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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Range Resources Limited | LSE:RRL | London | Ordinary Share | AU0000065989 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.035 | 0.03 | 0.04 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMRRL
RNS Number : 4220C
Range Resources Limited
01 October 2018
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATIONS (EU) NO. 596/2014 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA REGULATORY INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
AUDITED ANNUAL RESULTS FOR THE 12 MONTHSED 30 JUNE 2018
Range, an international company with oil and gas projects and oilfield service businesses in Trinidad and Indonesia, today releases its Annual Report for the 12 months ended 30 June 2018. A copy of the full Annual Report is available on the Company's website www.rangeresources.co.uk and also the Australian Securities Exchange website www.asx.com.au (ASX code: RRS).
Highlights
-- Increase in production: 25% production growth in Trinidad during the year (net average production of 650 bopd);
-- Continued drilling and workover programme in Trinidad: two new wells drilled, and over 250 workovers competed;
-- Encouraging levels of production from waterflood schemes: average production for the period of 200 bopd;
-- Two new acquisitions completed: oil and gas project in Indonesia and an oilfield services business in Trinidad;
-- 3(rd) party contract wins for oilfield services business; -- Indonesia operations initiated: field operations commenced; and -- Financial:
o 55% increase in revenues to US$13.1 million (2017: US$8.4 million);
o 43% improvement in OPEX per barrel for Trinidad upstream operations to US$26/barrel (2017: US$46/barrel);
o 24% improvement in EBITDAX with loss of US$6.0 million for the year (2017: loss of US$7.9 million).
Range's Chairman, Zhiwei Gu, commented:
"After another busy period, it is our pleasure to be reporting on significant operational and financial improvements delivered by the team. Looking ahead, we remain focused on achieving long-term profitability and positive operating cashflow through growth in revenues and production whilst maintaining a tight control over costs. On behalf of the Board, I would like to express our gratitude to our stakeholders and staff for their continued commitment and hard work to maximise the value of our high-quality assets. We look forward to reporting on our progress during the year ahead."
Operational summary
During the year, the Company's focus has been on growing production from its Trinidad assets with 25% increase in production achieved during the period (total production of 237,352 barrels and average of 650 bopd net to Range). Production growth was achieved as a result of the ongoing work programme, which included drilling of two new development wells, workovers on 250 wells, and production growth from the Beach Marcelle waterflood project. The Company also completed an upgrade to its oil handling and storage facilities at the Beach Marcelle field to accommodate production growth at the field.
In addition, the Company has been focused on integrating the newly acquired oilfield services business into the Group. The acquisition is particularly significant as it allows Range to have greater control over operating and drilling costs in Trinidad and the benefits of this acquisition have already been seen with the total cost for drilling the GY684 well in late 2017 being over 1/3rd cheaper than the cost of drilling the comparable GY681 well drilled prior to the acquisition. RRDSL has also been actively marketing its services to 3(rd) parties and has generated revenues of US$0.43 million.
In Indonesia, two offices and a services company have been established. The operations at the Perlak field commenced in May 2018, with reactivations on two wells underway. The initial production and well performance are below the original expectations, however work is still underway to establish stable production.
Range also provided an update on its reserves and contingent resources for Trinidad and Indonesia for the financial year ended 30 June 2018. The total reserves (net to Range) are estimated as follows: 1P of 9.3 MMbbl, 2P of 15.2 MMbbl, and 3P of 21.9 MMbbl. The total contingent resources (net to Range) are estimated as follows: 1C of 5.8 MMboe, 2C of 12.9 MMboe and 3C of 40.7 MMboe. The full summary of the reserves and resources statement is included with this announcement.
Financial summary
Range reports a significant improvement in the financial performance for the year with a materially reduced loss after tax of US$17.5 million compared to a loss in the prior year of US$54.4 million. Whilst still disappointing to be reporting a loss, the Company believes there has been positive progress seen in several key areas, including:
-- Revenues: 55% higher at US$13.1 million (prior year US$8.4 million) with 97% of revenues coming from upstream operations;
-- Realised oil price: 25% higher at US$55.40/barrel (prior year: US$44.27/barrel); -- First revenues generated by RRDSL from 3(rd) party drilling work;
-- General and administration expenses: 21% lower at US$4.1 million (prior year US$5.2 million). This includes one-off costs of US$0.75 million related to the AIM listing process completed during the year, therefore on an underlying basis the spend was lower at US$3.3 million (36% reduction from prior year); and
-- Operating expenses for Trinidad upstream operations of US$6.2 million, representing US$26/barrel, which is a 43% improvement on prior year (prior year: US$46/barrel).
During the year, Range continued to invest in growing the asset base of the Group with US$3.9 million capital expenditure in Trinidad in drilling, waterflood and workover activity. In addition to the activity undertaken at the core Trinidad fields, the Group also completed two important acquisitions. With the Perlak field in Indonesia, Range has invested approximately US$3.8 million during the year to firstly acquire its interest and then to fund its share of the operating costs during the first year of operation.
It is important to highlight that this is the first financial year since 2013 where there has been no impairment charge recognised and the Company continues to see significant value in the Trinidad asset base which can be released in the years ahead as production growth is delivered.
Cash management remains a critical area of focus and at the period end the Group had cash on hand and other liquid assets of US$6.7 million (including a US$2.8 million refundable deposit). Post-reporting period, Range completed an equity placement raising gross proceeds of GBP 1 million.
The acquisition of RRDSL has resulted in an increase in the level of net borrowings and other interest-bearing payables to US$87 million (2017: US$61.9 million). Range continues to benefit from highly competitive terms offered by LandOcean across the various funding arrangements with no security provided over any assets, no financial covenants or restrictive controls in place, no amortisation due until maturity and a competitive interest rate of between 6-8% pa. The first repayment is due at the end of November 2019 and Range has held initial discussions with LandOcean regarding potential refinancing options. The Company will be considering the most appropriate means to repay or refinance the balance during the coming months.
Outlook
The upcoming work programme in Trinidad is principally focused on completing the upgrades to sales infrastructure at the Beach Marcelle field. Once this work has been completed, Range will be in a position to grow production through new drilling activity and other field work. Regrettably, the infrastructure upgrade programme is running behind the original schedule and Range currently anticipates this will not be fully completed until late 2018 / early 2019.
Once most of the upgrades are completed, the Company can commence drilling a new development well at the Beach Marcelle field (the GY684 400'NE well). Range has already commenced initial planning work for this well and received the relevant government approvals with the intention to commence drilling operations in December 2018. It is currently expected that the second development well will be drilled in 2019. As part of the ongoing optimization programme, the Company will also be undertaking workovers on approximately 50 wells.
In addition, the Company is planning to undertake expansion of the Beach Marcelle waterflood project to incorporate more producer and injector wells. The programme is expected to deliver enhanced production during early 2019. The Company has already commenced data collection on some of the selected wells as part of expansion programme.
Range is also acquiring a new geological tool which will be instrumental in developing an extensive, shallow well drilling programme initially focused on the Morne Diablo field. This new tool is an enhanced version of the stratagem tool which was used very successfully by Range in the past and Range expects to receive the new tool later this year.
The delay to the infrastructure programme and the knock-on delay to drilling will clearly have an impact upon production growth and Range no longer expects to achieve its previous target of 1,000 bopd by the end of 2018. Range remains focused on seeking sustainable production growth from its Trinidad operations but given the anticipated timeline for infrastructure works and drilling, it will be into 2019 until that growth can be achieved.
In Indonesia, Range intends to undertake G&G studies to improve reservoir understanding and to assist in establishing a longer-term development plan for the field. Given that the results from the reactivation programme on two wells are below the original expectations, the Company does not believe the previous production guidance from Indonesian project of 200 bopd (gross) by the end of 2018 is achievable.
RRDSL has got off to an encouraging start to the FY2019 with 3rd party turnover year to date already in excess of the full year results for 2018. The focus for RRDSL remains securing 3(rd) party work and the Company is encouraged by the pipeline of drilling activity anticipated across both Trinidad and the wider Caribbean/Latin America region.
The Company will continue to provide updates on the progress of its operations as appropriate.
Reserves & resources and financial statements
Included with this announcement is a summary of Range's Reserves and Resources statement and Full Year Audited Annual Accounts for the year ended 30 June 2018 as extracted from the Annual Report, being:
Hot Features
Premium
- Reserves and resources statement;
- Consolidated Statement of Profit or Loss and Other Comprehensive Income;
- Consolidated Statement of Financial Position;
- Consolidated Statement of Changes in Equity;
- Consolidated Statement of Cashflows; and
- Notes to Financial Statements.
Contact Details
Cantor Fitzgerald Europe (Nominated
Range Resources Limited Adviser and Broker)
Evgenia Bezruchko (Group Corporate David Porter / Nick Tulloch (Corporate
Development Manager) Finance)
e. admin@rangeresources.co.uk t. +44 (0)20 7894 7000
t. +44 (0)20 3865 8430
Qualified person review
In accordance with AIM Rules, Guidance for Mining and Oil & Gas Companies, the information contained in this announcement has been reviewed and approved by Mr Lubing Liu. Mr Liu is a suitably qualified person with 23 years of industry experience. Mr Liu is a full-time employee of Range and holds a role of a Chief Operating Officer and Trinidad General Manager. He holds a BSc in Petroleum Engineering from the Southwest Petroleum University, China and is a member of the SPE (Society of Petroleum Engineers). Mr Liu is qualified in accordance with ASX listing rule 5.41 and consents to the use of petroleum reserve and resource figures in the form and context in which they appear in this statement.
Glossary - SPE Definitions
MMbbl - Million Barrels of Oil.
MMboe - Million Barrels of Oil Equivalent.
Proved Reserves are those quantities of petroleum, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations. Probable Reserves are those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves.
1P - Proved Reserves. Probability of success 90%.
2P - Proved plus Probable Reserves. Probability of success 50%.
3P - Proved, plus Probable, plus Possible Reserves. Probability of success 10%.
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by their economic status.
1C - a low estimate category of Contingent Resources.
2C - a best estimate category of Contingent Resources.
3C - a high estimate category of Contingent Resources.
Note relating to statutory disclosure of significant shareholdings
Statutory disclosure of significant shareholdings (as defined in the AIM Rules) is different for Australian companies and may not always ensure compliance with the requirements of Rule 17 of the AIM Rules. All shareholders who are holding (directly or indirectly), 3% or more of the issued and outstanding Ordinary Shares are requested to notify the Company without delay of any changes to their holding which increase or decrease such holding through any single percentage. Likewise, shareholders who acquire 3% or more of the issued and outstanding Ordinary Shares are requested to notify the Company without delay.
+ Reserves and Resources Statement
Reserves
As at 30 June 2018, Range's net proved and probable reserves (2P) are assessed to be 15.2 million barrels of oil (MMbbl). The key factors attributing to the revision in reserves are:
-- Production during the period; and -- Amended timing for waterflood activity and drilling.
Reserves as at 30 June 2018 (MMbbl):
Category Proved (1P) Proved & probable Proved, probable
(2P) & possible (3P)
Developed 3.1 4.9 6.4
------------ ------------------ -----------------
Undeveloped 6.2 10.3 15.5
------------ ------------------ -----------------
Total 9.3 15.2 21.9
------------ ------------------ -----------------
1. The reserve figures (1P, 2P and 3P) include reserves associated with the Company's Morne Diablo, South Quarry and Beach Marcelle licences in Trinidad. Range's net interest in all three fields is 100%.
2. Competent Persons Report ("CPR") prepared by Rockflow Resources Ltd, effective 30 June 2017 was used as a basis for estimation of the reserve figures.
3. Range's Morne Diablo and South Quarry fields are operated under farm-out agreements, with rights to production net of Trinidad government royalties, overriding royalties, and production taxes.
4. Range's Beach Marcelle field is operated under the terms of an Incremental Production Service Contract, entitling Range to a defined portion of the future revenue stream. No oil and gas reserves are owned by Range.
Movement in reserves (MMbbl):
Category Proved (1P) Proved & probable Proved, probable
(2P) & possible (3P)
Reserves as
at 30 June
2017 10.0 16.0 22.9
------------ ------------------ -----------------
FY 2018 production -0.2 -0.2 -0.2
------------ ------------------ -----------------
Revisions -0.5 -0.6 -0.8
------------ ------------------ -----------------
Reserves as
at 30 June
2018 9.3 15.2 21.9
------------ ------------------ -----------------
Contingent resources
As at 30 June 2018, Range's net contingent resources 2C (P50) are assessed to be 12.9 million barrels of oil equivalent (MMboe). The key factor attributing to the increase in contingent resources is the inclusion of the Indonesia assets.
Contingent resources as at 30 June 2018:
Category 1C 2C 3C
Project Gas Oil Total Gas Oil Total Gas Oil Total
Bscf MMbbl MMboe Bscf MMbbl MMboe Bscf MMbbl MMboe
------ ------- ------- ------ ------- ------- ------ ------- -------
Trinidad
(net 100
%) - 4.6 4.6 - 8.0 8.0 - 15.4 15.4
------ ------- ------- ------ ------- ------- ------ ------- -------
Indonesia
(net 23%) 1.7 0.9 1.2 10.9 3.1 4.9 41.1 18.4 25.3
------ ------- ------- ------ ------- ------- ------ ------- -------
Total 1.7 5.5 5.8 10.9 11.1 12.9 41.1 33.8 40.7
------ ------- ------- ------ ------- ------- ------ ------- -------
1. The Trinidad resource figures (1C, 2C and 3C) include contingent resources associated with the Company's Morne Diablo, South Quarry and Beach Marcelle licences in Trinidad. Range's net interest in all three fields is 100%.
2. The Trinidad resource figures are based on the CPR prepared by Rockflow Resources Ltd, effective 30 June 2017.
3. The Indonesia resource figures (1C, 2C and 3C) include contingent resources associated with the Company's interest in the Perlak field. Range's net interest is 23%.
4. The Indonesia resource figures are based on the CPR prepared by LEAP Energy Partners Sdn. Bhd, effective 1 August 2017.
5. The interest in the Indonesia project was acquired during FY2018, therefore contingent resources for FY2017 do not include Indonesia resources.
