve.
Consolidated Consolidated
2020 2019
Movement in Asset Revaluation Reserve $ $
Asset Revaluation Reserve at the beginning
of the year (402,412) (402,412)
Revaluation of FVOCI shares 38,887 -
Asset Revaluation Reserve at the end
of the year (363,525)(1) (402,412)
------------- -------------
1. The asset revaluation reserve balance related to the accumulated loss on the investment in GEM International Resources Inc recorded in FY2017 and FY2018.
20 Accumulated Losses Consolidated Consolidated
2020 2019
$ $
Accumulated losses at the beginning
of the year 24,101,980 22,921,464
Net loss attributable to members 4,837,410 1,180,516
Accumulated losses at the end of the
year 28,939,390 24,101,980
------------- -------------
21 Related Party Transactions
Consolidated Consolidated
2020 2019
$ $
Key Management Personnel Remuneration
Cash Payments to Directors and Management
(i) 511,000 549,173
Total 511,000 549,173
============= =============
i. During the year to 30 June 2020:
a. Directors fees of $60,000 and consulting fees of $177,000 were paid or are payable to Kensington Advisory Services Pty Ltd;
b. Director fees of $30,000 and consulting fees of $148,000 were paid or are payable to Australasian Energy Pty Ltd;
c. Directors fees of $30,000 were paid or are payable to J A Young;
d. CFO, Company Secretary and Consulting Fees totalling $66,000 were paid or are payable to J T White's accounting firm, Traverse Accountants Pty Ltd;
e. Norseman Silver Inc was admitted to trade on the NEX Board of the Toronto Stock Exchange (TSX). Furthermore, the Group's loan to Norseman Silver Inc was fully settled, with a total of $81,183 received in cash, and $54,861 via the issue of 1,000,000 shares. As at 30 June 2020 the Group held shares in Norseman Silver Inc to the value of $93,748. Since balance date, the share price appreciated, and approximately $258,000 was received in cash for the sales of shares, and the value on hand as of the date of this report is $133,000.
Movement in Shares and Options
The aggregate numbers of shares and options of the Company held directly, indirectly or beneficially by Key Management Personnel of the Company or their personally-related entities are fully detailed in the Directors' Report .
Amounts owing to the Company from subsidiaries:
Trident Energy Pty Ltd
At 30 June 2020 the Company's 100% owned subsidiary, Trident Energy Pty Ltd, owed Mosman Oil and Gas Limited $2,901,011 (2019: $2,883,384).
OilCo Pty Ltd
At 30 June 2020 the Company's 100% owned subsidiary, OilCo Pty Ltd (OilCo), owed Mosman Oil and Gas Limited $776,879 (2019: $776,412).
Mosman Oil USA, Inc
At 30 June 2020 the Company's 100% owned subsidiary, Mosman Oil USA, Inc, owed Mosman Oil and Gas Limited $4,423,121 (2019: $3,751,440).
22 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 30 June 2020, total exploration expenditure commitments for the next 12 months are as follows:
2020 2019
Entity Tenement $ $
Trident Energy Pty Ltd EP145(1) - -
Oilco Pty Ltd EPA155 - -
- -
----- -----
1. EP145 is currently under renewal application, therefore there are no committed expenditures as of the date of this report.
(b) Capital Commitments
The Company had no other capital commitments at 30 June 2020 (2019: $NIL).
23 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 the USA (and previously New Zealand until 2019). 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 the USA. Unallocated results, assets and liabilities represent corporate amounts that are not core to the reportable segments.
