UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): September 16, 2015
Samson
Oil & Gas Limited
(Exact name of registrant as specified in
its charter)
Australia |
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001-33578 |
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N/A |
(State or other jurisdiction of
incorporation or organization) |
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(Commission file number) |
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(I.R.S. Employer
Identification Number) |
Level 16, AMP Building
140 St Georges Terrace
Perth, Western Australia 6000 |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including
area code: 011 61 8 9220 9830
(Former name or former
address, if changed since last report)
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| ITEM 2.02 | Results of Operations and Financial Conditions. |
On September 16, 2015, Samson Oil &
Gas Limited filed its Annual Report for the fiscal year ended June 30, 2015 with the Australian Securities Exchange. A copy of the ASX Annual Report for the fiscal year
ended June 30, 2015 is furnished as Exhibit 99.1 hereto.
The information contained in this Item 2.02
(including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended,
or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| ITEM 9.01 | Financial Statements and Exhibits. |
Exhibit No. |
|
Description |
99.1 |
|
ASX Annual Report of Samson Oil & Gas Limited for
the year ended June 30, 2015. |
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: September 16, 2015 |
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Samson Oil & Gas Limited |
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By: |
/s/ Robyn Lamont |
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Robyn Lamont |
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Chief Financial Officer |
Exhibit 99.1
ABN 25 009 069 005
ANNUAL REPORT
30 June 2015
TABLE
OF CONTENTS
TABLE OF CONTENTS |
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Corporate Directory |
1 |
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Directors’ Report |
2 |
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Auditors’ Independence Declaration |
20 |
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Corporate Governance Statement |
21 |
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Consolidated Statement of Comprehensive Income |
29 |
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Consolidated Balance Sheet |
30 |
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Consolidated Statement of Cash Flows |
31 |
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Consolidated Statement of Changes in Equity |
32 |
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Notes to the Consolidated Financial Statements |
33 |
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Directors’ Declaration |
76 |
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Independent Auditor’s Report |
77 |
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Shareholder information |
79 |
Samson Oil & Gas Limited | | Annual Report – 30 June 2015 |
CORPORATE
DIRECTORY
CORPORATE DIRECTORY |
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Directors |
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Stock Exchange |
V. Rudenno (Chairman) |
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Australian Securities Exchange Limited |
T.M. Barr (Managing Director) |
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Code: SSN |
D. Craig |
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K. Skipper |
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NYSE Amex |
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Code: SSN |
Secretary |
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D.I. Rakich |
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Registered Office and Business Address |
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Australian Company Number |
Level 16, AMP Building |
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009 069 005 |
140 St Georges Terrace |
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Perth, Western Australia 6000 |
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Australian Business Number |
Telephone: |
(08) 9220 9830 |
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25 009 069 005 |
Facsimile: |
(08) 9220 9820 |
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Email |
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Presentation Currency |
contact@samsonoilandgas.com.au |
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The financial statements are presented in |
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US Dollars (2014: US Dollars) |
Web Site |
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www.samsonoilandgas.com.au |
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Share Registry |
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Security Transfer Registrars Pty Ltd |
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770 Canning Highway |
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Applecross, Western Australia 6953 |
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Telephone: |
(08) 9315 2333 |
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Facsimile: |
(08) 9315 2233 |
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Bankers |
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National Australia Bank |
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Utility Bay 13.03 |
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100 St Georges Terrace |
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Perth, Western Australia 6000 |
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Bank of the West |
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633 17th Street |
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Denver, Colorado, 80202 |
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Solicitors |
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Squire Sanders |
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152 St Georges Terrace |
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Perth, Western Australia 6000 |
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Davis Graham & Stubbs LLP |
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1550 Seventeenth Street, Suite 500 |
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Denver, Colorado, 80202 |
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Clanahan, Bean & Beck, PC |
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1873 South Bellaire Street, Suite 1401 |
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Denver, Colorado, 80222 |
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Auditors |
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RSM Bird Cameron Partners |
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8 St Georges Terrace |
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Perth, Western Australia 6000 |
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Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
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| Page 1 of 80 |
DIRECTORS’
REPORT
30
June 2015
DIRECTORS’ REPORT
In accordance with a resolution of Directors,
the Directors submit their report with respect to the results of the operations of Samson Oil & Gas Limited (“the Company”)
and its controlled entities (“the Consolidated Entity” or “Group”) for the year ended 30 June 2015 and
the state of its affairs at that time.
DIRECTORS
The names and details of the Directors
of the Company in office during the whole financial year and until the date of this report, unless noted otherwise, are:
Dr. Victor Rudenno
Chairman
Dr. Rudenno was appointed as a Director
of the Company in April 2007. In 1984, Dr. Rudenno transitioned to the investment industry as a rated mining and energy analyst
working for firms such as James Capel, DBSM and Prudential Bache. In 1995, he moved to the corporate side of investment banking
and worked for a number of leading firms including Macintosh Corporate, Deutsche Bank, Hartley Poynton and CIBC. In 2002, Dr. Rudenno
co-founded Equity Capital Markets Ltd, an investment bank specialising in corporate advice and capital raising which merged with
Interfinancial in 2005 and subsequently was acquired by Tolhurst, an ASX listed broker in 2007. He is currently an Executive Director
of Revaluate Pty Limited. He is a Senior Fellow of the Financial Services Institute of Australasia and a Fellow of the Australasian
Institute of Mining and Metallurgy. Dr. Rudenno holds a Bachelor of Mining Engineering degree, a Master of Commerce degree and
a Doctor of Philosophy for his thesis on Mining Economics. During his earlier academic career, Dr. Rudenno lectured both at the
University of New South Wales and part time at University of Sydney, predominantly on mining economics, geostatistics, operations
research and thermodynamics. He is the author of the textbook “Mining Valuation Handbook”.
Dr Rudenno is a member of the Audit Committee.
On 1 July 2015 Dr Rudenno was appointed Chair of the Audit Committee.
Dr Rudenno is a member of the Compensation
Committee.
On 25 August 2010, Dr Rudenno was appointed
a non-executive Director of Pilbara Minerals Limited (a publicly listed company) and resigned from this position on 30 May 2013.
Dr Rudenno has not held any directorships,
other than those disclosed above in the past three years.