6. The conversion factor used for converting gas to oil equivalent volumes is 6,000 scf to 1 boe.
Movement in contingent resources (MMboe):
Category 1C 2C 3C
Contingent resources
as at 30 June
2017 4.6 8.0 15.4
----- ----- ------
Revisions +1.2 +4.9 +25.3
----- ----- ------
Contingent resources
as at 30 June
2018 5.8 12.9 40.7
----- ----- ------
Notes on calculation of reserves and resources
-- The reserves and resources stated in this report are prepared in accordance with the definitions and guidelines in the Society of Petroleum Engineers (SPE) 2007 Petroleum Resources Management System (PRMS).
-- Range reviews and updates its oil and gas reserves and resources position on an annual basis and reports the updated estimates as of 30 June each year. Separately, Range reviews and updates its oil and gas reserves and resources position as frequently as required by the magnitude of the petroleum reserves and resources and changes indicated by new data.
-- The reserve and resource figures are reported according to Range's net economic interest, net of royalties and net of lease fuel up to the reference point.
-- The reference point defined as the point of sale to third parties.
-- Petroleum reserves and resources are prepared using deterministic and probabilistic methods.
-- Project and field totals are aggregated by arithmetic summation by category. -- Totals may not exactly reflect arithmetic addition due to rounding.
-- Oil and gas reserves estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates that were valid when originally calculated may alter significantly when new information or techniques become available. Additionally, by their very nature, reserve and resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional drilling and analysis, the estimates are likely to change. This may result in alterations to development and production plans which may, in turn, adversely impact the Company's operations. Reserves estimates and estimates of future net revenues are, by nature, forward looking statements and subject to the same risks as other forward-looking statements.
+ Consolidated Statement of Profit or Loss and other Comprehensive Income for the year ended 30 June 2018
The below consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
Note Consolidated
====================================== ==== ==========================
2018 (US$) 2017 (US$)
====================================== ==== ============ ============
Revenue from continuing operations 3 13,059,422 8,435,309
==== ============ ============
Operating expenses (10,769,092) (8,770,969)
==== ============ ============
Royalties (4,605,811) (2,494,497)
==== ============ ============
Depreciation, depletion and
amortisation (4,950,666) (6,289,324)
==== ============ ============
Cost of sales 4a (20,325,569) (17,554,790)
==== ============ ============
Gross loss (7,266,147) (9,119,481)
==== ============ ============
Other income and expenses from continuing operations
Other income 3 421,897 174,367
==== ============ ============
Finance costs 4b (3,094,795) (3,806,226)
==== ============ ============
General and administration expenses 4c (4,102,712) (5,223,721)
==== ============ ============
Exploration expenditure and
land fees 4d (1,946,306) (1,152,854)
==== ============ ============
Impairment of non-current assets 15 - (28,985,014)
==== ============ ============
Loss before income tax expense
from continuing operations (15,988,033) (48,112,929)
==== ============ ============
Income tax expense 6 (1,542,204) (4,999,950)
==== ============ ============
Loss after income tax from continuing
operations (17,530,237) (53,112,879)
==== ============ ============
Loss from discontinued operations,
net of tax 5 - (1,250,000)
==== ============ ============
Loss for the year attributable
to equity holders of Range Resources
Limited (17,530,237) (54,362,879)
==== ============ ============
Other comprehensive income
Items that may be reclassified
to profit or loss
==== ============ ============
Exchange differences on translation
of foreign operations 25c (1,423,892) 2,144,373
==== ============ ============
Other comprehensive loss for
year, net of tax (1,423,892) 2,144,373
==== ============ ============
Total comprehensive loss attributable
to equity holders of Range Resources
Limited (18,954,129) (52,218,506)
==== ============ ============
Loss per share from continuing operations attributable to the
ordinary equity holders of the Company:
Basic loss per share (cents
per share) 8a (0.23) (0.68)
==== ============ ============
Diluted loss per share (cents 8b n/a n/a
per share)
==== ============ ============
Loss per share attributable to the ordinary equity holders
of the Company:
Basic loss per share (cents
per share) 8a (0.23) (0.70)
==== ============ ============
Diluted loss per share (cents 8b n/a n/a
per share)
==== ============ ============
+ Consolidated Statement of Financial Position as at 30 June 2018
The below consolidated statement of financial position should be read in conjunction with the accompanying notes.
Note Consolidated
==================================== ==== ============================
2018 (US$) 2017 (US$)
==================================== ==== ============= =============
Assets
Current Assets
Cash and cash equivalents 9 3,945,683 17,254,360
==== ============= =============
Trade and other receivables 10 4,875,766 5,740,726
==== ============= =============
Inventory 11 3,277,096 2,353,143
==== ============= =============
Other current assets 11 3,054,911 233,140
==== ============= =============
Total current assets 15,153,456 25,581,369
==== ============= =============
Non-Current Assets
Trade and other receivables 10 2,251,384 6,866,394
==== ============= =============
Deferred tax asset 6c 13,517,531 6,853,135
==== ============= =============
Available for sale financial assets 13 - 45,238
==== ============= =============
Goodwill 15 3,241,472 -
==== ============= =============
Property, plant and equipment 16 25,489,614 2,021,682
==== ============= =============
Exploration assets 17 6,744,997 632,176
==== ============= =============
Producing assets 18 109,091,650 108,347,455
==== ============= =============
Total non-current assets 160,336,648 124,766,080
==== ============= =============
Total assets 175,490,104 150,347,449
==== ============= =============
Current liabilities
Trade and other payables 19 9,929,506 1,613,499
==== ============= =============
Current tax liabilities 246,917 283,220
==== ============= =============
Borrowings 20 1,600,000 -
==== ============= =============
Option liability 20b 33,345 341,618
==== ============= =============
Provisions 21 811,737 784,316
==== ============= =============
Total current liabilities 12,621,505 3,022,653
==== ============= =============
Non-current liabilities
Trade and other payables 19 50,441,779 51,390,088
==== ============= =============
Borrowings 20 42,439,606 21,071,631
==== ============= =============
Deferred tax liabilities 22 64,761,942 54,500,144
==== ============= =============
Employee service benefits 23 731,350 340,289
==== ============= =============
Total non-current liabilities 158,374,677 127,302,152
==== ============= =============
Total liabilities 170,996,182 130,324,805
==== ============= =============
Net assets 4,493,922 20,022,644
==== ============= =============
Equity
Contributed equity 24 383,918,397 383,918,397
==== ============= =============
Reserves 25 24,822,953 26,339,311
==== ============= =============
Non-controlling interest 17 3,517,873 -
==== ============= =============
Accumulated losses (407,765,301) (390,235,064)
==== ============= =============
Total equity 4,493,922 20,022,644
==== ============= =============
+ Consolidated Statement of Changes in Equity for the year ended 30 June 2018
The below consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Note Contributed Accumulated Foreign Share-based Option Non-controlling Total equity
equity losses currency payment premium interests
translation reserve reserve
reserve
============== ==== =========== ============= ============ =========== ========== =============== ============
(US$) (US$) (US$) (US$) (US$) (US$)
============== ==== =========== ============= ============ =========== ========== =============== ============
Balance at
1 July 2016 383,882,192 (335,872,185) 3,620,738 8,549,024 12,057,363 - 72,237,132
==== =========== ============= ============ =========== ========== =============== ============
Other
comprehensive
income - 2,144,373 - - - 2,144,373
==== =========== ============= ============ =========== ========== =============== ============
Loss
attributable
to members
of the
company - (54,362,879) - - - - (54,362,879)
==== =========== ============= ============ =========== ========== =============== ============
Total
comprehensive
loss for the
year - (54,362,879) 2,144,373 - - - (52,218,506)
==== =========== ============= ============ =========== ========== =============== ============
Transactions with owners in their capacity as owners:
Issue of share
capital 24 36,205 - - - - - 36,205
==== =========== ============= ============ =========== ========== =============== ============
Cost of
share-based
payments - - - (32,187) - - (32,187)
==== =========== ============= ============ =========== ========== =============== ============
Balance at
30 June 2017 383,918,397 (390,235,064) 5,765,111 8,516,837 12,057,363 - 20,022,644
==== =========== ============= ============ =========== ========== =============== ============
Balance at
1 July 2017 383,918,397 (390,235,064) 5,765,111 8,516,837 12,057,363 - 20,022,644
Other comprehensive
income - - (1,423,892) - - - (1,423,892)
=========== ============= =========== ========= ========== ========= ============
Loss attributable
to members
of the company - (17,530,237) - - - - (17,530,237)
=========== ============= =========== ========= ========== ========= ============
Total comprehensive
loss for the
year - (17,530,237) (1,423,892) - - - (18,954,129)
=========== ============= =========== ========= ========== ========= ============
Transactions with owners in their capacity as owners:
Issue of share
capital 24 - - - - - - -
=========== ============= =========== ========= ========== ========= ============
Cost of share-based
payments 4 - - - (92,466) - - (92,466)
=========== ============= =========== ========= ========== ========= ============
Non-controlling
interests on
acquisition
of subsidiary 17 - - - - - 3,517,873 3,517,873
=========== ============= =========== ========= ========== ========= ============
Balance at
30 June 2018 383,918,397 (407,765,301) 4,341,219 8,424,371 12,057,363 3,517,873 4,493,922
=========== ============= =========== ========= ========== ========= ============
+ Consolidated Statement of Cash Flows for the year ended 30 June 2018
The below consolidated statement of cashflows should be read in conjunction with the accompanying notes
Note Consolidated
--------------------------------------- ------ --------------------------
2018 (US$) 2017 (US$)
--------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Receipts from customers 6,580,150 8,531,655
------ ------------ ------------
Payments to suppliers and employees (9,868,121) (6,255,175)
------ ------------ ------------
Income taxes received 1,954,339 (958,253)
------ ------------ ------------
Interest received 115,477 85,123
------ ------------ ------------
Payment for exploration expenditure (1,253,329) -
------ ------------ ------------
Net cash inflow/(outflow) from
operating activities 29 (2,471,484) 1,403,350
------ ------------ ------------
Cash flows from investing activities
Cash acquired on business combination 15(a) 357,940 -
------ ------------ ------------
Payment for property, plant &
equipment 16 (254,088) (4,363)
------ ------------ ------------
Payment for asset acquisition 17(i) (2,560,000) -
------ ------------ ------------
Proceeds from disposal of property,
plant and equipment 19,061 63,106
------ ------------ ------------
Transfer from/(to) restricted
deposit - 8,000,000
------ ------------ ------------
Payments for available for sale
assets - (6,830)
------ ------------ ------------
Payments for loan to external
parties (4,047,630) (5,153,759)
------ ------------ ------------
Net cash inflow/(outflow) from
investing activities (6,484,717) 2,898,154
------ ------------ ------------
Cash flows from financing activities
On-demand refundable payment
to LandOcean 11 (2,800,000) -
------ ------------ ------------
Repayment of borrowings - convertible
note interest 20 (1,600,000) -
------ ------------ ------------
Net cash inflow/(outflow) from (4,400,000) -
financing activities
------ ------------ ------------
Net increase/(decrease) in cash
and cash equivalents (13,356,201) 4,301,504
Net foreign exchange differences 47,524 (48,396)
------------- -----------
Cash and cash equivalents at
beginning of financial year 17,254,360 13,001,252
------------- -----------
Cash and cash equivalents at
end of financial year 9 3,945,683 17,254,360
------------- -----------
+ Notes to Consolidated Financial Statements
Note 1: Significant accounting policies
These financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Range Resources Limited is a for-profit entity for the purpose of preparing the financial statements.
The financial statements cover the Group consisting of Range Resources Limited and its controlled entities. Financial information for Range Resources Limited as an individual entity is disclosed in Note 32. Range Resources Limited is a listed public company, incorporated and domiciled in Australia.
The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated. The financial report was authorised for issue by the Directors on 28 September 2018.
Basis of preparation
Reporting basis and conventions
The financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied.
Compliance with IFRS
The financial statements of Range Resources Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The financial statements were approved by the Board of Directors on 28 September 2018.
Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "Functional Currency"). The consolidated financial statements are presented in United States Dollars (USD), which is Range Resources Limited's functional and presentation currency.
Going concern
This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.
For the year ended 30 June 2018 the Group recorded a loss of US$17,530,237 (2017: US$54,362,879) and had net cash outflows of US$13,356,201 (2017: cash inflows of
Note 1: Significant accounting policies (continued)
US$4,301,504). At June 2018, the Group had a working capital surplus of US$2,531,951 (2017: surplus of US$22,558,716).
The aility of the Group to continue as a going concern is dependent on securing additional funding through the issue of shares and/or debt to fund its operational activities and to finance the repayment of debt and payable obligation to LandOcean as this falls due.
These conditions indicate a material uncertainty that may cast a significant doubt about the Group's ability to continue as a going concern and, therefore, it may be unable to realise its assets and discharge its liabilities in the normal course of business.
At the reporting date, Range had US$3,945,683 of unrestricted cash at bank and an on-demand cash receivable from LandOcean of US$2,800,000 as explained in Note 11.
Subsequent to the year end, Range Resources Limited announced a subscription for new ordinary shares to raise US$1,300,000 million before expenses.
Management believe there are sufficient funds to meet the Group's working capital requirements as at the date of this report.
The Company will continue to focus its capital allocation on assets which maximise production and enhance cash generation and returns to shareholders.
Should the Company not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or liabilities that might be necessary should the Company not continue as a going concern.
Adoption of new and revised accounting standards
In the year ended 30 June 2018, the directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current annual reporting period.
As a result of this review, the directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Company and, therefore, no material change is necessary to Group accounting policies.
(a) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Range Resources Limited ("Parent Entity" or "Company") as at 30 June 2018 and the results of all subsidiaries for the year then ended. Range Resources Limited and its subsidiaries together are referred to as the "Group".
Subsidiaries are all those entities (including special purpose entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its investment with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Where controlled entities have entered or left the Group during the year, their operating results have been included/excluded from the date control was obtained or until the
Note 1: Significant accounting policies (continued)
date control ceased. A list of controlled entities is contained in Note 14 to the financial statements. All controlled entities have a 30 June financial year-end.