23 Segment Information (continued)
(i) Segment performance
United States Australia Total
$ $ $
----- -------------- ------------ ------------
Year ended 30 June 2020
Revenue
Revenue 1,493,664 - 1,493,664
Interest income 20,578 7,869 28,447
Other income 119,773 33,036 152,809
----- -------------- ------------ ------------
Segment revenue 1,634,015 40,905 1,674,920
----- -------------- ------------ ------------
Segment Result
Loss
Allocated
- Corporate costs (146,873) (754,703) (901,576)
- Administrative costs (32,876) (140,676) (173,552)
- Lease operating expenses (529,456) - (529,456)
- Cost of sales (253,271) - (253,271)
Segment net profit (loss) before tax 671,539 (854,474) (182,935)
----- -------------- ------------ ------------
Reconciliation of segment result to net loss before tax
Amounts not included in segment result but reviewed by the
Board
- Exploration expenses incurred not capitalised - (71,604) (71,604)
- Evaluation and due diligence (84,790) (68,703) (153,493)
- Amortisation (102,222) - (102,222)
- Impairment (2,761,580) (1,381,296) (4,142,876)
Unallocated items
- Employee benefits expense (175,064)
- Depreciation (4,039)
- Finance costs (5,177)
Net Loss before tax from continuing operations (4,837,410)
------------
23 Segment Information (continued)
(i) Segment performance
New Zealand United States Australia Total
$ $ $ $
------------ -------------- ---------- ------------
Year ended 30 June 2019
Revenue
Revenue - 1,106,095 - 1,106,095
Interest income - 32,270 7,445 39,715
Gain on sale of non-current assets 937 - - 937
Other income - 425 41,958 42,383
------------ -------------- ---------- ------------
Segment revenue 937 1,138,790 49,403 1,189,130
------------ -------------- ---------- ------------
Segment Result
Loss
Allocated
- Corporate costs - (29,348) (742,158) (771,506)
- Administrative costs - (65,836) (114,852) (180,688)
- Lease operating expenses - (566,868) - (566,868)
- Cost of sales - (254,132) - (254,132)
- Share of net loss of joint operation - - - -
Segment net profit (loss) before tax 937 222,606 (807,607) (584,064)
------------ -------------- ---------- ------------
Reconciliation of segment result to net loss before tax
Amounts not included in segment result but reviewed by
the Board
- Exploration expenditure previously capitalised, writte
n off in financial year (8,125) - - (8,125)
- Evaluation and due diligence - - (162,447) (162,447)
- Amortisation - (82,958) - (82,958)
- Projects abandoned (6,645) - (7,132) (13,777)
- Loss on sale of available-for-sale assets - (156,105) - (156,105)
Unallocated items
- Employee benefits expense (189,392)
- Foreign exchange loss (3,953)
- Depreciation (5,765)
- Finance costs (2,250)
Net Loss before tax from continuing operations (1,208,836)
------------
23 Segment Information (continued)
(ii) Segment assets
United States Australia Total
$ $ $
----- ---------------- ------------ ------------
Total assets as at 1 July 2019 4,618,616 2,571,517 7,190,133
Segment asset balances at end of year
- Exploration and evaluation - 7,482,160 7,482,160
- Capitalised Oil and Gas Assets 4,632,884 - 4,632,884
- Less: Amortisation (191,710) - (191,710)
- Less: Impairment (2,380,043) (7,180,918) (9,560,961)
------ ---------------- ------------ ------------
2,061,131 301,242 2,362,373
------ ---------------- ------------ ------------
Reconciliation of segment assets to total assets:
Other assets 289,433 381,795 671,228
------ ---------------- ------------ ------------
Total assets from continuing operations
As at 30 June 2020 2,350,564 683,037 3,033,601
------ ---------------- ------------ ------------
New Zealand United States Australia Total
$ $ $ $
------------ ---------------- ---------- ----------
Total assets as at 1 July 2018 60,911 3,098,906 2,868,289 6,028,106
Segment asset balances at end of year
- Exploration and evaluation - - 1,615,956 1,615,956
- Capitalised Oil and Gas Assets - 4,126,703 - 4,126,703
- Less: Amortisation - (88,094) - (88,094)
- Less: Expenditure previously capitalised, written o
ff in financial year - (133,503) - (133,503)
------------ ---------------- ---------- ----------
- 3,905,106 1,615,956 5,521,062
------------ ---------------- ---------- ----------
Reconciliation of segment assets to total assets:
Other assets - 713,510 955,561 1,669,071
------------ ---------------- ---------- ----------
Total assets from continuing operations
As at 30 June 2019 - 4,618,616 2,571,517 7,190,133
------------ ---------------- ---------- ----------
23 Segment Information (continued)
(iii) Segment liabilities
United States Australia Total
$ $ $
------------ ---------------- ---------- ---------
Segment liabilities as at 1 July 2019 316,192 280,212 596,404
Segment liability increases (decreases) for the year (228,706) 201,662 (27,044)
------------ ---------------- ---------- ---------
87,486 481,874 569,360
------------ ---------------- ---------- ---------
Reconciliation of segment liabilities to total liabilities:
Other liabilities - - -
------------ ---------------- ---------- ---------
Total liabilities from continuing operations
As at 30 June 2020 87,486 481,874 569,360
------------ ---------------- ---------- ---------
New Zealand United States Australia Total
$ $ $ $
Segment liabilities as at 1 July 2018 146,071 136,374 173,141 455,586
Segment liability increases (decreases) for the year (146,071) 179,818 107,071 140,818
------------ ---------------- ---------- ---------
- 316,192 280,212 596,404
------------ ---------------- ---------- ---------
Reconciliation of segment liabilities to total liabilities:
Other liabilities - - - -
------------ ---------------- ---------- ---------
Total liabilities from continuing operations
As at 30 June 2019 - 316,192 280,212 596,404
------------ ---------------- ---------- ---------
24 Producing assets
The Group currently has 4 producing assets, which the Board monitors as separate items to
the geographical and operating segments. The Arkoma, Stanley and Welch and Duff projects
are Oil and Gas producing assets in the United States.