Mr Terence Maxwell Barr
Managing Director
Mr Barr is a petroleum geologist with over
30 years’ experience, including 11 years with Santos Limited. He is credited with the discovery of significant oil and gas
reserves during his career. In recent years, Mr Barr has specialised in tight gas exploration, drilling and completion and is considered
an expert in this field. This experience and expertise is invaluable given the exposure the Company has to tight gas opportunities
in Wyoming and other parts of United States of America. Mr Barr was appointed managing director of the Company on 25 January 2005.
Mr Barr has not held any other directorships
in the past three years.
Mr Keith Skipper
Non Executive Director
Mr. Skipper was appointed as director of
the Company on 15 September 2008. Mr. Skipper holds a B.Sc (Hons) degree in Geology from Reading University (United Kingdom)
and a Master of Science from McMaster University (Canada). He commenced his career with Amoco Canada Petroleum
Limited in 1970. Mr. Skipper’s experience includes ten years with Bridge Oil Ltd and several years with Pan Canadian
Petroleum Limited (now part of Encana Corporation) and Antrim Energy Inc. in management and senior executive positions. He
is a resident of Australia.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 2 of 80 |
DIRECTORS’
REPORT
30 June 2015
Mr Skipper is a member of the Audit Committee.
Mr Skipper was the Chair of the Compensation
Committee until 1 July 2015, when he resigned as Chair of the committee. He remains a member of the Compensation Committee
During the last three years, Mr. Skipper
was a Director of the following publicly listed companies:
| · | Rawson
Resources Limited |
Dr DeAnn Craig
Non Executive Director
Dr Craig was appointed as a Director of
the Company on 11 July 2011. Dr Craig holds an Interdisciplinary PhD with emphasis in Petroleum Engineering and Operations
Research from the Colorado School of Mines (USA). She has also earned several degrees from Colorado School of Mines including
Masters of International Political Economy of Resources, Masters of Science Mineral Economics and Business and a Bachelor of Science
Chemical and Petroleum Refining Engineering. In addition Dr Craig holds an MBA from Regis University in Denver, Colorado.
During her career Dr. Craig has been a drilling engineer, a reservoir engineer responsible for reserves determination and property
valuation, and progressed to senior management in several companies, including Phillips Petroleum, now ConocoPhillips, and CNX
Gas. She is a registered professional engineer in the state of Colorado.
In the previous five years she has served
as Senior Vice President, Asset Assessment CNX Gas Corporation, served as an Adjunct Professor in the Petroleum Engineering Department
at the Colorado School of Mines and was appointed by the Governor of Colorado to serve on the Colorado Oil and Gas Conservation
Commission. Currently she is consulting to the oil and gas industry.
Dr Craig was the Chair of the Audit Committee
throughout the year. She resigned as Chair of the Audit Committee on 1 July 2015, she remains a member of the committee.
Dr Craig is a member of the Compensation
Committee.
Dr Craig was appointed a Non-Executive
of Atlas Resources Partners, L.P. (a publicly listed company) in March 2012 and continues to serve in that position to the date
of this report. Dr Craig has not held any other directorships in the past three years.
Mr Eugene McColley (resigned effective
5 August 2015)
Non Executive Director
Mr McColley is a co-founder and managing
general partner of Roaring Fork Capital Management, LLC formed in 2002. He has provided both capital and value-added services to
orphaned microcap companies (public companies with market capitalisations of $140 million or less that have been neglected by the
financial community) for the past 20 years. His relevant expertise stems from experience as both a microcap investment banker and
a director investor in orphaned microcap companies. As an investment banker, Mr McColley raised $280 million for over 50 microcap
public companies. As a private equity fund manager and direct angel investor, Mr McColley has invested in 81 orphaned microcap
companies.
Prior to his resignation, Mr McColley was
a member of the Audit and Compensation Committees.
Mr McColley has not held any other directorships
in the past three years.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 3 of 80 |
DIRECTORS’
REPORT
30 June 2015
COMPANY SECRETARY
Mr Denis Rakich F.C.P.A
Mr Rakich is an accountant and Company
Secretary with extensive corporate experience within the petroleum services, petroleum and mineral production and exploration industries.
Mr Rakich is responsible for the corporate management of Samson Oil & Gas Limited and the maintenance of the Company’s
ASX listing. He is a member of CPA Australia and is currently Company Secretary for another public Company in the resources sector.
DIRECTORS’ SHAREHOLDINGS
At the date of this report, the interests
of the Directors in shares and share options in the Company are:
| |
Number of Ordinary Shares | | |
Number of Options over Ordinary Shares | |
T.M. Barr | |
| 14,546,446 | | |
| 802,938 | |
V. Rudenno | |
| 5,892,105 | | |
| 542,241 | |
K. Skipper | |
| 936,502 | | |
| 80,000 | |
D. Craig | |
| 280,000 | | |
| 4,000,000 | |
E. McColley | |
| 2,002,500 | | |
| 4,801,001 | |
PRINCIPAL ACTIVITIES
The principal activities during the year
of entities within the Consolidated Entity were oil and gas exploration, development and production in the United States of America.
There have been no significant changes in the nature of these activities during the year.
The Company’s focus in the future
will continue to be on oil and gas exploration, development and production in the USA. The Company will aim to develop existing
acreage, whilst continuing to identify potential project acquisitions.
OPERATING AND FINANCIAL REVIEW
Financial Results
Excluding certain non-cash charges of impairment,
depletion and amortisation and exploration expenditure written off the Company made a profit of $4.4 million (2014:$3.0 million).
The result for the financial year ended
30 June 2015 from continuing operations, after provision for income tax was a loss attributable to members of the parent of $35.0
million (2014: loss $3.3 million). Included in the current year result is exploration expenditure expensed of $12.7 million (2014:
$0.4 million). Exploration expenditure also includes $12.4 million of previously capitalized exploration expense written off in
relation to the Company’s South Prairie, Roosevelt and Hawk Springs project. The exploration expenditure in the prior year
primarily relates to the Matson well in our South Prairie project. This well was expensed in line with the Consolidated Entity’s
accounting policy to expense all exploration when the conclusion is reached that the Consolidated Entity is unlikely to recover
the expenditure by future exploitation or sale.