All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the Group.
Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a shareholding of between 20-50% of the voting rights. Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost.
(b) Income tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date within each jurisdiction.
Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is credited in profit or loss except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
Note 1: Significant accounting policies (continued)
(c) Property, plant and equipment
Owned assets
Plant and equipment are measured on the historical cost basis less accumulated depreciation and impairment losses.
The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Oil and gas assets
These properties represent the accumulation of all exploration, evaluation and development expenditure, pre-production development costs and ongoing costs of continuing the develop reserves for production incurred by or on behalf of the entity in relation to areas of interests.
Where further development expenditure is incurred in respect of a property after the commencement of production, such expenditure is carried forward as part of the cost of that property only when expected future economic benefits are to be received, otherwise such expenditure is classified as part of the cost of production.
Depreciation
The depreciable amount of all fixed assets including capitalised lease assets is depreciated on a straight-line basis over their useful lives to the 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.
The depreciation rates used for each class of depreciable asset are:
Class of fixed Asset Depreciation Rate
Plant & equipment 11.25% - 33%
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Production equipment 10 - 20%
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Motor vehicles, furniture &
fixtures 25 - 33%
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Leasehold improvements 10 - 12.50%
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The residual values of the assets and their useful lives are reviewed and adjusted if appropriate at each reporting date.
The carrying amount of plant and equipment is reviewed annually by the 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 which will be received from the employment of the assets and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.
The carrying amount of the asset is written down to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.
Note 1: Significant accounting policies (continued)
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in profit or loss. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to accumulated losses.
(d) Exploration and evaluation expenditure and the recognition of assets
Acquisition costs for exploration and evaluation projects are accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area 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.
The recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.
The carrying values of expenditures carried forward are reviewed for impairment at each reporting date when the facts, events or changes in circumstances indicate that the carrying value may be impaired.
Accumulated expenditures are written off to profit or loss to the extent to which they are considered to be impaired.
The group applies AASB 6 Exploration and Evaluation of Mineral Resources which is equivalent to IFRS 6. The carrying value of exploration and evaluation expenditure is historical cost less impairment.
Ongoing exploration costs incurred in respect of the Group's Trinidadian and Indonesian interests are expensed as incurred. Initial acquisition costs to obtain the right to explore are capitalised.
(e) Producing assets
Upon the commencement of commercial production from each identifiable area of interest, the exploration and evaluation expenditure incurred up to that point is impairment tested and then reclassified to producing assets.
When production commences, the accumulated costs for the relevant area of interest are amortised on a "units of production" method which is based on the ratio of actual production to remaining proved and probable reserves (1P) as estimated by independent petroleum engineers over the life of the area according to the rate of depletion of the economically recoverable reserves.
Subsequent costs such as workovers, are included in the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured. All other costs are charged to profit or loss during the financial period in which they are incurred.
Note 1: Significant accounting policies (continued)
The carrying amount of producing assets is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount of an asset is the greater of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows of an asset are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash flows that are largely independent from other assets or groups of assets, the recoverable amount is determined for the cash generating unit to which the asset belongs. For producing assets, the estimated future cash flows for the value-in-use calculation are based on estimates, the most significant of which are 2P hydrocarbon reserves, future production profiles, commodity prices, operating costs and any future development costs necessary to produce the reserves which the group is committed. Under a fair value less costs to sell calculation, future cash flows are based on estimates of 2P hydrocarbon reserves. Estimates of future commodity prices are based on the Group's best estimate of future market prices with reference to external market analysts' forecasts, current spot prices and forward curves. Future commodity prices are reviewed at least annually.
The carrying amount of an asset is written down to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in profit or loss. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to accumulated losses.
The Group records the present value of the estimated cost of legal and constructive obligations to restore operating locations in the period in which the obligation arises. The nature of restoration activities includes the removal of facilities, abandonment of wells and restoration of affected areas. A restoration provision is recognised and updated at different stages of the development and construction of a facility and then reviewed on an annual basis. When the liability is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related exploration and evaluation/development assets.
Over time, the liability is increased for the change in the present value based on a post-tax discount rate appropriate to the risk inherent in the liability. The unwinding of the discount is recorded as an accretion charge within finance costs. The carrying amount capitalised in oil and gas properties is depreciated over the useful life of the related asset.
Costs incurred that relate to an existing condition caused by past operation and do not have a future economic benefit are expensed.
(f) Financial instruments
The Group's financial instruments include cash and cash equivalents, trade and other receivables and available-for-sale financial assets.
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition, these instruments are measured as set out below.
Note 1: Significant accounting policies (continued)
The Group classifies its financial assets in the following categories: loans and receivables and available-for-sale investments. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.
Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets designated in this category not included in any of the other categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to the available for sale investment revaluation reserve in equity. Investments are designated as available-for-sale if they do not have fixed maturities and fixed determinable payments and management intends to hold them for the medium to long term.
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 held at cost less impairment, including recent arm's length transactions, reference to similar instruments and option pricing models.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in the available for sale investment revaluation reserve in equity. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in equity.
Impairment of assets
The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss) is removed from equity and included in profit or loss. Impairment losses recognised in the statement of profit or loss and other comprehensive income on equity instruments classified as available-for-sale are not reversed through profit or loss.
Note 1: Significant accounting policies (continued)
Recognition and de-recognition
Regular purchases and sales of financial assets are recognised on trade-date - the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets are de-recognised 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 reward of ownership.
When the securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in profit or loss as gains and losses for investment securities.
(g) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each entity within the Group is determined using the currency of the primary economic environment in which that entity operates.
Transaction and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in profit or loss.
(h) Provisions
Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects the current market assessments of the time value of money and the risk specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
Note 1: Significant accounting policies (continued)
(i) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.
(j) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Group will not be able to collect all amounts due, according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
The amount of impairment loss is recognised in profit or loss within other expenses. When a trade receivable, for which an impairment allowance had been recognised, becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.
(k) Revenue recognition
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. Revenue is recognised when the amount of revenue can be reliably measured, and it is probable that future economic benefits will flow to the Group.
Revenue from the sale of oil and gas and related products is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership and the amounts can be measured reliably. In the case of oil, this usually occurs at the time of lifting.
Interest revenue is recognised on a time proportion basis taking into account the interest rates applicable to the financial assets.
(l) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as
Note 1: Significant accounting policies (continued)
part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.
Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
(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) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash follows at the current market interest rate that is available to the Group for similar financial instruments.
(o) Investments in associates
Investments in associates are accounted for using the equity method of accounting in the consolidated financial statements.
Under the equity method, the investment in the associate is carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Group's share of net assets of the associate.
After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group's net investment in the associate.
The Group's share of the associate post-acquisition profits or losses is recognised in the statement of profit or loss and other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group's share of losses in the associate equals or exceeds its interest in the associate, including any unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
Note 1: Significant accounting policies (continued)
The reporting dates of the associate and the Group are identical and the associate's accounting policies conform to those used by the Group for like transactions and events in similar circumstances.
(p) Prepayments for investments
Prepayments for acquisitions of financial assets are recorded at the fair value of consideration to acquire the assets.
On satisfaction of all terms of the acquisition contract have been satisfied the prepayment is transferred and accounted for as an investment.
(q) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition unless alternative terms are agreed. The Group's most material balance is with LandOcean which has specific payment terms of 3 years.
(r) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at reporting date.
(s) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(t) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares.
(u) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer.
Note 1: Significant accounting policies (continued)
(v) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which they are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
(w) Intangible assets (goodwill)
Goodwill is measured at cost less any impairment write downs. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segments (note 28).
(x) Share-based payments
The fair value of options granted is recognised as an expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions.
(y) Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits are recognised in current liabilities 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.
Long service benefit
The liability for long service benefit is recognised in current and non-current liabilities, depending on the unconditional right to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to
Note 1: Significant accounting policies (continued)
expected future wage and salary levels, experience of employee departures and periods of service.
(z) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the company will obtain ownership at the end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.
(aa) Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classified as non-current.
(bb) Compound financial instruments
Compound financial instruments issued by the Group comprise convertible notes that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed.
The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition.
Note 1: Significant accounting policies (continued)
Interest related to the financial liability is recognised in profit or loss. On conversion the financial liability is reclassified to equity and no gain or loss is recognised.
Convertible notes that can be converted to share capital at the option of the holder and where the number of shares is variable, contains an embedded derivative liability. The embedded derivative liability is calculated (at fair value) first and the residual value is assigned to the debt host contract. The embedded derivative is subsequently measured at fair values and movements are reflected in the profit or loss.
Certain convertible notes issued by the Group which include embedded derivatives (option to convert to variable number of shares in the Group) are recognised as financial liabilities at fair value through profit or loss. On initial recognition, the fair value of the convertible note will equate to the proceeds received and subsequently the liability is measured at fair value at each reporting period until settlement. The fair value movements are recognised on the profit or loss as finance costs.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.
(cc) Non-current assets classified as held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. They are measured at the lower of their carrying amount and fair value less costs to sell. For non-current assets to be classified as held for sale, they must be available for immediate sale in their present condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non-current assets to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of a non-current asset, but not in excess of any cumulative impairment loss previously recognised.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognised.
Non-current assets classified as held for sale are presented separately on the face of the consolidated statement of financial position, in current assets. The liabilities of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current liabilities.
(dd) Discontinued operations
A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:
-- represents a separate major line of business or geographical area of operations
-- is part of a single co-ordinated plan to dispose of a separate major line of business or geographical are of operations
-- is a subsidiary acquired exclusively with a view to resale.
Note 1: Significant accounting policies (continued)
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative consolidated statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative year.
(ee) Inventories
Inventories include consumable supplies and maintenance spares and are valued at the lower of cost and net realisable value. Cost is determined on a weighted average basis and includes direct costs and an appropriate portion of fixed and variable production overheads where applicable. Inventories determined to be obsolete or damaged are written down to net realisable value, being the estimated selling price less selling costs.
Note 2: Critical accounting estimates and judgements
The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Areas involving a higher degree of judgement or complexity, or areas where estimations and assumptions are significant to the financial statements are disclosed here.
Producing asset expenditure
The classification of exploration and evaluation expenditure to producing assets is based on the time of first commercial production. Producing asset expenditure for each area of interest is carried forward as an asset provided certain conditions listed in Note 1(e) are met and depreciated on a unit of production basis on P1 reserves. P1 reserves have been determined by an independent expert.
Producing assets are assessed for impairment when facts and circumstances suggest that the carrying amount of a production asset may exceed its recoverable amount. These timings, calculations and reviews require the use of assumptions and judgement. The related carrying amounts are disclosed in Note 18.
Reserves and resources
Estimates of reserves requires judgement to assess the size and quality of reservoirs and their anticipated recoveries. Estimates of reserves are used to calculate depreciation, depletion and amortisation charges.
Impairment of goodwill and producing assets
The Group tests whether goodwill or the producing assets has suffered any impairment in accordance with the accounting policies stated in notes 1(e) and 1(w). The recoverable amount of the cash-generating unit to which the assets belong is estimated based on the present value of future cash flows.
The expected future cash flow estimation is always based on a number of factors, variables and assumptions, the most important of which are estimates of reserves, future production profiles, commodity prices and costs. In most cases, the present value of future cash flows is most sensitive to estimates of future oil price and discount rates. A
Note 2: Critical accounting estimates and judgements (continued)
change in the modelled assumptions in isolation could materially change the recoverable amount. Refer to note 15 for details of these key assumptions.
Deferred tax liability
Upon acquisition of SOCA Petroleum Ltd in June 2011, in accordance with the requirement of AASB 112 Income Taxes, a deferred tax liability of US$46,979,878 was recognised in relation to the difference between the carrying amount for accounting purposes of deferred development assets and their actual cost base for tax purposes.
The carrying value of this deferred tax liability is US$28,429,185 at 30 June 2018. In the event that the manner by which the carrying value of these assets is recovered differs from that which is assumed for the purpose of this estimation, the associated tax charges may be significantly less than this amount.
Recoverability of deferred tax assets
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Management considers that it is probable that future taxable profits will be available to utilise those temporary differences. Judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future profits.
Fair value of assets acquired and liabilities assumed in business combination
Identifiable assets acquired and liabilities assumed in business combination are measured at their fair values at the acquisition date.
Share based payments transactions
The Group measures the cost of equity-settled share-based payment transactions with employees by reference to the fair value of the equity instruments at the grant date. The fair value is determined using a Black-Scholes model. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and derivative liability.
Contingent liabilities
The Directors are of the opinion that no provision is required to be raised in respect to any of the matters disclosed in Note 27 as the likely outcome of any outflow is considered to be remote.
Recoverability of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices. To the extent that capitalised exploration
Note 2: Critical accounting estimates and judgements (continued)
and evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period in which this determination is made.
Note 3: Revenue
Note Consolidated
----------------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
----------------------------------- ------ ----------- -----------
From continuing operations
Revenue from sale of oil 12,629,996 8,435,309
----------- -----------
Revenue from third party services 429,426 -
------ ----------- -----------
Total revenue from continuing
operations 13,059,422 8,435,309
----------- -----------
Other income
Interest income 240,390 78,021
----------- -----------
Other income 181,507 96,346
----------- -----------
Total other income 421,897 174,367
----------- -----------
Note 4: Expenses
Note Consolidated
-------------------------------------- ------ -------------------------
2018 (US$) 2017 (US$)
-------------------------------------- ------ ------------ -----------
Loss before income tax includes the following specific expenses:
a: Cost of sales
Costs of production 6,688,758 6,613,133
------ ------------ -----------
Royalties 4,605,811 2,494,497
------ ------------ -----------
Staff costs 4,080,334 2,157,836
------ ------------ -----------
Oil and gas properties depreciation,
depletion and amortisation 4,950,666 6,289,324
------ ------------ -----------
Total cost of sales 20,325,569 17,554,790
------ ------------ -----------
b: Finance costs
Fair value movement of derivative
liability (2,308,556) (786,021)
------ ------------ -----------
Fair value movement of option
liability 20(b) (308,273) (494,096)
------ ------------ -----------
Foreign exchange loss 193,109 1,362,426
------ ------------ -----------
Interest expense 3,209,959 2,119,996
------ ------------ -----------
Interest on convertible note 2,308,556 1,871,318
------ ------------ -----------
Other finance income - (267,397)
------ ------------ -----------
Total finance costs 3,094,795 3,806,226
------ ------------ -----------
-
-------------------------------------- ------ ------------ -----------
c: General and administration expenses
Directors' and officers' fees
and benefits 840,599 1,097,029
------ ------------ -----------
Share based payments - employee,
director and consultant options (92,466) (32,187)
------ ------------ -----------
Other expenses 3,354,579 4,158,879
------ ------------ -----------
Total general and administration
expenses 4,102,712 5,223,721
------ ------------ -----------
Note 4: Expenses (continued)
d: Exploration expenditure
Indonesia (i) 1,253,329 -
---------- ----------
Trinidad (ii) 670,856 822,383
---------- ----------
Other 22,121 330,471
---------- ----------
Total exploration expenditure 1,946,306 1,152,854
---------- ----------
(i) Amounts expensed in the year in Indonesia relate to exploration activities in the Perlak field for which the company policy is to expense.