Project performance is monitored by the line items below.
Project performance
Arkoma Stanley Welch Other Projects Total
$ $ $ $ $
--------- ---------- ---------- --------------- ----------
Year Ended 30 June 2020
Revenue
Oil and gas project related revenue 17,350 635,288 841,026 - 1,493,664
Producing assets revenue 17,350 635,288 841,026 - 1,493,664
--------- ---------- ---------- --------------- ----------
Project-related expenses
* Cost of sales (897) (29,278) (223,096) - (253,271)
(10,769) (102,880) (389,626) (26,181) (529,456)
* Lease operating expenses
Project cost of sales (11,666) (132,158) (612,722) (26,181) (782,727)
--------- ---------- ---------- --------------- ----------
Project gross profit
Gross profit/(loss) 5,684 503,130 228,304 (26,181) 710,937
--------- ---------- ---------- --------------- ----------
24 Producing assets (continued)
Project performance
Arkoma Stanley Strawn Welch Total
$ $ $ $ $
-------- --------- --------- ---------- ----------
Year Ended 30 June 2019
Revenue
Oil and gas project related revenue 39,342 128,687 56,310 881,756 1,106,095
Producing assets revenue 39,342 128,687 56,310 881,756 1,106,095
-------- --------- --------- ---------- ----------
Project-related expenses
* Cost of sales (1,307) (6,408) (21,014) (225,403) (254,132)
8,335 (26,513) (58,566) (490,124) (566,868)
* Lease operating expenses
Project cost of sales 7,028 (32,921) (79,580) (715,527) (821,000)
-------- --------- --------- ---------- ----------
Project gross profit
Gross profit/(loss) 46,370 95,766 (23,270) 166,229 285,095
-------- --------- --------- ---------- ----------
25 Earnings/ (Loss) per shares
Consolidated
Consolidated 2020 2019
$ $
The following reflects the loss and share data used in the calculations of
basic and diluted
earnings/ (loss) per share:
Earnings/ (loss) used in calculating basic and diluted earnings/
(loss) per share (4,837,410) (1,208,836)
------------------ -----------------
Number of shares Number of shares
2020 2019
Weighted average number of ordinary shares used in calculating basic
earnings/(loss) per
share: 960,879,461 590,422,674
Basic loss per share (cents per share) 0.50 0.20
26 Notes to the statement of cash flows
Reconciliation of loss from ordinary
activities after income tax to net Consolidated Consolidated
cash outflow from operating activities: 2020 2019
$ $
------------- -------------
Loss from ordinary activities after
related income tax (4,837,410) (1,218,985)
Share based payments - 10,149
Depreciation and amortisation 106,261 88,722
Impairment 4,142,876
Previously capitalised expenses, written
off - -
Fixed assets disposed of during the
year - 156,105
Share of loss of joint operations - -
Fair value loss on available-for-sale
assets - -
Decrease in other assets - -
Decrease/(increase) in trade and other
receivables 104,090 (197,519)
Increase in inventory 33,452 28,672
Change in value of NCI - -
Increase/(decrease) in trade and other
payables (7,606) 140,818
Unrealised FX (22,511) 112,419
Net cash outflow from operating activities (480,848) (879,619)
------------- -------------
27 Financial Instruments
The Company's activities expose it to a variety of financial and market risks. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Company.