Also included in the net loss are impairment
charges of $19.9 million. This charge mainly relates to our North Stockyard and Rainbow project and is a direct result of the significant
decrease in the global oil price.
Development Activities
Bakken Field, Williams County, North
Dakota
North Stockyard Project
Various working interests
Together with the fellow working interest
owners, the Consolidated Entity has drilled seventeen wells in this field, fourteen in the Bakken formation, two in the Three Forks
formation and one in the Mission Canyon formation.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 4 of 80 |
DIRECTORS’
REPORT
30 June 2015
Below is a summary of the wells in our
North Stockyard and their performance during the year ended 30 June 2015. Production information is shown on a gross basis.
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Net Revenue
Interest |
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Objective |
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Reserve Classification
at June 30, 2015 |
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YTD Production
June 30, 2015
BOE* |
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Cumulative
well
production to June
30, 2015 BOE* |
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Initial Development Program |
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Harstad #1-15 |
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26.39 |
% |
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Mission Canyon |
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Plugged and Abandoned |
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- |
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105,234 |
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Leonard #1-23H |
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7.65 |
% |
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Bakken |
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PDP |
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15,960 |
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153,645 |
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Gene #1-22H |
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23.41 |
% |
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Bakken |
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PDP |
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26,973 |
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206,133 |
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Gary #1-24H |
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28.31 |
% |
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Bakken |
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PDP |
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22,517 |
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238,314 |
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Rodney #1-14H |
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20.66 |
% |
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Bakken |
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PDP |
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39,578 |
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195,203 |
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Earl #1 -13H |
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24.48 |
% |
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Bakken |
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PDP |
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53,359 |
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314,600 |
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Everett #1-15H |
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19.89 |
% |
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Bakken |
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PDP |
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114,640 |
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254,118 |
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- |
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Infill Development Program |
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- |
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Billabong |
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22.01 |
% |
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Bakken |
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PDNP |
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41,057 |
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41,057 |
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Sail & Anchor 4-13-14 |
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19.15 |
% |
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Bakken |
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PDP |
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45,136 |
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95,813 |
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Blackdog 3-13-14 |
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19.02 |
% |
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Bakken |
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PDP |
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99,520 |
|
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|
189,417 |
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Tooheys 4-15-14 |
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21.60 |
% |
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Bakken |
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PDP |
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78,248 |
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130,999 |
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Coopers 2-15-14 |
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21.60 |
% |
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Bakken |
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PDP |
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60,262 |
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99,789 |
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Little Creature |
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21.24 |
% |
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Bakken |
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PDP |
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23,681 |
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85,909 |
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Matilda Bay 1-15 |
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25.23 |
% |
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Bakken |
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PDP |
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31,892 |
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32,901 |
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Matilda Bay 2-15 |
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25.23 |
% |
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Bakken |
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PDP |
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33,118 |
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47,796 |
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Bootleg 4- 14-15 |
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21.72 |
% |
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Three Forks |
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PDP |
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94,172 |
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94,172 |
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Bootleg 5- 14-15 |
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21.72 |
% |
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Three Forks |
|
PDP |
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82,379 |
|
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82,379 |
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Bootleg 8-14-15 |
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21.72 |
% |
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Three Forks 2 |
|
PDP |
|
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14,816 |
|
|
|
14,816 |
|
Ironbank 5-14-13 |
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|
20.46 |
% |
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Three Forks |
|
PDP |
|
|
68,029 |
|
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|
68,029 |
|
Ironbank 4-14-13 |
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|
20.46 |
% |
|
Three Forks |
|
PDP |
|
|
36,835 |
|
|
|
36,835 |
|
Ironbank 7-14-13 |
|
|
20.46 |
% |
|
Three Forks |
|
PDP |
|
|
35,236 |
|
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|
35,236 |
|
Bootleg 6-14-15 |
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|
21.72 |
% |
|
Three Forks |
|
PDP |
|
|
13,125 |
|
|
|
13,125 |
|
Bootleg 7-14-13 |
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|
21.72 |
% |
|
Three Forks |
|
PDP |
|
|
16,472 |
|
|
|
16,472 |
|
Ironbank 6-14-13 |
|
|
20.46 |
% |
|
Three Forks |
|
PDP |
|
|
16,629 |
|
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16,629 |
|
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1,063,634 |
|
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|
2,568,619 |
|
*BOE calculations only
includes gas sold and excludes gas flared.
Rainbow
Project
23% - 55%
working interest
The Consolidated
Entity’s first well in its Rainbow project spud on 28 June 2014. This well was drilled by Continental Energy Corporation
and produced 15,207 barrels of oil, net to the Company during the year ended 30 June 2015.
Currently, the Consolidated Entity’s
had a permit in place to drill a Middle Bakken well in the western drilling unit. The location for this well has been built and
conductor pipe has been set, therefore drilling to complete the well could be commenced in the near future, if desired. However,
if drilling operations do not commence by 4 February 2016, the lease could expire as it is passed its primary term and is being
held by a continuous drilling clause. The Consolidated Entity is considering extending the lease to delay the drilling of the well
in the current oil price environment; however the terms and conditions of this are not yet known.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 5 of 80 |
DIRECTORS’
REPORT
30 June 2015
Exploration Activities
Hawk Springs Project, Goshen County,
Wyoming
Defender US 33 #2-29H
37.5% working interest
This well
commenced production in February 2012. Numerous operational and pumping issues have been associated with this well. This well was
cleaned out in July 2012 and resumed pumping. In June 2015, the well was struck by lightning, which affected the electronic controllers
associated with the well. These controllers have yet to be repaired due to the well’s low productivity rate. At June 30,
2015, the Defender well had no proved reserves.
Bluff 1-11
25% working interest
The Bluff Prospect was drilled in June
2014 to test multiple targets in the Permian and Pennsylvanian sections in a 4-way structural trapping configuration. The Bluff
#1-11 well reached a total depth of 8,900 feet after intersecting the pre-Cambrian basement.