(ii) Amounts expensed in the year in Trinidad relate to land fees in relation to St Mary's for which the company policy is to expense.
Note 5: Discontinued operations
During 2017 the Group fully wrote down the asset held-for-sale which relates to 45% interest in the unlisted company Strait Oil & Gas Limited ("Strait") due to uncertainty over its recoverability.
Note Consolidated
------------------------------------ ------ --------------------------
2018 (US$) 2017 (US$)
------------------------------------ ------ ------------ ------------
a: Results of discontinued operations
Revenue - -
------ ------------ ------------
Cost of sales - -
------ ------------ ------------
Asset write off - (1,250,000)
----------- ------------
Other expenses - -
------ ------------ ------------
Results from operating activities - (1,250,000)
----------- ------------
Income tax (expense)/benefit - -
------ ------------ ------------
Results from operating activities,
after tax - (1,250,000)
----------- ------------
Loss on sale of subsidiary - -
asset
------ ------------ ------------
Loss from discontinued operations - (1,250,000)
----------- ------------
Note 6: Income Tax Expense
Note Consolidated
-------------------------------------- ------ ----------------------------
2018 (US$) 2017 (US$)
-------------------------------------- ----- ------------- -------------
a: Income tax expense
Current tax - -
------ ------------- -------------
Deferred tax 1,419,725 4,974,750
----- ------------- -------------
Adjustments for current tax
of prior periods 122,478 9 25,200
----- ------------- -------------
1,542,204 4,999,950
--------------------------------------------- ------------- -------------
Income tax expense/(benefit) is attributable to:
Loss from continuing operations 1,542,204 4,999,950
----- ------------- -------------
Loss from discontinued operations - -
------ ------------- -------------
Aggregate income tax expense 1,542,204 4,999,950
----- ------------- -------------
b: The prime facie tax on profit from ordinary activities
before income tax is reconciled to the income tax as follows:
Loss from continuing operations
before income tax (15,988,033) (48,112,929)
----- ------------- -------------
Loss from discontinuing operations
before income tax - (1,250,000)
----- ------------- -------------
(15,988,033) (49,362,929)
--------------------------------------------- ------------- -------------
Prime facie tax payable on
loss from ordinary activities
before income tax at 30% (2017:
30%) Group (4,474,410) (14,433,879)
----- ------------- -------------
(4,796,410) (14,433,879)
--------------------------------------------- ------------- -------------
Add tax effect of:
Other taxes 88,626 25,200
----- ------------- -------------
Expenses not deductible for
tax 4,883,415 23,850,271
----- ------------- -------------
Tax losses not brought to account 11,316,449 11,471,474
----- ------------- -------------
Capital expenses deductible
for tax purposes (5,961,448) (8,092,768)
----- ------------- -------------
Deferred tax assets not brought
to account 331,010 4,179,397
----- ------------- -------------
Differences in tax rates (4,319,439) (11,999,745)
----- ------------- -------------
1,542,204 4,999,950
--------------------------------------------- ------------- -------------
Unrecognised deferred tax asset
Capital losses 443,654 443,654
----- ------------- -------------
Revenue losses 10,595,377 10,470,664
----- ------------- -------------
Other 2,866,987 1,400,991
----- ------------- -------------
Offset of deferred tax liabilites (5,680,826) (3,147,098)
----- ------------- -------------
Net Deferred Tax Assets not
brought to account 8,225,192 9,168,211
----- ------------- -------------
c: Recognised deferred tax assets
Temporary differences 13,517,531 6,853,135
-------------------- -------------
13,517,531 6,853,135
-------------------------------------- -------------------- -------------
Recognised deferred tax liabilities
Accelerated depreciation (36,332,757) (26,167,218)
-------------------- -------------
DTL arising on business combination (28,429,185) (28,332,926)
-------------------- -------------
Net deferred tax liabilities (64,761,942) (54,500,144)
-------------------- -------------
Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set out in Note 1(b) occur.
Note 7: Auditor's remuneration
Note Consolidated
------------------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
------------------------------------- ------ ----------- -----------
Remuneration of the auditor of the Parent Entity for:
Auditing or reviewing the financial
report by BDO Audit (WA) Pty
Ltd 56,016 70,000
----------- -----------
Non-audit services provided
by a related entity of BDO
Audit (WA) Pty Ltd in respect
to Parent Entity's tax compliance 17,010 17,828
----------- -----------
Professional services provided 160,591 -
by BDO UK LLP in respect to
AIM admission
------ ----------- -----------
Total remuneration for the
Parent Entity 233,617 87,828
----------- -----------
Remuneration of the auditors of the subsidiaries
Auditing or reviewing the financial
report by BDO UK 2,016 5,327
----------- -----------
Auditing or reviewing the financial
report by BDO Barbados 14,175 10,331
----------- -----------
Auditing or reviewing the financial
report by BDO Trinidad 30,801 29,251
----------- -----------
Auditing or reviewing the financial 19,300 -
report by BDO Indonesia
------ ----------- -----------
Total remuneration for the
subsidiaries 66,292 44,909
----------- -----------
Note 8: Loss by share
Note Consolidated
----------------------------------- ------ ------------------------------
2018 (US$) 2017 (US$)
----------------------------------- ------ -------------- --------------
a: Basic loss per share
Loss per share from continuing
operations attributable to
the ordinary equity holders
of the company (0.23) (0.68)
-------------- --------------
Loss per share attributable
to the ordinary equity holders
of the company (0.23) (0.70)
-------------- --------------
b: Diluted loss per share
Loss per share from continuing n/a n/a
operations attributable to
the ordinary equity holders
of the company
------ -------------- --------------
Loss per share attributable n/a n/a
to the ordinary equity holders
of the company
------ -------------- --------------
c: Reconciliation of loss used in calculating earnings
per share
Basic/ Diluted loss per share
----------------------------------- ------ -------------- --------------
Loss from continuing operations
attributable to the ordinary
equity holders of the company (17,530,237) (53,112,879)
-------------- --------------
Loss attributable to the ordinary
equity holders of the company (17,530,237) (54,362,879)
-------------- --------------
d: Weighted average number of shares used as the denominator
Weighted average number of
ordinary shares used as the
denominator in calculating
basic EPS 7,595,830,782 7,595,830,782
-------------- --------------
Note 9: Cash and cash equivalents
Note Consolidated
-------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
-------------------------- ------ ----------- -----------
Cash at bank and on hand 3,945,683 17,254,360
----------- -----------
Risk exposure
Information about the Group's exposure to credit risk, foreign exchange risk and price risk is provided in Note 33.
Note 10: Trade and other receivables
Note Consolidated
----------------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
----------------------------------- ------ ----------- -----------
Current
Trade receivables (i) 1,197,336 658,338
----------- -----------
Taxes receivable 3,678,430 5,082,388
----------- -----------
Total trade and other receivables 4,875,766 5,740,726
----------- -----------
(i) Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. Trade receivables are neither past due nor impaired.
Fair value approximates the carrying value of trade and other receivables at 30 June 2018 and 30 June 2017.
Note Consolidated
----------------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
----------------------------------- ------ ----------- -----------
Non-current
Other receivables (i) 2,251,384 6,886,394
----------- -----------
Total trade and other receivables 2,251,384 6,886,394
----------- -----------
(i) Other receivables are comprised of receivables from LandOcean Energy Services Co. Ltd (US$1,220,713) and Sincep Oilog Equipment Co. Ltd (US$44,150) which are both part of LandOcean group of companies. The total interest due is US$986,521.
Fair value approximates the carrying value of trade and other receivables at 30 June 2018 and 30 June 2017.
Risk exposure
Information about the Group's exposure to credit risk, foreign exchange risk and price risk is provided in Note 33.
Note 11: Other current assets
Note Consolidated
---------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
---------------------------- ------ ----------- -----------
Current
Prepayments 242,142 208,946
----------- -----------
Inventory - finished goods 3,277,096 2,353,143
----------- -----------
Other assets (i) 2,812,769 24,194
----------- -----------
Total other current assets 6,332,007 2,586,283
----------- -----------
(i) Other assets include a refundable payment of $2,800,000 made to LandOcean Petroleum Corp. Ltd on 22 December 2017 in respect of RRDSL acquisition. The amount is receivable on-demand, unsecured and accrues 6% interest.
Note 12: Assets held for sale
During 2017 the Group fully wrote down the asset held-for-sale which relates to 45% interest in the unlisted company Strait Oil & Gas Limited ("Strait") due to uncertainty over its recoverability.
Note Consolidated
---------------------------------- ------- ----------------------------
2018 (US$) 2017 (US$)
---------------------------------- ------- ------------- -------------
Movements in assets classified as held for sale are as follows:
Opening net book amount - 1,250,000
------------ -------------
Transfer from investment in - -
associate
------- ------------- -------------
Sold in period - -
------- ------------- -------------
Impairment loss relating to
discontinued operations - (1,250,000)
------------ -------------
Closing net book amount - -
------------ -------------
Note 13: Financial assets available for sale
Note Consolidated
------------------------------------ ------ ------------------------
2018 (US$) 2017 (US$)
------------------------------------ ------ ----------- -----------
Interest in other corporations - 45,238
----------- -----------
Total available-for-sale financial
assets - 45,238
----------- -----------
Movement in financial assets available-for-sale
Opening balance 45,238 45,238
----------- -----------
Impairment recognised in profit (45,238) -
or loss
------ ----------- -----------
Closing Balance - 45,238
----------- -----------
Available-for-sale financial assets comprise investments in the ordinary share capital of various entities. There are no fixed returns or fixed maturity date attached to these investments.
Risk exposure
Information about the Group's exposure to credit risk, foreign exchange risk and price risk is provided in Note 33.
Note 14: Controlled Entities
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with accounting policy described in Note 1(a).
Controlled Entities Consolidated Country of Percentage Owned
Incorporation (%)
------------------------------------ --------------- ==================
30 June 30 June
2018 2017
------------------------------------ --------------- -------- --------
Subsidiaries of Range Resources Limited:
Range Resources (Barbados) Limited Barbados 100 100
--------------- -------- --------
SOCA Petroleum Limited Barbados 100 100
--------------- -------- --------
Range Resources Drilling Services
Limited Trinidad 100 -
--------------- -------- --------
West Indies Exploration Company
Limited Trinidad 100 100
--------------- -------- --------
Range Resources Trinidad Limited Trinidad 100 100
--------------- -------- --------
Range Resources West Coast
Limited Trinidad 100 100
--------------- -------- --------
Range Resources (Barbados) GY
Limited Barbados 100 100
--------------- -------- --------
Range Resources GY Shallow
Limited Trinidad 100 100
--------------- -------- --------
Range Resources GY Deep Limited Trinidad 100 100
--------------- -------- --------
Range Resources Upstream Services
Limited United Kingdom 100 100
--------------- -------- --------
Range Resources HK Limited Hong Kong 100 100
--------------- -------- --------
PT Hengtai Weiye Oil and Gas Indonesia 60 -
--------------- -------- --------
PT Jasmine Oil and Gas Services
(ii) Indonesia 60 -
--------------- -------- --------
PT Lubuk Kawai Raya (i) Indonesia 46.8 -
--------------- -------- --------
PT Aceh Timur Kawai Energi
(i) Indonesia 42.1 -
--------------- -------- --------
(i) Indirect control of these companies was obtained with the acquisition of 60% of share capital in PT Hengtai Weiye Oil and Gas.
(ii) Newly established entity.
Note 15a: Business Combinations
On 30th November 2017, Range acquired RRDSL from LandOcean Petroleum Corp. Ltd. for a consideration of US$5,500,000. Details of the purchase consideration, the net assets acquired and goodwill are below.
Purchase consideration comprises:
US$
--------------------- ----------
Cash payable 5,500,000
---------------------- ----------
Total consideration 5,500,000
---------------------- ----------
The group has reported provisional amounts for the assets and liabilities acquired as follows:
Net identifiable assets acquired 2,258,528 ----------------------------------- ------------- Net assets acquired: ----------------------------------- ------------- Plant and equipment 24,739,434 ----------------------------------- ------------- Deferred tax asset 2,544,203 ----------------------------------- ------------- Cash and cash equivalents 357,940 ----------------------------------- ------------- Trade and other receivables 4,013,278 ----------------------------------- ------------- Inventory 1,470,349 ----------------------------------- ------------- Trade and other payables (1,745,851) ----------------------------------- ------------- Deferred tax liability (5,289,460) ----------------------------------- ------------- Borrowings (23,831,365) ----------------------------------- ------------- Goodwill 3,241,472 ----------------------------------- ------------- (a) Goodwill recognition and allocation
On 30th November 2017, Range acqured RRDSL from LandOcean Petroleum Corp. Ltd. for a consideration of US$5,500,000 which is payable on 30 November 2020.
Goodwill of US$3,241,472 represents the costs savings achieved within the Group now that RRDSL is part of Range group.
(b) Revenue and loss contribution
Revenue and net loss before tax of RRDSL included in the consolidated statement of profit or loss and other comprehensive income from the acquisition date to 30 June 2018 were US$429,426 and US$(3,015,699).