(i) Interest Rate Risk
The Company's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of changes in market, interest rates and the effective weighted average interest rates on those financial assets, is as follows:
27 Financial Instruments (continued)
Consolidated Note Fixed Assets/ Total
2020 Weighted Funds Available Interest Liabilities
Average at a Floating Rate Non
Effective Interest Interest
Interest Rate Bearing
% $ $ $ $
----------------------- ----- ----------- ---------------- ---------- ------------- --------
Financial Assets
Cash and Cash
Equivalents 7 3.80% 372,479 - - 372,479
Trade and other
R eceivables 8 - - 78,719 78,719
Other Financial
Assets 9 93,748 93,748
Other assets 10 - - 16,959 16,959
Total Financial
Assets 372,479 - 189,426 561,905
---------------- ---------- ------------- --------
Financial Liabilities
Trade and other
Payables 15 - - 358,091 358,091
Equity Settled
Liabilities 16 191,000 191,000
Provisions 17 - - 20,269 20,269
---------------- ---------- ------------- --------
Total Financial
Liabilities - - 569,360 569,360
---------------- ---------- ------------- --------
Net Financial
Assets/(Liabilities) 372,479 - (379,934) (7,455)
================ ========== ============= ========
Consolidated Note Fixed Assets/ Total
2019 Weighted Funds Available Interest (Liabilities)
Average at a Floating Rate Non
Effective Interest Interest
Interest Rate Bearing
% $ $ $ $
----------------------- ----- ----------- ---------------- ---------- --------------- ----------
Financial Assets
Cash and Cash
Equivalents 7 3.80% 823,959 - - 823,959
Trade and other
R eceivables 8 - - 330,160 330,160
Other assets 10 - - 35,756 35,756
Total Financial
Assets 823,959 - 365,916 1,189,875
---------------- ---------- --------------- ----------
Financial Liabilities
Trade and other
Payables 16 - - 569,234 569,234
Provisions 17 - - 27,170 27,170
---------------- ---------- --------------- ----------
Total Financial
Liabilities - - 596,404 596,404
---------------- ---------- --------------- ----------
Net Financial
Assets/(Liabilities) 823,959 - (230,488) 593,471
================ ========== =============== ==========
27 Financial Instruments (continued)
(ii) Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date, is the carrying amount, net of any provisions for doubtful debts, as disclosed in the balance sheet and in the notes to the financial statements. The Company does not have any material credit risk exposure to any single debtor or group of debtors, under financial instruments entered into by it.
(iii) Commodity Price Risk and Liquidity Risk
At the present state of the Company's operations it has minimal commodity price risk and limited liquidity risk due to the level of payables and cash reserves held. The Company's objective is to maintain a balance between continuity of exploration funding and flexibility through the use of available cash reserves.
(iv) Net Fair Values
For assets and other liabilities, the net fair value approximates their carrying value. No financial assets and financial liabilities are readily traded on organised markets in standardised form. The Company has no financial assets where the carrying amount exceeds net fair values at balance date.
The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the balance sheet and in the notes to the financial statements.
28 Contingent Liabilities
Mosman entered into contract to sell the Welch project in West Texas for US$300,000. Total deposits were received of US$90,000. The acquirer did not pay the balance, and thus the deposit was forfeited and Mosman has banked those funds.
The acquirer is seeking to have the funds returned, which Mosman is disputing, and legal representation has been secured.
The Directors estimate the contingent liability to be in the range of US$45,000 - $60,000.
There were no other material contingent liabilities not provided for in the financial statements of the Company as at 30 June 2020.
29 Mosman Oil and Gas Limited - Parent Entity Disclosures
2020 2019
$ $
------------ ------------
Financial position
Assets
Current assets 292,130 837,100
Non-current assets 6,180,398 15,157,158
------------ ------------
Total assets 6,472,528 15,994,258
------------ ------------
Liabilities
Current liabilities 380,276 233,970
Total liabilities 380,276 233,970
------------ ------------
Net assets 6,092,252 15,760,288
============ ============
Equity
Contributed equity 30,690,829 30,164,205
Reserves 108,295 69,408
Accumulated losses (24,706,872) (14,473,325)
Total Equity 6,092,252 15,760,288
============ ============
Financial Performance
Loss for the year (1,197,064) (1,127,224)
Other comprehensive income -
------------ ------------
Total comprehensive loss (1,197,064) (1,127,224)
============ ============
30 Controlled Entities
Investments in group entities comprise:
Beneficial percentage
held by economic
Name Principal activities Incorporation entity
----------------------- ------------------------ --------------- ------------------------
2020 2019
% %
----------------------- ------------------------ --------------- ----------- -----------
Mosman Oil and Gas
Limited Parent entity Australia
Wholly owned and
controlled entities:
OilCo Pty Limited Oil & Gas exploration Australia 100 100
Trident Energy Pty
Ltd Oil & Gas exploration Australia 100 100
Mosman Oil USA, INC. Oil & Gas operations U.S.A. 100 100
Mosman Texas, LLC Oil & Gas operations U.S.A. 100 100
Mosman Operating,
LLC Oil & Gas operations U.S.A. 100 100
Mosman Oil and Gas Limited is the Parent Company of the G roup, which includes all of the controlled entities. See also Note 32 Subsequent Events for additional corporate activity in progress subsequent to the 30 June 2020 year end.