Various oil shows were observed in the
Cretaceous, Jurassic, Permian, and Pennsylvanian intervals while drilling. After running drill-pipe conveyed logging tools
in the deeper portion of the well below the intermediate casing, the Pennsylvanian zones, were deemed to be too thin and uneconomic
to produce. The Permian target zone (from 7738’to 7756’) displayed excellent porosity. As a result, the calculated
water saturation was high, and was initially deemed to be water saturated, so the bottom portion of the hole below the intermediate
casing was plugged. Further analysis of the Permian target zone by an outside expert petrophysicist has determined the 9500
foot level sand contains gas, and the properties associated with this interval the gas was most likely nitrogen and this was proven
through analysis of the gas sampled from the flow test. . The presence of any type of gas in the Permian target zone validates
the trap in the Bluff prospect and thus the potential to host an oil leg below the gas cap. In April 2015, the cement plug
above the Permian target zone was drilled out and the presence of nitrogen was confirmed and we began a flow test of this well
in July 2015, The flow test was completed in September after 1.2 BCF of gas was produced, the test was curtailed at this point
because pressure transient analysis and reservoir modeling suggested that whilst the fluid contact was seen to be moving it was
doubtful as to whether this fluid boundary would be seen at the Bluff 1-11 well bore. Accordingly the flow test was not definitive
either proving or disproving the presence of an oil leg to this gas accumulation.
Roosevelt Project, Roosevelt County,
Montana
Australia II
100% working interest
In December 2011, the Consolidated Entity
drilled the Australia II well in the Roosevelt Project, the first appraisal (exploratory) well in this project area. This well
was drilled to a total measured depth of 14,972 feet with the horizontal lateral remaining within the target zone for the entire
lateral length. Oil and gas shows were returned during the drilling of this well and approximately 3,425 barrels of oil were produced.
The well encountered numerous operational issues and was deemed uneconomic and all costs associated with the well were expensed
during the year ended 30 June 2012.
In July 2014, the Consolidated Entity replaced
the pump on the Australia II well and production from this well has recommenced production. During July 2014, the well averaged
100 barrels of oil per day. The well failed to produce consistently following this and the high cost of lease operating expenses
rendered the well uneconomic, it is currently shut in, pending higher oil prices.
Gretel II
100% working interest
The Consolidated Entity drilled the second
appraisal (exploratory) well in the Roosevelt Project, Gretel II, in January 2012 and fracture stimulated in March 2012. Based
on the results, it appears that this well was drilled on the north side of the Brockton Fault zone, which is believed to be the
western edge of the continuous Bakken oil. The Gretel II well is currently shut in, as it was mainly producing water, with just
a 5% oil cut. The Consolidated Entity does not believe that it will recover its costs associated with drilling it. The Consolidated
Entity expensed $11.6 million of previously capitalised exploration expenditure which represents 100% of the costs incurred during
the year ended 30 June 2012. No further work has been performed on this well bore during the year ended 30 June 2014. During the
year ended 30 June 2015, the reclamation process was started for this lease.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 6 of 80 |
DIRECTORS’
REPORT
30 June 2015
In total, $24.7 million of previously capitalized
exploration expenditure has been expensed in relation to the drilling costs associated with these two wells during the year ended
30 June 2012.
During the year ended 30 June 2014, the
Consolidated Entity entered into a seismic and drilling agreement with Momentus Energy Corp, a Canadian exploration and development
company based in Calgary to further explore this project. Momentus acquired 20 squares miles of 3-D seismic data at no cost to
the Consolidated Entity. This data has been processed and interpreted.
Momentus failed to drill their earn in
well by the date required in the farm out agreement and therefore the agreement has been voided. Given the deterioration in the
oil price, and the exploratory nature of the project, all previously capitalised costs, $7.9 million, in relation to the Roosevelt
project were written off during the year ended 30 June 2015.
Other
South Prairie Project, North Dakota
25% working interest
The Consolidated Entity has a 25% working
interest in 25,590 net acres, which is located on the eastern flank of the Williston Basin in North Dakota. The target reservoir
for the project is the Mississippian Mission Canyon Formation. Seventy-six square miles of 3-D seismic data have been shot and
processed. The data has been interpreted and the first prospect – the Matson #3-1 well, was drilled during the year ended
30 June 2014. The well was drilled to a depth of 4,825 feet. The joint operation elected to plug and abandon this well based on
the logging and show results and $186,854 in dry hole costs was recognised in the Income Statement. The data indicates that oil
migrated through the Mission Canyon reservoir, evidenced by black asphaltic dead oil stain, but was not trapped in the targeted
420 acre 4-way structural closure.
The joint operation then focused on developing
three structural closure prospects (Pubco, Deering, and Birch) along the Prairie Salt edge in the South Prairie 3-D project. The
York #3-9 well, from the Pubco Prospect was drilled in September 2014. This well failed to intersect hydrocarbons and was immediately
plugged. Given the lack of success in this project, the Consolidated Entity expensed $2.5 million in previously capitalised Exploration
Expenditure to the Income Statement during the year ended 30 June 2015.
The leases remain current in the project
and a third well, Badger #1 is expected to be drilled in October 2015. This well is expected to test the Wayne Zone of the Mississippian
Canyon formation.
Cane Creek Project, Grand & San
Juan Counties, Utah
Pennsylvanian Paradox Formation, Paradox
Basin
100% working interest
On November 5, 2014, the Consolidated Entity
entered into an Other Business Arrangement (“OBA”) with the Utah School and Institutional Trust Lands Administration
(“SITLA”) covering approximately 8,080 gross/net acres located in Grand and San Juan Counties, Utah, all of which are
administered by SITLA. The Consolidated Entity was granted an option period for two years in order to enter into a Multiple Mineral
Development Agreement (“MMDA”) with another company who hold leases to extract potash in an an acreage position situated
without project area. Upon entering into the MMDA, SITLA is obligated to deliver oil and gas leases covering our project area at
cost of $75 per acre to the Consolidated Entity
This acreage is located in the heart of
the Cane Creek Clastic Play of the Paradox Formation along the Cane Creek anticline. The primary drilling objective is the overpressured
and oil saturated Cane Creek Clastic interval. Keys to the play to date include positioning along the axis of the Cane Creek anticline
and exposure to open natural fractures. The 3-D seismic is currently being designed to image these natural fractures. This project
displays very robust economics in a low priced oil environment using the evidence obtained from a nearby competitor well that has
produced 802,967 BO in just over two years and has an EUR of 1.2 million barrels of oil. Initial production rates are around 1,500
BOPD and decline rates are very modest.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 7 of 80 |
DIRECTORS’
REPORT
30 June 2015
Financing Activities
In January 2014, the Consolidated Entity
entered into a $25 million credit facility with Mutual of Omaha, which was increased to $50 million in November 2014, subject to
borrowing base restrictions.