If the acquisition had occurred on 1 July 2017, revenue and net profit from RRDSL would have been US$529,002 and US$268,188.
(c) Purchase consideration - cash outflow Outflow of cash to acquire subsidiary net of cash acquired US$ ------------------------------------------------------------- ------------ Cash consideration - ------------------------------------------------------------ ------------ Less cash acquired 357,940 ------------------------------------------------------------- ------------ Net inflow of cash - investing activities 357,940 ------------------------------------------------------------- ------------
Acquisition related costs
Acquisition related costs of $736,881 are included in general and administration expenses in profit or loss and in operating cash flows in the statement of cash flows.
(d) Accounting policy
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of subsidiary comprises the:
(i) fair values of the assets transferred (ii) liabilities incurred to the former owners of the acquired business (iii) equity interests issued by the group
(iv) fair value of any asset or liability resulting from contingent consideration arrangement, and
(v) fair value of any pre-existing equity interest in the subsidiary
Note 15a: Business Combinations (continued)
Identifiable assets acquired and liabilities and contingent liabilities assumed in business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred.
The excess of the
(i) consideration transferred, (ii) amount of any non-controlling interest in the acquired entity, and
(iii) acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired
is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised directly in profit or loss as bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Note 15b: Intangible Assets
Note Consolidated
------------------------- ------ --------------------------
2018 (US$) 2017 (US$)
------------------------- ------ ----------- -------------
Cost 3,241,472 28,985,014
------ ----------- -------------
Impairment write down - (28,985,014)
------ ----------- -------------
Net book amount 3,241,472 -
------ ----------- -------------
Year ended 30 June 2018
Opening net book amount - 28,985,014
------ ----------- -------------
Additions-acquisition 15(a) 3,241,472 -
------ ----------- -------------
Impairment charge - (28,985,014)
------ ----------- -------------
Closing net book amount 3,241,472 -
------ ----------- -------------
Impairment tests
During the year ended 30 June 2018, the Group did not record an impairment with respect to goodwill.
Goodwill has been allocated for impairment testing purposes to one cash-generating unit (CGU), identified according to operating segments, being Trinidad - oil and gas production. The goodwill represents the costs savings achieved within the group as a result of the RRDSL acquisition.
Note 15b: Intangible Assets (continued)
Estimates of the recoverable amount is based on an asset's fair value less costs to sell using a discounted cash flow method and is most sensitive to the following key assumptions:
-- Obtaining all required approvals and permissions to undertake waterflood development; -- Obtaining lease extensions until 2031; -- P1 and P2 Recoverable reserves; -- Commodity price of between US$60 and US$72 per barrel dependent on the year; -- Operating costs at 10%-26% of revenue, depending on oil price and production at that time; -- Post-tax discount rate of 10.0%.
Economical recoverable reserves represent management's expectations at the time of completing the impairment testing and based on the reserves statements and exploration and evaluation work undertaken by appropriately qualified persons. A summary of the Company's Trinidad reserves and resources are published on the Group's website.
The commodity price for oil was based on mean WTI forecast oil price data from a variety of different analysts and other sources. Estimates (calendar years) are US$61/bbl in 2018, US$66/bbl in 2019, US$63/bbl in 2020, US$65/bbl in 2021, US$64/bbl in 2022, US$68/bbl in 2024, US$67/bbl in 2025 and then escalating at 2% per annum for the remainder of the project.
Operating cost assumptions were based on FY19 budgets, actual costs incurred in FY18 and estimates of additional operating costs for waterflood activities received from Range Resources Drilling Services Limited. An adverse 20% change to oil prices, production, operating costs and the discount rate would not result in an impairment.
Note 16: Property, Plant & Equipment
Consolidated Production Gathering Leasehold Motor vehicle,
equipment station improvement furniture, Total
and access and field fixtures
roads office & fittings
----------------- ----------- ---------- ------------ -------------- -----------
US$ US$ US$ US$ US$
----------- ---------- ------------ -------------- -----------
Year ended 30 June 2017
Opening net
book amount 1,770,165 98,119 214,300 246,644 2,329,228
----------- ---------- ------------ -------------- -----------
Foreign currency
movement (28,211) (2,813) (4,421) (1,523) (36,968)
----------- ---------- ------------ -------------- -----------
Additions - - - 4,363 4,363
----------- ---------- ------------ -------------- -----------
Disposals - - - (3,916) (3,916)
----------- ---------- ------------ -------------- -----------
Depreciation
charge (134,384) (7,861) (25,022) (103,758) (271,025)
----------- ---------- ------------ -------------- -----------
Closing net
book amount 1,607,570 87,445 184,857 141,810 2,021,682
----------- ---------- ------------ -------------- -----------
At 30 June 2017
Cost 6,288,571 502,697 529,599 1,134,146 8,455,013
----------- ---------- ------------ -------------- -----------
Accumulated
depreciation (4,681,001) (415,252) (344,742) (992,336) (6,433,331)
----------- ---------- ------------ -------------- -----------
Net book amount 1,607,570 87,445 184,857 141,810 2,021,682
----------- ---------- ------------ -------------- -----------
Year ended 30 June 2018
Opening net
book amount 1,607,570 87,445 184,857 141,810 2,021,682
----------- ---------- ------------ -------------- -----------
Foreign currency
movement 2,381 127 404 210 3,122
----------- ---------- ------------ -------------- -----------
Acquisitions
from business
combination 23,742,231 - - 997,203 24,739,434
----------- ---------- ------------ -------------- -----------
Additions 214,331 - 14,484 228,082 456,897
----------- ---------- ------------ -------------- -----------
Depreciation
charge (1,475,122) (11,571) (18,255) (226,573) (1,731,521)
----------- ---------- ------------ -------------- -----------
Closing net
book amount 24,091,391 76,001 181,490 1,140,732 25,489,614
----------- ---------- ------------ -------------- -----------
At 30 June 2018
Cost 30,265,925 496,647 539,886 2,337,172 33,639,630
----------- ---------- ------------ -------------- -----------
Accumulated
depreciation (6,174,534) (420,646) (358,396) (1,196,440) (8,150,016)
----------- ---------- ------------ -------------- -----------
Net book amount 24,091,391 76,001 181,490 1,140,732 25,489,614
----------- ---------- ------------ -------------- -----------
Note 17: Exploration assets
Note Consolidated
------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
------------------------- ------ ----------- -----------
Opening balance (ii) 632,176 645,801
----------- -----------
Acquisition (i) 6,077,873 -
------ ----------- -----------
Foreign exchange 34,948 (13,625)
----------- -----------
Closing net book amount 6,744,997 632,176
----------- -----------
(i) Asset acquisition
On 30th October 2017, Range Resources Limited acquired through Range Resources HK Limited, 60% of the shares of PT Hengtai Weiye Oil and Gas ("Hengtai"), resulting in an indirect interest of 42% (a 23% indirect equity interest and further 19% indirect economic interest) in the Perlak field, Indonesia. Control has been obtained through the shareholder agreements in place at each entity level.
Details of the fair value of the assets acquired are as follows:
Purchase consideration comprises: US$ ----------------------------------- ---------- Cash 2,560,000 ------------------------------------ ---------- Total cash paid 2,560,000 ------------------------------------ ---------- Total consideration 2,560,000 ------------------------------------ ---------- Net assets acquired: US$ ----------------------------------- ------------ Exploration and evaluation assets 6,077,873 ------------------------------------ ------------ Less: non-controlling interests (3,517,873) ------------------------------------ ------------ Total 2,560,000 ------------------------------------ ------------
Put option agreement
The vendor has agreed to provide Range with a put option, whereby Range has the option to enforce a buyback of its full 60% interest in Hengtai should agreed milestones not be achieved, therefore providing protection to Range's investment. These milestones, amongst others, include achieving minimum production of 800 bopd from Perlak field over a continuous 90-day period, as well as proving up independently audited 1P reserves of at least 10 mmbbl within a three-year period. On acquisition, a cash consideration of US$2,560,000 was paid. No value has been recognised for this option as there is no evidence that the milestones will not be achieved.
Asset acquisition accounting policy
The transaction is not deemed a business combination as the assets acquired did not meet the definition of a business. When an asset acquisition 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 recognition exemption for deferred tax under AASB 112 applies. No goodwill arose on the acquisition and transaction costs of the acquisition will be included in the capitalised cost of the asset. The
Note 17: Exploration assets (continued)
non-controlling interest is recognised at fair value. All the other expenses in relation to Indonesia are expensed in exploration costs in the Income Statement.
(ii) Trinidad
At 30 June 2018, US$667,124 (30 June 2017: US$632,176) capitalised exploration and evaluation expenditure relates to the interests of the Group in the Guayaguayare and St Mary's Blocks in Trinidad.
Note 18: Producing assets
Note Consolidated
--------------------------- ------ ----------------------------
2018 (US$) 2017 (US$)
--------------------------- ------ ------------- -------------
Cost 152,711,418 150,555,891
------------- -------------
Accumulated amortisation (43,619,768) (42,208,436)
------------- -------------
Net book value 109,091,650 108,347,455
------------- -------------
Opening net book amount 108,347,455 95,077,882
------------- -------------
Foreign currency movement 88,034 (761,346)
------------- -------------
Additions 3,875,306 20,049,219
------------- -------------
Amortisation charge (3,219,145) (6,018,300)
------------- -------------
Closing net book amount 109,091,650 108,347,455
------------- -------------
Refer to Note 15 for the assessment of the recoverable amount of the producing assets.
Note 19: Trade and other payables
Note Consolidated
----------------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
----------------------------------- ------ ----------- -----------
a: Current
Trade payables 1,416,480 381,237
----------- -----------
Sundry payables and accrued
expenses 8,513,026 1,232,262
----------- -----------
Total 9,929,506 1,613,499
----------- -----------
b: Non-Current
Interest bearing trade payables 41,359,805 40,851,038
----------- -----------
Accrued expenses 5,796,050 10,539,050
----------- -----------
Other payables - interest bearing 3,242,977 -
------ ----------- -----------
Other payables - non-interest 42,947 -
bearing
------ ----------- -----------
Total 50,441,779 51,390,088
----------- -----------
Risk exposure
Trade payables are non-interest bearing. Interest bearing other payables are amounts due to LandOcean and are not payable until April 2020. Interest charged at 6%. Other interest-bearing payables relate to the consideration due to LandOcean Petroleum Corp
Note 17: Exploration assets (continued)
Ltd for RRDSL acquisition, interest bearing at 6% on net balance outstanding which is due to be paid in November 2020. LandOcean payables are unsecured.
Information about the Group's exposure to credit risk, foreign exchange risk and price risk is provided in Note 33.
Note 20: Borrowings
Note Consolidated
------------------------------ ----- ------------------------
2018 (US$) 2017 (US$)
------------------------------ ----- ----------- -----------
Current borrowings
Interest on convertible note 20c 1,600,000 -
----- ----------- -----------
Option liability 20b 33,345 341,618
----- ----------- -----------
Total current borrowings 1,633,345 341,618
----- ----------- -----------
Non-current borrowings
Borrowings at amortised cost 20a 24,481,224 -
----- ----------- -----------
Convertible note 20c 17,958,382 21,071,631
----- ----------- -----------
Total non-current borrowings 42,439,606 21,071,631
----- ----------- -----------
Note Consolidated
---------------------------- ----- ------------------------
2018 (US$) 2017 (US$)
---------------------------- ----- ----------- -----------
a: Borrowings
Principal 15,640,024 -
----- ----------- -----------
Interest due on outstanding 8,841,200 -
balance
----- ----------- -----------
Closing net book amount 24,481,224 -
----- ----------- -----------
These are unsecured payables to EPT, Unionpetro, GPN and LO Petroleum, which all belong to the LandOcean group of companies. Interest is charged at 6% on net balance outstanding, with the amounts being payable within three years.
Note Consolidated
-------------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
-------------------------------- ------ ----------- -----------
b: Option liability
Option liability at fair value
through profit or loss 33,345 341,618
----------- -----------
Closing net book amount 33,345 341,618
----------- -----------
During 2018, no options were exercised (2017: 0).
Total fair value movement recognised in the Statement of Profit and Loss was a gain of US$308,273 (2017: US$494,096).
Note 20: Borrowings (continued)
Note Consolidated
----------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
----------------------------- ------ ----------- -----------
c: Convertible note
Convertible note liability
element 16,507,750 16,507,750
----------- -----------
Convertible note derivative
element 384,007 2,692,563
----------- -----------
Interest due on outstanding
balance - non-current 1,066,625 271,318
----------- -----------
Interest due on outstanding
balance- current 1,600,000 1,600,000
----------- -----------
Closing net book amount 19,558,382 21,071,631
----------- -----------
In 2017, Range signed an agreement with LandOcean Energy Services Co. Limited. for the issuance of a US$20,000,000 convertible note.
The terms of the convertible note are as follows:
Issuer Range Resources Limited
Noteholder LandOcean Energy Services Co. Limited
------------------------------------------
Amount US$20,000,000
------------------------------------------
Tenor Three years, maturity date 28 November
2019
------------------------------------------
Repayment Bullet at maturity date
------------------------------------------
Interest 8% per annum, payable annually in arrears
(i)
------------------------------------------
Security None
------------------------------------------
Conversion price 0.88p per share
------------------------------------------
Lender Conversion At any time, in a minimum amount of
Right US$10,000,000
------------------------------------------
(i) The next interest payment of US$1,600,000 is due on 28 November 2018 and annually thereafter.
The proceeds from this convertible note were utilised solely to replace a portion of the outstanding payable balance due to LandOcean under the terms of the Integrated Master Services Agreement ("IMSA").
Note 21: Provision for rehabilitation
The Group records the present value of the estimated cost of legal and constructive obligations to restore operating locations in the period in which the obligation arises. The nature of restoration activities includes removal of facilities, abandonment of wells and restoration of affected areas.