31 Share Based Payments
Consolidated Consolidated
2020 2019
$ $
Basic loss per share (cents per share) 0.50 0.20
The following share based payment arrangements existed at 30 June 2020:
Each of the three classes of unlisted options detailed below entitle the holder to acquire one Ordinary share of the Company on the terms disclosed, but do not entitle the holder to participate in any share issue or dividends of the Company and are not transferable. All options vested on the grant date and were therefore not dependent on performance. Options do not lapse on a Director leaving the Company.
(1) On 18 December 2017, 10,000,000 Options were issued to KMP to take up ordinary shares of the Company at an exercise price of 2 GB pence each. The options are exercisable on or before 15 December 2020.
(2) On 15 February 2018, 750,000 Options were issued to UK consultants involved in the AIM IPO to take up ordinary shares of the Company at an exercise price of 2 GB pence each. The options are exercisable on or before 15 February 2021.
A summary of the movements of all company option issues to 30 June 2020 is as follows:
Company Options 2020 2019 2020 2019
Number of Options Number of Options Weighted Average Weighted Average
Exercise Price Exercise Price
Outstanding at the
beginning of the year 101,659,091 14,809,372 $0.0103 $0.0516
------------------- ------------------- ------------------------ ------------------------
Expired - (4,059,372)
------------------- ------------------- ------------------------ ------------------------
Granted 200,000,000 90,909,091 $0.0041 $0.0072
------------------- ------------------- ------------------------ ------------------------
Outstanding at the end
of the year 301,659,091 101,659,091 $0.0062 $0.0103
------------------- ------------------- ------------------------ ------------------------
Exercisable at the end
of the year 301,659,091 101,659,091 $0.0062 $0.0103
------------------- ------------------- ------------------------ ------------------------
32 Events Subsequent to the End of the Financial Year
Subsequent to balance date the company notes the following material developments to the group:
1. The Stanley-4 well was drilled and has been placed on production; 2. The Stanley-1 and 2 wells were worked over;
3. The Falcon-1 well was drilled. Oil and gas were produced at rates up to 80 bopd and 2.78 mmcfd (c463 boepd) equating to a combined total of c543 boepd;
4. Planning for a workover at Greater Stanley was planned;
5. Shares that were held in the Canadian Company, Norseman Silver Inc (formerly Gem International Resources Inc) were partially sold releasing some $258,000 back into treasury;
6. A placement was completed in July 2020 and $721,000 raised; 7. Warrants to the value of $505,000 were exercised with the funds being added to treasury; 8. A further placement was completed in October 2020 and $1,645,000 raised;
9. An additional 80.83% interest was acquired in the Cinnabar Lease, bringing the Group's interest up to 97%. The lease will be operated by Mosman Operating, LLC, a wholly owned subsidiary of Mosman Oil and Gas Limited.
There have been no significant events subsequent to reporting date other than stated above.
Directors' Declaration
T he Directors of the Company de c l a re that:
1. The fin ancial s t a t e m e nts a nd not e s are in a c c o rdance with the Australian Corpo r a tions A ct 2001:
(a) comply with Accounting Standards, which, as stated in Note 1 - Statement of Accounting Policies to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and
( b) give a t rue and f a ir v i ew of the f ina n c i al pos ition as at 30 June 2020 a nd of the pe r for m a n ce f or the ye ar ended on th at date of the G r o up.
2. In the Dir ectors' opinion the re a re r e a sonable g rounds to beli eve that the C ompany will be able to pay its debts as a nd w h en they become due and pa y able.
T his d e cla r a tion is m ade in a c cordance with a r e solution of the Boa rd of Dir e c tors and is sig n ed by autho rity for a nd on be h a lf of the D i r e cto rs by:
John W Barr
Executive Chairman
24 November 2020
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