The current borrowing base is $19.0 million,
which is drawn to $18.7 million as at Balance Date and the date of this report.
Production Activities
During the year the Consolidated Entity produced approximately
233,646 (2014: 105,243) barrels of oil and 226,707 (2014: 182,659) Mcf of gas.
Reserves
| |
As at 30 June 2015 | |
| |
NET OIL MBBLS | | |
NET GAS MMCF | | |
NET BOE MBBLS | | |
NPV 10 $ MILLION | |
PDP | |
| 1,217 | | |
| 1,117 | | |
| 1,403 | | |
$ | 32.336 | |
PDNP | |
| 68 | | |
| 66 | | |
| 79 | | |
$ | 1.917 | |
PUD | |
| - | | |
| - | | |
| - | | |
| - | |
TOTAL PROVED | |
| 1,285 | | |
| 1,177 | | |
| 1,482 | | |
$ | 34.253 | |
Notes to Reserves Estimates
BOE MBBBLS is thousand barrels of oil equivalent
BOE is calculated using a heating value
of gas and converted as 1 BOE equals 6 MCF
PDP is Proved Developed Producing
PDNP is Proved Developed Non Producing
PUD is Proved Un-Developed
NPV 10 is Net Present Value
at 10% discount rate
The SEC pricing model that has been used
is as follows:
| |
Benchmark | | |
Proved realized | |
Oil | |
$ | 71.68/BBL | | |
$ | 59.64/BBL | |
Gas | |
$ | 3.39/MMBTU | | |
$ | 4.30/MCF | |
The PDP and PDNP reserve estimates and
forecasts of future production rates are based on historical performance and analogy data. If no production decline trend has been
established, future production rates and decline curves are based on analogous wells. If a decline curve is established, this trend
is used as the basis for estimating future production rates.
The reserve estimates utilize historical
operating costs of the wells and leases, subject to the report, and are held constant for the life of a well. Development costs
are based on authorizations for expenditure for the proposed work or actual costs for similar projects. Abandonment costs are assumed
to be offset by the salvage value as all of these projects are located onshore.
The estimated reserves quoted are based
on, and fairly represent, information and supporting documentation prepared by Stephen E Gardner an employee Ryder Scott Company,
L.P., an independent petroleum engineering consulting firm based on the definitions and disclosures guidelines of the United State
Securities and Exchange Commission (SEC). The reserves included in this release were estimated using deterministic methods and
presented as incremental quantities.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 8 of 80 |
DIRECTORS’
REPORT
30 June 2015
Mr. Gardner is a qualified petroleum reserves
and resources evaluator within the meaning of the ASX Listing Rules, and is a member of the Society of Petroleum Engineers and
the Society of Petroleum Evaluation Engineers
Mr. Gardner and Ryder Scott Company, L.P.
have each consented to the form and context in which the estimated reserves and supporting documentation are presented.
The reference point used in the reserve
estimates is the sales point, and the reserves and their value are wholly attributable to the Consolidated Entity’s economic
interest, net of royalties, operating and development costs, and production and ad valorem taxes.
The PDP reserve estimate is comprised of 33 individual wells
which fall into two groups and have the following net revenue interest, reserve volumes and value.
PDP | |
Well count | | |
Avg. NRI | | |
Net Oil MBBLS | | |
Net Gas MMCF | | |
Net BOE MBBLS | | |
NPV 10 $ MILLION | |
North Stockyard | |
| 22 | | |
| 21 | % | |
| 1,089 | | |
| 869 | | |
| 1,234 | | |
$ | 29.471 | |
Other | |
| 22 | | |
| 17 | % | |
| 131 | | |
| 255 | | |
| 174 | | |
$ | 2.861 | |
Total | |
| 33 | | |
| | | |
| 1,220 | | |
| 1,124 | | |
| 1,408 | | |
$ | 32.332 | |
North Stockyard is operated by Zavanna LLC and Slawson Exploration
Company Inc.
All PDP reserves are held by production.
The PNDP reserve estimate is comprised of 1 well in the North
Stockyard group that has the following net revenue interest, reserve volumes and value.
PNDP | |
Well count | | |
Avg. NRI | | |
Net Oil MBBLS | | |
Net Gas MMCF | | |
Net BOE MBBLS | | |
NPV 10 $ MILLION | |
North Stockyard | |
| 1 | | |
| 25 | % | |
| 68 | | |
| 67 | | |
| 80 | | |
$ | 1.917 | |
All PNDP reserves are held by production.
DIVIDENDS
No dividend was paid or recommended for
payment during the year (2014: $Nil).
SHARE OPTIONS
As at the date of this report, there were
324,667,765 (2014: 389,192,854) unissued ordinary shares under option. All option exercise prices are denominated in Australian
Dollars unless noted otherwise.
In November 2010, 29,000,000 options were
issued to the Directors. These options have an exercise price of 8 cents per share and an expiry date of 31 October 2014. These
options vested immediately and expired unexercised during the year.
In December 2010, 32,000,000 options were
issued to employees of the Company. These options have an exercise price of 8 cents and an expiry date of 31 December 2014. One
third of the options vested on 31 January 2011, one third vested on 31 January 2012 and the remaining third vested on 31 January
2013. 500,000 of these options were exercised during the year ended 30 June 2011. The remaining option expired unexercised on 31
December 2014.
In July 2011, 4,000,000 options were issued
to an employee of the Company. These options have an exercise price of 16.4 cents and an expiry date of 31 December 2014. One third
of the options vested on 31 July 2011, one third vested on 31 July 2012 and the remaining third vested on 31 July 2013. These options
expired unexercised.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 9 of 80 |
DIRECTORS’
REPORT
30 June 2015
In November 2011, 4,000,000 options were
issued to a Non-executive Director of the Company. These options have an exercise price of 15.5 cents and an expiry date of 31
October 2015. These options vested immediately.