Note Consolidated
--------------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
--------------------------------- ------ ----------- -----------
Provision for rehabilitation 811,737 784,316
----------- -----------
Movement in the provision for rehabilitation during the
financial year are set out below:
Carrying amount at the start
of the year 784,316 740,268
----------- -----------
Additional provision recognised 27,420 44,048
----------- -----------
Carrying amount at the end
of the year 811,737 784,316
----------- -----------
Note 22: Deferred taxes
Accrued Total
interest
---------------------------------------- ----------- -----------
Deferred tax asset US$ US$
Movements: Year ended 30 June 2018
Opening balance 6,853,135 6,853,135
----------- -----------
Charged/(credited) - to profit or loss 4,120,193 4,120,193
----------- -----------
Acquisition of subsidiary 2,544,203 2,544,203
----------- -----------
Closing net book amount 13,517,531 13,517,531
----------- -----------
Fair value Accelerated Total
uplift on depreciation
business
combination
-------------------------------- ------------- -------------- ------------
Deferred tax liability US$ US$ US$
Movements: Year ended 30 June 2017
Opening balance 30,046,205 17,515,407 47,561,612
------------- -------------- ------------
Foreign currency movement - (1,007,041) (1,007,041)
------------- -------------- ------------
Charged/(credited) - to profit
or loss (1,713,279) 9,658,852 4,872,363
------------- -------------- ------------
Closing net book amount 28,332,926 26,167,218 54,500,144
------------- -------------- ------------
Movements: Year ended 30 June 2018
Opening balance 28,332,926 26,167,218 54,500,144
------------- -------------- ------------
Foreign currency movement - (567,580) (567,580)
------------- -------------- ------------
Charged/(credited) - to profit
or loss 96,259 5,443,659 5,539,918
------------- -------------- ------------
Acquisition of subsidiary - 5,289,460 5,289,460
------------- -------------- ------------
Closing net book amount 28,429,185 36,332,757 64,761,942
------------- -------------- ------------
As a result of business combination, at the date of acquisition a deferred tax liability has been recognised in relation to the difference between the carrying amount of the deferred exploration and development costs for accounting purposes and the cost base of the asset for tax purposes in accordance with the requirements of Australian Accounting Standard AASB 112 Income Taxes. The Group does not have a tax payable in relation to the deferred tax liability at 30 June 2018 and it is anticipated that the deferred taxation liability will be reduced in the future as the deferred exploration and development costs are amortised in future periods.
Note 23: Other non-current liabilities
Note Consolidated
--------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
--------------------------- ------ ----------- -----------
Employee service benefits 731,350 340,289
----------- -----------
Total 731,350 340,289
----------- -----------
Risk exposure
Information about the Group's exposure to credit risk, foreign exchange risk and price risk is provided in Note 33.
Note 24: Contributed equity
Note Consolidated
------------------------------------- ------ ----------------------------
2018 (US$) 2017 (US$)
------------------------------------- ------ ------------- -------------
7,595,830,782 (2017: 7,595,830,782)
fully paid ordinary shares 404,910,284 404,910,294
------------- -------------
Share issue costs (20,991,887) (20,991,897)
------------- -------------
Total contributed equity 383,918,397 383,918,397
------------- -------------
Consolidated
---------------------- ----------------------------------------------------------
2018 No. 2018 (US$) 2017 No. 2017 (US$)
---------------------- -------------- ------------ -------------- ------------
a: Fully paid ordinary shares
At the beginning
of reporting period 7,595,830,782 404,910,284 7,589,790,100 404,874,079
-------------- ------------ -------------- ------------
Shares issued during
year - - 6,040,682 36,205
-------------- ------------ -------------- ------------
Total contributed
equity 7,595,830,782 404,910,284 7,595,830,782 404,910,284
-------------- ------------ -------------- ------------
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting of the Company, in person or by proxy, is entitled to one vote and upon a poll each share is entitled to one vote.
Consolidated
----------------------------------------- -----------------------------
2018 No. 2017 No.
----------------------------------------- ------------- --------------
b: Options
At the beginning of reporting period 808,844,977 903,055,747
------------- --------------
Options issued during year (refer Notes
20 and 30) - 8,000,000
------------- --------------
Options expired (27,000,000) (102,210,771)
------------- --------------
Options exercised during year - -
------------- --------------
Total options 781,844,977 808,844,977
------------- --------------
Note 24: Contributed equity (continued)
At 30 June 2018, the unissued ordinary shares under option are as follows:
Date of expiry Exercise price Number under
option
================= =============== ============
14 July 2018 GBP0.01 161,472,247
=============== ============
14 July 2018 GBP0.02 118,729,593
=============== ============
31 August 2018 GBP0.01 14,000,000
=============== ============
3 September 2019 GBP0.01 194,585,862
=============== ============
3 September 2019 GBP0.02 172,557,275
=============== ============
30 March 2020 GBP0.01 120,500,000
=============== ============
Total number under option: 781,844,977
============
The holders of these options do not have any rights under the options to participate in any share issues of the company.
During the year ended 30 June 2018, no ordinary shares of Range were issued on the exercise of options (2017: nil).
Note 25: Reserves
Note Consolidated
------------------------------------ ------ ------------------------
2018 (US$) 2017 (US$)
------------------------------------ ------ ----------- -----------
a: Share-based payment reserve
Balance 1 July 2017 8,516,837 8,549,023
----------- -----------
Share based payment expenses (Note
30) (92,466) (32,186)
----------- -----------
Expired options reclassified to - -
retained earnings
------ ----------- -----------
Balance 30 June 2018 8,424,371 8,516,837
----------- -----------
The share based payment reserve records items recognised as expenses on the fair valuation of shares and options issued as remuneration to employees, directors and consultants.
Note Consolidated
------------------------------------------ ------ ------------------------
2018 (US$) 2017 (US$)
------------------------------------------ ------ ----------- -----------
b: Option premium reserve
Balance 1 July 2017 12,057,363 12,057,363
----------- -----------
Fair value movement of exercised - -
options that were originally classified
as a derivative liability
------ ----------- -----------
Balance 30 June 2018 12,057,363 12,057,363
----------- -----------
The option premium reserve is used to recognise the grant date fair value of options.
Note 25: Reserves (continued)
Note Consolidated
---------------------------------- ------ -------------------------
2018 (US$) 2017 (US$)
---------------------------------- ------ ------------ -----------
c: Foreign currency translation reserve
Balance 1 July 2017 5,765,111 3,620,738
------------ -----------
Currency translation differences
arising during the year (1,423,892) 2,144,373
------------ -----------
Balance 30 June 2018 4,341,219 5,765,111
------------ -----------
The foreign currency translation reserve is used to record exchange differences arising from the translation balances of foreign subsidiaries.
Total reserves at 30 June 2018 24,822,953 26,339,311
Note 26: Commitments
Note Consolidated
----------------------- ------ -------------------------
2018 (US$) 2017 (US$)
----------------------- ------ ------------ -----------
Expenditure and Capital commitments
Not later than 1 year - 5,509,200
----------- -----------
Total - 5,509,200
----------- -----------
Note 27: Contingent liabilities and contingent assets
Geeta Maharaj
Range received an invoice from Geeta Maharaj, a Trinidad based attorney seeking payment for legal services in the amount of approximately US$1.9 million. The invoice purports to relate to legal work undertaken during mid-2014 including the preparation of inter-company loan agreements. Range strongly refutes the amount of this purported invoice and considers it to be vastly excessive and therefore not payable. A claim has been filed by Ms Maharaj seeking the sum of TT$12,019,573 (approximately US$1.9 million) plus interest and costs. Range filed a notice of application to strike out this claim on 14 July 2017. An initial hearing on this application was held on 29 September 2017 at which the parties were ordered to file and exchange written submissions by 20 October 2017 with replies, if any, to be filed by 30 October 2017. Both parties filed and exchanged written submissions and responses by the requested dates and a further hearing was scheduled for 1 December 2017. This hearing was rescheduled by the court and the Company is awaiting notification of a rescheduled date.
Separately, Range has received further correspondence from Ms Maharaj on a related matter claiming damages of TT$6,000,000 (approximately US$890,000) on the basis of a conspiracy designed to damage Ms Maharaj's reputation. Again, Range firmly refutes the allegation and in conjunction with its legal counsel in Trinidad has responded to this demand. A claim has been filed by Ms Maharaj seeking damages of TT$6,000,000 (approximately US$890,000) plus interest and costs. The Company, in conjunction with its legal counsel, has filed a defence in respect of this claim and a preliminary hearing was
Note 27: Contingent liabilities and contingent assets (continued)
scheduled for 1 December 2017. This hearing was rescheduled by the court and the Company is awaiting notification of a rescheduled date.
While the Company, having taken legal advice, considers the probability of Ms Maharaj succeeding in either of her claims to be remote, there can be no guarantee that there will be a favourable outcome for the Company.
Indonesia acquisition
Range completed the acquisition of an indirect interest in an established oil block in Indonesia on 30 October 2017. As per terms of the acquisition, the Company has acquired an indirect 42% interest (a 23% indirect equity interest and further 19% indirect economic interest) in the Perlak field located in a mature hydrocarbon province of Northern Sumatra. Please refer to Operations section for further details on the asset.
The remaining consideration of US$0.64 million will be payable upon completion of the minimum work obligation.
Colombian exploration licences
In January 2016, Range received notification from Agencia Nacional de Hidrocarburos ("ANH") in Colombia advising that the E&P licences over three exploration blocks (PUT-5, VSM-1 and VMM-7) had been revoked. The licences had been awarded to a Consortium of Optima Oil Corporation ("Optima") and the Company in December 2012. ANH alleges that various obligations and commitments agreed within the exploration licences have not been complied with and also that invalid letters of credit had been presented to ANH by Optima to support the minimum work obligations. The effect of revocation of the licences by ANH is: (i) expiry of the contracts, (ii) Range would be unable to enter into any further agreement with Colombian State for a period of 5 years, (iii) final settlement and liquidation of the licences, and (iv) joint and several liability of the Consortium partners to ANH for all sums due to ANH and for potential damages claim of up to the aggregate financial value of the work commitments of the Consortium for the three licences which totalled approximately US$53 million. The value of the allegedly invalid letters of credit provided was approximately US$11 million.
On 1 September 2016, Range received a demand notice from ANH addressed to the Consortium seeking payment of the full amount of the outstanding obligations due to ANH totalling up to approximately US$53 million. The deadline for making the payment, or otherwise responding to ANH with a defence against the action, was 7 September 2016. A comprehensive response was subsequently submitted to ANH by the consortium on this date. This response addressed the numerous areas in which Range and the consortium object to the demand which was received from ANH.
A Joint Operating Agreement ("JOA") is in place amongst the Consortium partners. Under the terms of the JOA it was agreed between the Consortium that it was the sole responsibility of Optima to complete the minimum work obligations and to provide all necessary funding, including the provision of valid letters of credit in favour of ANH. Under the JOA, Range has an indemnity to recover from Optima any payment incurred by
Note 27: Contingent liabilities and contingent assets (continued)
Range for any contractual obligations under the licences which were not paid by Optima. Range has engaged legal advisers in Colombia.
Range has no material assets in Colombia.
In addition to the ongoing work with legal advisers in Colombia, Range has sought advice from its Australian advisers regarding the ability of ANH to try and enforce a claim against Range in Australia (where Range is incorporated). The Company's legal advisers confirm that there is no provision in Australian law to enable either judgments of Colombian courts, or administrative orders of ANH to be recognised in Australia. If ANH did seek to make any claim in Australia it would be required to commence court proceedings in the Australian courts and to prove its entitlement to such claim. Range would have the right to defend such claim. Range has not received any claim from ANH in Australia and would defend itself against any such claim if ever received.
During the year, the Company reached an agreement with ANH to settle all outstanding historic claims and disputes between ANH and the Consortium. The key terms of the settlement arrangement are that ANH confirms that Range (and the Consortium) has no liability for any payments or debts, all proposed penalties have been lifted, the Consortium agrees to waive all potential claims against ANH and the consortium agrees to the termination of the exploration licences. The agreement between the Consortium and ANH is subject to court approval in Colombia.
The Directors are not aware of any further contingent liabilities or contingent assets as at 30 June 2018.