During the year ended June 30, 2013, we
issued 97,307,526 options in conjunction with two placements and a rights offering. The options have an exercise price of 3.8 cents
and an expiry date of 31 March 2017. During the current year 25,089 (2014: 28,784) were exercised.
In August and September 2013, 132,352,082
options were issued in conjunction with two placements and a rights offering. The options have an exercise price of 3.8 cents and
an expiry date of 31 March 2017.
In November 2013, 4,000,000 options were
issued to a Non-Executive Director of the Company. These options have an exercise price of 3.9 cents and an expiry date of 30 November
2017. These options vested immediately.
In April 2014, 87,033,246 were issued in
conjunction with a placement completed at the same time. The options have an exercise price of 3.3 cents and an expiry date of
30 April 2018.
Shares issued as a result of the exercise
of options
During the year 25,089, (2014: 28,784) ordinary shares were
issued upon the exercise of 25,089 3.8 cent options (2014: 28,784) (2014: 3.8 cent options).
Remuneration Report
The remuneration report is set out under the following headings:
| A | Key management personnel disclosed in this report |
| B | Principles used to determine the nature and amount of remuneration |
| E | Equity instruments held by key management personnel |
| F | Loans to key management personnel |
The information provided in this remuneration report has been
audited as required by section 308 (3C) of the Corporations Act 2001.
| A | Key management personnel disclosed in this report |
For the purposes of this report, Key Management
Personnel (KMP) of the Consolidated Entity are defined as those persons having authority and responsibility for planning, directing
and controlling the major activities of the Company and the Consolidated Entity, directly or indirectly, including any director
(whether executive or otherwise) of the Parent Company.
For the purposes of this report, the term
“executive” encompasses the Chief Executive Officer, Company Secretary, Chief Financial Officer, Vice President –
Exploration and Vice President - Engineering. There are no further employees employed by either the Company or its subsidiaries
who meet the definition of executive, therefore only the five executives detailed above are included in this report. During the
year and as at the date of this report, unless stated otherwise, the key management personnel were:
Terry Barr |
Managing Director |
Victor Rudenno |
Non-executive Director, Chairman |
Keith Skipper |
Non-executive Director |
DeAnn Craig |
Non-executive Director |
Eugene McColley |
Non-executive Director (resigned effective 5 August 2015) |
|
|
Denis Rakich |
Company Secretary |
Robyn Lamont |
Chief Financial Officer |
David Ninke |
Vice President – Exploration |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 10 of 80 |
DIRECTORS’
REPORT
30 June 2015
| B | Principles used to determine the nature and amount
of remuneration |
The objective of the Consolidated Entity’s
executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The performance
of the Company depends upon the quality of its Directors and executives. To be successful and maximise shareholder wealth, the
Company must attract, motivate and retain highly skilled Directors and executives.
Remuneration packages applicable to the
executive Directors, senior executives and non-executive Directors are established with due regard to:
| · | Performance against set goals |
| · | Ability to attract and retain qualified
and experienced Directors and senior executives. |
The Company has formed a Compensation Committee.
Dr DeAnn Craig, Dr Victor Rudenno, Mr Eugene McColley (prior to his resignation) and Mr Keith Skipper are the current members of
the Compensation Committee. The Compensation Committee is responsible for determining and reviewing compensation arrangements for
Directors and executives. The Committee assesses the appropriateness of the nature and amount of remuneration of Directors and
executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum
stakeholder benefit from the retention of a high quality Board and executive team.
Executive Remuneration
The Company aims to reward executives with
a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to:
| · | Align the interests of executives with
those of shareholders; |
| · | Link reward with strategic goals and performance
of the Company; and |
| · | Ensure total remuneration is competitive
by market standards. |
Base pay for executives is reviewed on
the contract renewal date to ensure the base pay is set to reflect the market for a comparable role. There are no guaranteed base
pay increases included in any executives’ contracts.
Remuneration consists of fixed remuneration
and remuneration incentives in the form of options issued in the Company.
The level of fixed remuneration is reviewed
annually by the Board having due regard to performance against goals set for the year and relevant comparative information. The
Board has access to external advice independent of management if required. During the year ended 30 June 2014 the Board sought
advice from Denver Compensation and Benefits LLC in regards to the remuneration, including cash compensation and short and long
term incentives for employees of the Consolidated Entity. No external advice was sought during the year ended 30 June 2015.
Non-executive Director Remuneration
Fees and payments to non-executive Directors
reflect the demands which are made on, and the responsibilities of, the Directors. Non-executive Directors’ fees and payments
are reviewed annually by the board. The Chair’s fees are determined independently of the other non-executive Directors. The
Chair is not present at any discussions relating to determination of his own remuneration.
The ASX Listing Rules specify that the
aggregate remuneration of non-executive Directors shall be determined from time to time by a general meeting. An amount not exceeding
the amount determined is then divided between Directors as agreed. The latest determination was at the Annual General Meeting held
on 18 November 2010 when shareholders approved an aggregate remuneration of A$500,000 per annum. The amount of aggregate remuneration
sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 11 of 80 |
DIRECTORS’
REPORT
30 June 2015
Non-executive Directors are encouraged
by the Board to hold shares in the Company (purchased by Directors on market). It is considered good governance for Directors to
have a stake in the Company on whose Board they sit.
Remuneration Incentives
The Company does not have a policy in place
limiting the Directors exposure to risk in relation to the Company’s options.
The remuneration of non-executive Directors
for the year ended 30 June 2015 and 2014 is detailed in Table 1 and Table 2 of this report.
Remuneration Incentives
Directors’ remuneration is not linked
to either long term or short term incentives. The Board feels that the expiry date and exercise price of the options issued to
the Directors in the current and prior years are sufficient to align the goals of the Directors and executives with those of the
shareholders to maximise shareholder wealth. There are no performance criteria or service conditions attached to options issued
to Directors.
Vesting conditions are attached to options
that are issued to executives and employees.
Bonus plan for calendar year ended 31
December 2013
For the calendar year ended 31 December
2013, the payment of a bonus will be at the discretion of the Board of Directors. Payment of a bonus will only be payable if the
Consolidated Entity’s operations are cash flow positive for the December quarter 2013. Cash flow has been defined by the
Compensation Committee as all revenue including interest less all costs including interest. Costs will also exclude all exploration
and development expenditure for the period after deduction of all administrative costs associated with these expenditures.
While the size of the bonus plan will be
at the discretion of the Board, it may not be larger than 20% of the net cash balance after debt servicing as at 31 December 2013
and no greater than $1.2m. No bonus expense was accrued as at 30 June 2013 and no bonus was paid under this plan.
Bonus plan for calendar year ended 31
December 2014
For the calendar year ended 31 December
2014, the following goals have been established for the payment of a bonus:
Metric | |
Weight | | |
Threshold | | |
Target | | |
Stretch | |
Production | |
| 30 | % | |
| 132,000 | | |
| 158,000 | | |
| 178,000 | |
Reserves | |
| 30 | % | |
| 1367 MBOE | | |
| 1640 MBOE | | |
| 1845 MBOE | |
Discretionary | |
| 40 | % | |
| | | |
| | | |
| | |
For the period ended 30 June 2014, $132,324
has been accrued in relation to this bonus. During the year ended 30 June 2015, a further $178,421 was expensed in relation to
this bonus as both stretch targets were meet. No discretionary piece was paid.
Bonus plan for calendar year ended 31
December 2015
The Compensation Committee agreed not to
put a bonus plan in place for the calendar year ended 31 December 2015.
Amounts of remuneration
Details of remuneration of the Directors
and executives of the Company and Consolidated Entity in accordance with the requirements of the Corporations Act 2001 and
its Regulations are set out in the following tables.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 12 of 80 |
DIRECTORS’
REPORT
30 June 2015
Table 1: Key Management Personnel compensation
for the year ended 30 June 2015
| |
Short
Term | | |
Post
Employment | | |
Share-based
Payments | | |
Total | | |
Total
Performance
Related | |
| |
Salary
& Fees | | |
Bonus
Paid | | |
Non-monetary
Benefits | | |
Accrued
Bonus | | |
Super
– annuation | | |
Options | | |
Ordinary
Shares
| | |
| | |
| |
| |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
% | |
Directors | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
T.Barr | |
| 400,000 | | |
| 62,260 | | |
| 3,670 | | |
| - | | |
| 17,750 | | |
| - | | |
| - | | |
| 483,680 | | |
| 12.9 | % |
D. Craig | |
| 80,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 80,000 | | |
| 0.0 | % |
K. Skipper | |
| 67,056 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 67,056 | | |
| 0.0 | % |
V. Rudenno | |
| 88,011 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 88,011 | | |
| 0.0 | % |
E. McColley | |
| 80,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 80,000 | | |
| 0.0 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Executives | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
D. Rakich | |
| 98,561 | | |
| 9,276 | | |
| - | | |
| - | | |
| 15,088 | | |
| - | | |
| - | | |
| 122,925 | | |
| 7.5 | % |
R. Lamont | |
| 242,000 | | |
| 32,959 | | |
| 4,875 | | |
| - | | |
| 17,750 | | |
| - | | |
| - | | |
| 297,584 | | |
| 11.1 | % |
D. Ninke | |
| 276,716 | | |
| 37,688 | | |
| 1,761 | | |
| - | | |
| 17,750 | | |
| - | | |
| - | | |
| 333,915 | | |
| 11.3 | % |
| |
| 1,332,344 | | |
| 142,183 | | |
| 10,306 | | |
| - | | |
| 68,338 | | |
| - | | |
| - | | |
| 1,553,171 | | |
| | |
The bonus paid represents the amount of
the bonus expensed for the year ended 30 June 2015, with respect to the bonus applicable for the calendar year ended 31 December
2014. A portion of the bonus was accrued and expensed during the year ended 30 June 2014, however was only paid during the year
ended 30 June 2015, along with the portion expensed for the year ended 30 June 2015. All key management personnel earned 60% of
the maximum bonus payable and forfeited the remaining 40%.
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 13 of 80 |
DIRECTORS’
REPORT
30 June 2015
Table 2: Key Management Personnel compensation for the years
ended 30 June 2014
| |
Short
Term | | |
Post
Employment | | |
Share-based
Payments | | |
Total | | |
Total
Performance
Related | |
| |
Salary
& Fees | | |
Bonus
Paid | | |
Non-monetary
Benefits | | |
Accrued
Bonus | | |
Super
– annuation | | |
Options | | |
Ordinary
Shares
| | |
| | |
| |
| |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
% | |
Directors | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
T.Barr | |
| 400,000 | | |
| - | | |
| 3,470 | | |
| 33,740 | | |
| 8,750 | | |
| - | | |
| - | | |
| 445,960 | | |
| 7.6 | % |
D.Craig | |
| 74,837 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 74,837 | | |
| 0.0 | % |
K. Skipper | |
| 73,480 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 73,480 | | |
| 0.0 | % |
V. Rudenno | |
| 96,443 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 96,443 | | |
| 0.0 | % |
E. McColley* | |
| 56,508 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 80,989 | | |
| - | | |
| 137,497 | | |
| 58.9 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Executives | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
D. Rakich1 | |
| 163,350 | | |
| - | | |
| - | | |
| 5,812 | | |
| 12,208 | | |
| - | | |
| - | | |
| 181,370 | | |
| 3.2 | % |
R. Lamont1 | |
| 242,000 | | |
| - | | |
| 5,850 | | |
| 17,861 | | |
| 15,000 | | |
| - | | |
| - | | |
| 280,711 | | |
| 6.4 | % |
D. Ninke1 | |
| 276,716 | | |
| - | | |
| 2,878 | | |
| 20,423 | | |
| 15,000 | | |
| - | | |
| - | | |
| 315,017 | | |
| 6.5 | % |
D. Gralla* | |
| 240,502 | | |
| - | | |
| 1,590 | | |
| - | | |
| 13,541 | | |
| - | | |
| - | | |
| 255,633 | | |
| 0.0 | % |
| |
| 1,623,836 | | |
| - | | |
| 13,788 | | |
| 77,836 | | |
| 64,499 | | |
| 80,989 | | |
| - | | |
| 1,860,948 | | |
| | |
The accrued bonus represents the amount
of bonus that was expensed during the year ended 30 June 2014 for the bonus for the calendar year ended 31 December 2014.