Note 28: Segment reporting
30 June 2018 Trinidad Trinidad Indonesia Unallocated Total
- Oil & - Oilfield US$ US$ US$
Gas Production Services
US$ US$
--------------------------- ---------------- ------------ ------------ ------------ -------------
Segment revenue
Total segment revenue 12,629,996 3,561,259 - - 16,191,255
---------------- ------------ ------------ ------------ -------------
Intersegment revenue - (3,131,833) - - (3,131,833)
---------------- ------------ ------------ ------------ -------------
Revenue from external
customers 12,629,996 429,426 - - 13,059,422
---------------- ------------ ------------ ------------ -------------
Other income 161,828 15,060 - 245,009 421,897
---------------- ------------ ------------ ------------ -------------
Segment result
Depreciation (2,374,508) (2,576,158) - - (4,950,666)
---------------- ------------ ------------ ------------ -------------
Interest income/(expense) 103,187 (498,435) - (2,704,172) (3,099,420)
---------------- ------------ ------------ ------------ -------------
Other segment expenses (12,044,090) (4,874,421) (1,253,329) (3,247,456) (21,419,296)
---------------- ------------ ------------ ------------ -------------
Loss before income
tax (1,523,587) (7,504,498) (1,253,329) (5,706,619) (15,988,033)
---------------- ------------ ------------ ------------ -------------
Income tax (1,827,521) 285,317 - - (1,542,204)
---------------- ------------ ------------ ------------ -------------
Loss after income
tax (3,351,108) (7,219,181) (1,253,329) (5,706,619) (17,530,237)
---------------- ------------ ------------ ------------ -------------
Segment assets
Segment assets 127,047,106 34,469,110 6,077,873 7,896,015 175,490,104
---------------- ------------ ------------ ------------ -------------
Total assets 127,047,106 34,469,110 6,077,873 7,896,015 175,490,104
---------------- ------------ ------------ ------------ -------------
Segment liabilities
Segment liabilities 68,336,505 37,226,190 - 65,433,487 170,996,182
---------------- ------------ ------------ ------------ -------------
Total liabilities 68,336,505 37,226,190 - 65,433,487 170,996,182
---------------- ------------ ------------ ------------ -------------
30 June 2017 Trinidad Trinidad Indonesia Unallocated Total
- Oil & - Oilfield US$ US$ US$
Gas Production Services
US$ US$
------------------------- ---------------- ------------ ---------- ------------ -------------
Segment revenue
Revenue from continuing
operations 8,435,309 - - - 8,435,309
---------------- ------------ ---------- ------------ -------------
Other income 96,347 - - 78,020 174,367
---------------- ------------ ---------- ------------ -------------
Total revenue 8,531,656 - - 78,020 8,609,676
---------------- ------------ ---------- ------------ -------------
Segment result
Segment expenses (54,452,224) - - (3,520,381) (57,972,605)
---------------- ------------ ---------- ------------ -------------
Loss before income
tax (45,920,568) - - (3,442,361) (49,362,929)
---------------- ------------ ---------- ------------ -------------
Income tax (4,999,950) - - - (4,999,950)
---------------- ------------ ---------- ------------ -------------
Loss after income
tax (50,920,518) - - (3,442,361) (54,362,879)
---------------- ------------ ---------- ------------ -------------
Segment assets
Segment assets 132,921,505 - - 17,425,944 150,347,449
---------------- ------------ ---------- ------------ -------------
Total assets 132,921,505 - - 17,425,944 150,347,449
---------------- ------------ ---------- ------------ -------------
Segment liabilities
Segment liabilities 103,755,172 - - 26,569,633 130,324,805
---------------- ------------ ---------- ------------ -------------
Total liabilities 103,755,172 - - 26,569,633 130,324,805
---------------- ------------ ---------- ------------ -------------
Note 28: Segment reporting (continued)
(i) Unallocated assets
30 June 30 June
2018 2017
US$ US$
---------------------- ---------- -----------
Segment assets
Cash 3,000,847 17,254,360
---------- -----------
Other 4,895,168 171,584
---------- -----------
Total segment assets 7,896,015 17,425,944
---------- -----------
Note Consolidated
----------------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
----------------------------------- ------ ----------- -----------
a: Other segment information
Segment other revenue - all other segments
Other income 245,009 78,020
----------- -----------
Total unallocated segment revenue 245,009 78,020
----------- -----------
Note Consolidated
------------------------------------ ------ ------------------------
2018 (US$) 2017 (US$)
------------------------------------ ------ ----------- -----------
Segment result - all other segments
Directors' and officers' fees
and benefits 939,802 1,069,490
----------- -----------
Share based payments - employee
and onsultant shares (92,466) (32,187)
----------- -----------
Discontinued operations - 1,250,000
----------- -----------
Finance costs 2,393,872 792,362
----------- -----------
Other general and administration
expenses 2,895,353 1,510,206
----------- -----------
Total unallocated segment expenses 6,136,561 4,589,871
----------- -----------
Accounting policies
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The chief operating decision maker is the Chief Executive Officer and through this role the Board of Directors.
Following the adoption of AASB 8, the identification of the Group's reporting segments has changed since the prior period, with management allocating resources to "Trinidad - Oil & Gas Production" and "Trinidad - Oilfield Services" segments.
Information regarding these segments is presented above. The accounting policies of the reportable segments are the same as those of the Group. Segment information is prepared in conformity with the accounting policies of the entity as disclosed in Note 1.
Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of cash, receivables, plant and equipment, exploration expenditure capitalised and development assets net of accumulated depreciation and amortisation. While most such assets can be directly attributed to individual segments, the carrying amount of certain assets used
Note 28: Segment reporting (continued)
jointly by two or more segments is allocated to the segments on a reasonable basis. Segment disclosures do not include deferred income taxes.
Revenue from Trinidad - Oil & Gas Production segment of US$12,629,996 (2017: US$8,435,309) is derived from the subsidiary's sole customer, which is Petroleum Company of Trinidad and Tobago Limited.
Intersegment transfers
Segment revenues, expenses and results do not include any transfers between segments.
Note 29: Cash flow information
Note Consolidated
------------------------------------------ ----- ----------------------------
2018 (US$) 2017 (US$)
------------------------------------------ ----- ------------- -------------
Reconciliation of cash flow from operations with loss after
income tax
Loss after income tax (17,530,237) (54,362,879)
----- ------------- -------------
Non-cash flows in profit
----- ------------- -------------
Depreciation, depletion and amortisation 4,950,666 6,289,324
----- ------------- -------------
Share based payment- consultants
and employees (92,466) (32,187)
----- ------------- -------------
Impairment of non-current assets - 28,985,014
----- ------------- -------------
Finance costs (non-cash) - 3,723,917
----- ------------- -------------
Foreign exchange (gain)/loss 193,079 1,362,426
----- ------------- -------------
Impairments recognised on held
for sale assets - 1,250,000
----- ------------- -------------
Fair value movement of derivative 4 (2,308,556) (494,096)
----- ------------- -------------
Other non-cash items
----- ------------- -------------
Decrease in other current assets (1,854,276) (2,408,126)
----- ------------- -------------
Decrease/(increase) in trade
and other receivables 5,479,970 (7,986,854)
----- ------------- -------------
(Increase)/decrease in deferred
tax asset (6,664,396) (2,893,332)
----- ------------- -------------
(Decrease)/increase in trade
and other payables 7,367,699 (11,433,731)
----- ------------- -------------
Decrease in income tax payable - (3,503)
----- ------------- -------------
Increase in deferred tax liabilities 10,261,798 7,946,065
----- ------------- -------------
(Decrease)/increase in provisions 27,420 44,048
----- ------------- -------------
Increase/(decrease) in borrowings - 21,071,631
----- ------------- -------------
(Decrease)/Increase in non-current
operating payables (2,302,185) 10,345,663
----- ------------- -------------
Net cash outflow (from)/to operations (2,471,484) 1,403,350
----- ------------- -------------
Note 29: Cash flow information (continued)
Financial liability reconciliation
2017 Cash Flows Non-cash changes 2018
----------- ------------
Acquisition Fair value changes Interest accrued
------------------------ ----------- ------------ ------------ ------------------- -----------------
Borrowings - - 23,831,365 - 649,860 24,481,225
----------- ------------ ------------ ------------------- ----------------- -----------
Convertible note 21,071,631 (1,600,000) - (2,308,556) 2,395,307 19,558,382
----------- ------------ ------------ ------------------- ----------------- -----------
Total liabilities from
financing activities 21,071,631 (1,600,000) 23,831,365 (2,308,556) 3,045,167 44,039,607
----------- ------------ ------------ ------------------- ----------------- -----------
Note 30: Share based payments
No options were issued to key management personnel. The expense reversal is due to the change in the probability of meeting the vesting conditions as explained below.
Probability of meeting the 1,500 barrels of oil per day for a continuous 15-day period in Trinidad vesting condition is 100%.
Probability of meeting the 2,500 barrels of oil per day for a continuous 15-day period in Trinidad vesting condition is 0%.
Probability of meeting the 4,000 barrels of oil per day for a continuous 15-day period in Trinidad vesting condition is 0%.
The following share-based payment arrangements occurred during the financial year ended at 30 June 2017:
Quantity Security US$ Value Purpose
============ ================ ========= =====================
Options issued to key
8,000,000(i) Unlisted options 7,096 mangement personnel
================ ========= =====================
(i) The value of options have been expensed to the profit or loss on a proportionate basis for each financial year from grant to vesting date.
Employee option plan
Year ended 30 June 2018
No options were issued to key management personnel, employees and consultants.
Note 30: Share based payments (continued)
Year ended 30 June 2017
The following options were issued to key management personnel, employees and consultants:
Name Number of options Grant date Expiry date
======================== ================= ============ =============
Key management personnel 8,000,000 29 September 30 March 2020
2016
================= ============ =============
The value of options have been expensed to the profit or loss on a proportionate basis for each financial year from grant to vesting date.
Quantity Security US$ Value Purpose
========== =================== ========= ===========================
Fully paid ordinary Shares issued to employees
19,987,481 shares 580,406 and consultants
=================== ========= ===========================
Options issued in lieu of
42,742,654 Unlisted options 1,176,524 consulting fee
=================== ========= ===========================
Options issued to Directors
75,000,000 Unlisted options 85,464 in period
=================== ========= ===========================
Options issued in lieu of
7,500,000 Unlisted options 895,049 consulting fees
=================== ========= ===========================
The fair value at grant date of unlisted options is independently determined using a Black Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility
of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
Options granted 1 September 2015
The value per option at the grant date was 0.56 cents for key management personnel options and 0.45 cents for employee options, determined using the Black Scholes option price model using the following key inputs:
Probability of meeting vesting
Volatility: 100% conditions: 100%
Risk free rate: 1.92% Exercise price GBP0.01
======== =============================== ==========
USD/GBP exchange 0. 6509 Share price on grant date GBP0.0057
rate
======== =============================== ==========
Options granted 25 May 2016
The fair value of options to be granted have been estimated at 30 June 2016 at 0.30 cents using the Black Scholes options pricing model using the following key inputs:
Probability of meeting vesting
Volatility: 100% conditions: 100%
Risk free rate: 1.92% Exercise price GBP0.01
======== =============================== ==========
USD/GBP exchange 0. 7468 Share price on grant date GBP0.0037
rate
======== =============================== ==========
Note 30: Share based payments (continued)
Expenses recognised in the profit or loss
During the year, share-based payments recognised in profit or loss amounts to a reversal of US$92,466 (2017: reversal of US$32,187).
2018 No. Average 2017 No. Average
exercise exercise
price (US$) price (US$)
--------------------------- ------------- ------------- -------------- -------------
As at 1 July 788,844,977 0.019 883,055,747 0.019
------------- ------------- -------------- -------------
Granted during year:
------------- ------------- -------------- -------------
Other - - 8,000,000 0.021
------------- ------------- -------------- -------------
Expired (27,000,000) 0.025 - -
------------- ------------- -------------- -------------
Forfeited - - (102,210,770) 0.028
------------- ------------- -------------- -------------
As at 30 June 761,844,977 0.023 788,844,977 0.023
------------- ------------- -------------- -------------
Vested and exercisable
at 30 June 701,845,000 0.025 728,845,000 0.023
------------- ------------- -------------- -------------
Weighted average 153 days 518 days
remaining contractual
life options outstanding
at end of period
------------- ------------- -------------- -------------
Note 31: Related party transactions
(a) Parent entity
The ultimate Parent Entity and ultimate Australian Parent Entity within the Group is Range Resources Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 14.
(c) Transactions with Key Management Personnel
The following transactions occurred during the year with Key Management Personnel or their related parties:
2018 2017
US$ US$
-------------------------------------------------- -------- --------
Consulting fees paid or payable to Kaiyuan
Guosen Management Consulting Limited, a company
owned by Mr Gu 195,000 195,000
-------- --------
Consulting fees paid or payable to Plentiful
Wise Holdings Limited, a company owned by
Ms Wang 112,500 75,000
-------- --------
Consulting fees paid or payable to Ten Faye
Limited, a company owned by Mr L Liu 25,740 39,660
-------- --------
Balances at year end to related parties
Lijun Xiu and related entities 42,000 42,000
-------- --------
Note 31: Related party transactions (continued)
Note Consolidated
-------------------------- ------ ------------------------
2018 (US$) 2017 (US$)
-------------------------- ------ ----------- -----------
d: Key Management Personnel compensation
Short-term benefits 884,847 906,725
----------- -----------
One-off payments - 104,000
----------- -----------
Post-employment benefits 39,737 33,315
----------- -----------
Termination benefits - 38,750
----------- -----------
Share based payments (83,985) 14,239
----------- -----------
Total 840,599 1,097,029
----------- -----------
Note 32: Parent entity information
The following details information related to the Parent Entity Range Resources Limited, at 30 June 2018. The information presented here has been prepared in accordance using consistent accounting policies as presented in Note 1.
Note Consolidated
------------------------------------- ------ ------------------------------
2018 (US$) 2017 (US$)
------------------------------------- ------ -------------- --------------
Current assets 5,823,790 16,760,518
-------------- --------------
Non-current assets 64,091,154 29,029,801
-------------- --------------
Total assets 69,914,944 45,790,319
-------------- --------------
Current liabilities 2,176,682 2,852,384
-------------- --------------
Non-current liabilities 63,244,340 23,245,915
-------------- --------------
Total liabilities 65,421,022 26,098,299
-------------- --------------
Contributed equity 383,918,396 383,918,396
-------------- --------------
Accumulated losses (402,977,948) (387,637,292)
-------------- --------------
Reserves 23,553,474 23,410,916
-------------- --------------
Total equity 4,493,922 19,692,020
-------------- --------------
Loss for the year from continuing
operations (15,352,002) (51,299,139)
-------------- --------------
Loss for the year from discontinued
operations - (1,250,000)
-------------- --------------
Total comprehensive loss for
the year (15,352,002) (52,549,139)
-------------- --------------
The contingent liabilities of the parent are included within those of the Group as disclosed in Note 27.
The contractual commitments of the parent are included within those of the Group as disclosed in Note 27.
Note 33: Financial risk management
The Group has exposure to the following risks from their use of financial instruments:
-- Credit risk -- Liquidity risk -- Market risk
This note presents information about the Group's exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout these financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed to reflect changes in market conditions and the Group's activities. The Group, through training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all consultants and agents understand their roles and obligations.
Credit risk
Credit risk is the risk of financial loss to the Group if counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables and cash held at financial institutions.
Credit risk is managed on a group basis. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions.
The credit quality of financial assets that are neither past due or impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates.
Note Consolidated
------------------- --------- --------------------------------------
2018 (US$) 2017 (US$)
------------------- --------- ------------------ ------------------
Cash at bank, restricted deposits and short-term bank deposits
(S&P ratings)
AAA - 2,509,501 15,971,560
--------- ------------------ ------------------
AA- 490,986 571,294
--------- ------------------ ------------------
A+ - 708,744
--------- ------------------ ------------------
BBB+ 945,196 -
--------- ------------------ ------------------
BBB- - 2,762
--------- ------------------ ------------------
Not rated - -
--------- ------------------ ------------------
Total 9 3,945,683 17,254,360
--------- ------------------ ------------------
Note 33: Financial risk management (continued)
Exposure to credit risk
The carrying amount of the Group's financial assets represents the maximum credit exposure. The Group's maximum exposure to credit risk at the reporting date was:
Note Consolidated
------------------------------- ----- ------------------------
2018 (US$) 2017 (US$)
------------------------------- ----- ----------- -----------
Trade and other receivables -
non-current (i) 10 2,251,384 6,866,394
----- ----------- -----------
Trade and other receivables -
current (i) 10 4,875,766 5,740,726
----- ----------- -----------
Cash and cash equivalents 9 3,945,683 17,254,360
----- ----------- -----------
Total 11,072,833 29,861,480
----- ----------- -----------
(i) Counterparties without an external credit rating.
Loans and receivables
The Group's exposure to credit risk is influenced mainly by the individual characteristics of each debtor. No collateral was held in relation to these receivables.
Impairment losses
No impairment loss was recognised in relation to other receivables respectively in the prior year.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
The Group uses activity-based costing to cost its activities, which assists in monitoring cash flow requirements and optimising its cash return on investments. Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 12 months; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
Group 2018
Carrying Contractual Within 1-2 years 2-5 years
amount cash flows one year
----------------- ------------ ------------ ----------- ----------- ----------
Financial liabilities at amortised cost
Trade and other
payables 60,371,285 60,371,285 9,929,506 50,441,779 -
------------ ------------ ----------- ----------- ----------
Borrowings 44,039,606 42,439,605 1,600,000 42,439,606 -
------------ ------------ ----------- ----------- ----------
Total 102,810,891 102,810,890 11,529,506 91,281,385 -
------------ ------------ ----------- ----------- ----------
Note 33: Financial risk management (continued)
Group 2017
Carrying Contractual Within 1-2 years 2-5 years
amount cash flows one year
---------------- ---------- ------------
Financial liabilities at amortised cost
Trade and other
payables 53,003,587 54,491,940 11,475,641 - 43,466,299
Borrowings 21,071,631 24,800,000 1,600,000 21,600,000
Total 74,075,218 79,291,940 13,075,641 - 65,066,299
Market risk
Market risk is the risk that changes in market prices, such as interest rates and equity prices will affect the Group's income or the value of its holdings of available for sale assets. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Equity price risk
The Group is exposed to equity securities price risk. This arises from investments held by the Group and classified on the statement of financial position as available for sale as well as from the option liability held as a current liability. A 10% increase in Range's share price would result in an increase to the option liability of US$3,335. A decrease would have had the equal but opposite effect.
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar, AU dollar, TT Dollar and British pound. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.
The Group's treasury risk management policy is to closely monitor exchange rate fluctuations. To date, the Group has not sought to hedge its exposure to fluctuations in exchange rates, however this policy will be reviewed on an ongoing basis.
The Group's exposure to foreign currency risk at the reporting date was as follows:
Consolidated
2018 AUD 2017 AUD 2018 GBP 2017 GBP
Cash 206,996 327,374 60,911 268,079
Amount payable to
other entities (73,269) (104,555) (50,550) (361,758)
Total 133,727 222,819 10,361 (93,679)
Sensitivity
Based upon the amounts above, had the Australian dollar strengthened by 10% against the US dollar with all other variables held constant, the Group post-tax loss for the year on current amounts receivable/payable would have been US$18,064 higher (2017: US$32,164 higher), mainly as a result of foreign exchange gains/losses on translation of AUD
Note 33: Financial risk management (continued)
denominated payables as detailed in the table above. A 10% weakening of the Australian dollar against the above currencies at 30 June would have had the equal but opposite effect, on the basis that all other variables remain constant.
The Trinidad entities are minimally exposed to foreign exchange risk arising from various currencies, primarily with respect to the United States Dollar.
Interest rate risk
The group's main interest rate risk arises from non-current receivables. Non-current receivables issued at fixed rates expose the group to fair value interest rate if the loans are carried at fair value. During 2018 and 2017, the group loan receivables were denominated in Australian Dollars, British Pounds and US Dollars.
Note 33: Financial risk management (continued)
Profile
At the reporting date, the interest rate profile of the Group's financial instruments which exposes the group to cash flow interest rate risks are:
Weighted Floating Interest Fixed Interest Non-interest bearing Total
Average Rate Maturing
Effective
Interest Rate
2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
% % US$ US$ US$ US$ US$ US$ US$ US$
Financial Assets:
Cash and
cash
equivalents 1.8% 0.4% 3,945,683 17,254,360 - - - - 3,945,683 17,254,360
Trade and
other
receivables - - - - - - 7,127,150 12,607,120 7,127,150 12,607,120
Available
for sale
financial
assets - - - - - - - 45,238 - 45,238
Total
financial
assets 3,945,683 17,254,360 - - 7,127,150 12,652,358 11,072,833 29,906,718
Financial Liabilities:
Trade and
other
payables 10% 9.3% - - 44,602,782 40,851,038 15,768,503 12,152,549 60,371,285 53,003,586
Borrowings 6% 8% - - 44,039,606 21,071,631 - - 44,039,606 21,071,631
Total
financial
liabilities - - - - 88,642,388 61,922,669 15,768,503 12,152,549 104,410,891 74,075,217
Note 33: Financial risk management (continued)
Sensitivity analysis for variable rate instruments
The sensitivity on interest rates for 2018 and 2017 assumes a change of 100 basis points in the interest rates at the reporting date and would have increased / (decreased) profit or loss by the amounts shown. Both analyses for each year assume that all other variables, in particular foreign currency rates, remain constant.
Group Weighted 2018 2018 Weighted 2017 2017
Average Average
Interest +100 -100 Interest +100 -100
Rate bps bps Rate bps bps
% US$ US$ % US$ US$
Variable rate instruments
Financial assets
(cash and cash equivalents) 1.8% - - 0.4% - -
Financial assets - - - - - -
(loan and receivables)
Fair values versus carrying amounts
The fair value of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:
Group 30 June 2018 30 June 2017
US$ US$
Carrying amount Fair value Carrying Fair
amount value
Available-for-sale
financial assets - - 45,238 45,238
Trade and other
receivables 7,127,150 7,127,150 12,607,120 12,607,120
Cash and cash
equivalents 3,945,683 3,945,683 17,254,360 17,254,360
Trade and other
payables (60,371,285) (60,371,285) (53,003,587) (53,003,587)
Borrowings (44,039,606) (44,039,606) (21,071,631) (21,071,631)
Total (93,338,058) (93,338,058) (44,168,500) (44,168,500)
The basis for determining fair value is disclosed in Note 1(n).
Other price risks
The Group is not exposed to any other price risks.
Capital management
The entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital.
The entity's overall strategy remains unchanged from 2017.
Note 33: Financial risk management (continued)
The capital structure of the group consists of cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued capital, reserves and accumulated losses as disclosed in Notes 24 and 25 respectively. None of the entities within the group are subject to externally imposed capital requirements.
Gearing ratio
The Board reviews the capital structure on an annual basis. As a part of this review the Board considers the cost of capital and the risks associated with each class of capital.
Note Consolidated
2018 (US$) 2017 (US$)
Financial assets
Cash and cash equivalents 3,945,683 17,254,360
Other financial assets 2,800,000 -
Financial liabilities
Trade and other payables (60,371,285) (53,003,587)
Borrowings (44,602,782) (21,071,631)
Net debt (98,228,384) (56,820,858)
Equity 4,443,822 20,022,644
Net debt to equity ratio 2,197.8% 283.8%
Categories of financial instruments
Note Consolidated
2018 (US$) 2017 (US$)
Financial assets
Cash and cash equivalents 3,945,683 17,254,360
Trade and other receivables
- non-current 2,251,384 6,866,394
Trade and other receivables
- current 4,875,766 5,740,726
Available-for-sale financial
assets - 45,238
11,072,833 29,906,718
Financial liabilities
Trade and other payables 60,371,285 52,326,678
Borrowings 44,039,606 21,071,631
Option liability 33,345 341,618
Total 104,444,236 73,739,927
The carrying amount reflected above represents the Group's maximum exposure to credit risk for such loans and receivables.
Note 34: Fair value measurement of financial instruments
(a) Fair value hierarchy
AASB 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),
(b) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2), and
(c) Inputs for the asset or liability that are not based on observable market data (unobservable inputs (level 3).
The following table presents the Group's financial assets and financial liabilities measured and recognised at fair value at 30 June 2018 and 30 June 2017 on a recurring basis.
At 30 June 2018 Level Level Level Total
1 2 3
US$ US$ US$
Assets
Available for sale financial
assets
Equity securities - - - -
Total assets - - - -
Liabilities
Option liability at fair
value through profit or
loss - 33,345 - 33,345
Derivative liability at
fair value through profit
or loss - 384,007 - 384,007
Total liabilities - 417,352 - 417,352
At 30 June 2017 Level Level Level Total
1 2 3
US$ US$ US$
Assets
Available for sale financial
assets
Equity securities - - 45,238 45,238
Total assets - - 45,238 45,238
Liabilities
Option liability at fair
value through profit or
loss - 341,618 - 341,618
Derivative liability at
fair value through profit
or loss - 2,692,563 - 2,692,563
Total liabilities - 3,034,181 - 3,034,181
The Group's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the end of the reporting period. There were no transfers between the levels of the fair value hierarchy during the year ended 30 June 2018.
(b) Fair values of other financial instruments
The Group has financial instruments which are measured at amortised cost in the consolidated statement of financial position.
Note 34: Fair value measurement of financial instruments (continued)
Due to their short-term nature, the carrying amounts of the current receivables, current payables, current borrowings, and current other financial liabilities is assumed to approximate their fair value.
(c) Fair values of non-current receivables, payables and borrowings
For non-current receivables, payables and borrowings, the fair values are not materially different to their carrying amounts since the interest on these balances is close to current market rates.
Note 35: Events after the reporting date
Completion of US$1.3m subscription
Subsequent to the year end, Range announced a subscription for new ordinary shares to raise US$1,300,000 million before expenses (the "Subscription"). Pursuant to the Subscription, the Company issued 909,090,910 new ordinary shares at a price of 0.11 pence per new ordinary share. The Company intends to use the proceeds from the Subscription to fund sales infrastructure upgrade, as well as other general investment in asset upgrades in Trinidad.
Georgia update
Subsequent to the year end, Range signed an agreement to acquire Georgian Oil Pty Ltd (20% interest holder in SOG) for a nominal upfront sum. Following completion, Range will hold a 65% interest in SOG. Completion is anticipated to occur in October 2018.
Other than the above, no events occurred after the reporting date.
Note 36: New accounting Standards and interpretations
Australian accounting Standards/amendments released but not yet effective: 30 June 2018 year end
Certain new accounting Standards and Interpretations have been published that are not mandatory for 30 June 2018 reporting periods and have not been early adopted by the Group. The Group's assessment of the impact of these new Standards and Interpretations is set out below. In all cases the Group intends to apply these standards from the application date as indicated in the tables below.
Note 36: New accounting Standards and interpretations (continued)
Reference: AASB 9 Title: Financial Instruments
Standard application 1 January 2018
date:
Group application date: 1 July 2018
Key Requirements
AASB 9 addresses the classification, measurement and derecognition
of financial assets and financial liabilities and introduces
new rules for hedge accounting.
In December 2014, the AASB made further changes to the classification
and measurement rules and also introduced a new impairment
model. These latest amendments now complete the financial
instruments standard.
Impact
Management is currently assessing the impact of the new
rules. At this stage, the Group is not able to estimate
the impact of the new rules on the Group's financial statements.
The Group will make more detailed assessments of the impact
over the next 12 months.
Reference: AASB 15 Title: Revenue from Contracts with
Customers
Standard application 1 January 2018
date:
Group application date: 1 July 2018
Key Requirements
The AASB has issued a new standard for the recognition of
revenue. This will replace AASB 118 which covers contracts
for goods and services and AASB111 which covers construction
contracts. The new standard is based on the principle that
revenue is recognised when control of a good or service
transfers to a customer, so the notion of control replaces
the existing notion of risks and rewards.
The standard permits a modified retrospective approach for
the adoption. Under this approach entities will recognise
any applicable transitional adjustments in retained earnings
on the date of the initial application without restating
the comparative period.
Entities will only need to apply the new rules to contracts
that are not completed as of the date of initial application.
Impact
Management is currently assessing the impact of the new
rules. At this stage, the Group is not able to estimate
the impact of the new rules on the Group's financial statements.
The Group will make more detailed assessments of the impact
over the next 12 months.
Note 36: New accounting Standards and interpretations (continued)
Reference: AASB 16 Title: Leases
Standard application 1 January 2019
date:
Group application date: 1 July 2019
Key Requirements
The key features of AASB 16 are as follows:
Lessee accounting
* Lessees are required to recognise assets and
liabilities for all leases with a term of more than
12 months, unless the underlying asset is of a low
value.
* A lessee measures right-of-use assets similarly to
other non-financial assets and lease liabilities
similarly to other financial liabilities.
* Assets and liabilities arising from a lease are
initially measured on a present value basis. The
measurement includes non-cancellable lease payments,
and also includes payments to be made in optional
periods if the lessee is reasonably certain to
exercise an option to extend the lease, or not to
exercise an option to terminate the lease.
* AASB 16 contains disclosure requirements for leases.
Lessor accounting
AASB 16 substantially carries forward the lessor accounting
requirements in AASB 117. Accordingly, a lessor continues
to classify its leases as operating leases or finance leases,
and to account for those two types of leases differently.
AASB 16 also requires enhanced disclosures to be provided
by lessors that will improve information disclosed about
a lessor's risk exposure, particularly to residual value
risk.
Impact
Management is currently assessing the impact of the new
rules. At this stage, the Group is not able to estimate
the impact of the new rules on the Group's financial statements.
The Group will make more detailed assessments of the impact
over the next 12 months.
There are no other standards that are not yet effective and that would be expected to have a material impact on Range in the current or future period and on foreseeable future transactions.
Note 37: Company details
The registered office of the company is:
c/o Edwards Mac Scovell, Level 7, 140 St Georges Terrace, Perth WA 6000
Telephone: +61 8 6205 3012
The principal place of business is:
c/o Edwards Mac Scovell, Level 7, 140 St Georges Terrace, Perth WA 6000
Telephone: +61 8 6205 3012
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR SEWFMAFASEDU
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