* Mr McColley was appointed 3 October 2014.
* Mr Gralla resigned effective 31 May 2014.
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 14 of 80 |
DIRECTORS’
REPORT
for the year ended 30 June 2015
Table 3 Compensation options: Granted
and vested during the year (Consolidated) – in Australian Dollars
No compensation options were granted during
the year.
It is the Board’s policy that employment
contracts are only entered into with the managing director and senior executives. As such contracts have been entered into for
Mr. Barr, Mr. Gralla, Mr. Ninke and Ms Lamont. Details of these contracts are included below.
Mr. Barr – Chief Executive Officer
Effective 1 January 2011, Mr Barr has been
retained by the Company to act as the Company’s President, Managing Director and Chief Executive officer for a period of
three years with an option to extend the contract for an additional three years at the mutual agreement of both the Company and
the employee. In January 2014, his contract was extended for an additional 2 years. As of 1 January 2014, the contract allows for
total compensation of $454,700 (cash and non cash benefits).
Mr. Ninke – Vice President Exploration
Effective 1 January 2011, Mr Ninke has
been retained by the Company to act as Vice President - Exploration for a period of three years with an option to extend the contract
for an additional three years. In January 2014, Mr Ninke’s contract was extended for three years at the mutual agreement
of both the Company and the employee. As of 1 January 2014, the contract allows for total compensation of $301,417 (cash and non
cash benefits). Mr Ninke also retains the right to receive a 1% revenue royalty from production from prospects identified and recommended
prior to 31 March 2011, being the Diamondback prospect. This prospect has yet to be drilled.
Ms Lamont – Chief Financial Officer
Effective 1 January 2011, Ms Lamont has
been retained by the Company to act as the Vice President – Finance and Chief Financial Officer for a period of three years
with an option to extend the contract for an additional three years at the mutual agreement of both the Company and the employee.
In January 2014, Ms Lamont’s contract was extended for an additional three years. As of 1 January 2014, the contract allows
for total compensation of $266,700 (cash and non cash benefits).
| E | Equity instruments held by key management personnel |
| (i) | Option holdings of key management personnel |
| (ii) | Shares issued on exercise of options |
| (iii) | Shareholding of key management personnel |
| (i) | Option holdings of key management personnel |
30 June 2015 | |
Balance at beginning of period 1 July 2014 | | |
Exercised during the year | | |
Expired during the year | | |
Granted as compensation | | |
Other | | |
Balance at end of period 30 June 2015 | | |
Options vested at 30 June 2015 | |
Directors | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
D.Craig | |
| 4,000,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 4,000,000 | | |
| 4,000,000 | |
T. Barr | |
| 10,802,938 | | |
| - | | |
| (10,000,000 | ) | |
| - | | |
| - | | |
| 802,938 | | |
| 802,938 | |
V. Rudenno | |
| 6,542,241 | | |
| - | | |
| (6,000,000 | ) | |
| - | | |
| - | | |
| 542,241 | | |
| 542,241 | |
K. Skipper | |
| 6,080,000 | | |
| - | | |
| (6,000,000 | ) | |
| - | | |
| - | | |
| 80,000 | | |
| 80,000 | |
E. McColley | |
| 4,801,001 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 4,801,001 | | |
| 4,801,001 | |
Executives | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
D. Rakich | |
| 5,000,000 | | |
| - | | |
| (5,000,000 | ) | |
| - | | |
| - | | |
| - | | |
| - | |
R. Lamont | |
| 7,000,000 | | |
| - | | |
| (7,000,000 | ) | |
| - | | |
| - | | |
| - | | |
| - | |
D. Ninke | |
| 7,000,000 | | |
| - | | |
| (7,000,000 | ) | |
| - | | |
| - | | |
| - | | |
| - | |
Total | |
| 51,226,180 | | |
| - | | |
| (41,000,000 | ) | |
| - | | |
| - | | |
| 10,226,180 | | |
| 10,226,180 | |
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 15 of 80 |
DIRECTORS’
REPORT
for the year ended 30 June 2015
| (ii) | Shares issued on exercise of options |
No directors or executive options were
exercised during the year ended 30 June 2015 (2014: nil)
| (iii) | Shareholdings of key management personnel |
30 June 2015 | |
Balance at beginning of period 1 July 2014 | | |
Granted as compensation | | |
On exercise of options | | |
Net change other | | |
Balance at end of period 30 June 2015 | |
Directors | |
| | | |
| | | |
| | | |
| | | |
| | |
D. Craig | |
| 280,000 | | |
| - | | |
| - | | |
| - | | |
| 280,000 | |
T. Barr | |
| 14,546,446 | | |
| - | | |
| - | | |
| - | | |
| 14,546,446 | |
V. Rudenno | |
| 5,892,105 | | |
| - | | |
| - | | |
| - | | |
| 5,892,105 | |
K. Skipper | |
| 936,502 | | |
| - | | |
| - | | |
| - | | |
| 936,502 | |
E. McColley | |
| 8,402,500 | | |
| - | | |
| - | | |
| (6,400,000 | ) | |
| 2,002,500 | |
Executives | |
| | | |
| | | |
| | | |
| | | |
| | |
D. Rakich | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
R. Lamont | |
| 2,472,038 | | |
| - | | |
| - | | |
| - | | |
| 2,472,038 | |
D. Ninke | |
| 2,112,624 | | |
| - | | |
| - | | |
| (224 | ) | |
| 2,112,400 | |
| |
| 34,642,215 | | |
| - | | |
| - | | |
| (6,400,224 | ) | |
| 28,241,991 | |
All equity transactions with key management
personnel other than those arising from the exercise of compensation options have been entered into under terms and conditions
no more favourable than those the Consolidated Entity would have adopted if dealing at arm’s length.
In the tables above “Net Change Other”
for E. McColley represents sales of shares by a company associated with Mr McColly through a blind trust that Mr McColly has no
control over. D.Ninke holds his ordinary shares in the form of an American Depositary Receipt (“ADR’s”) in the
United States. The ratio of ordinary shares to ADR’s changed during the year from 20:1 to 200:1 and as a result Mr Ninke’s
shareholding decreased slightly.
| F | Loans to key management personnel |
No loans have been granted to key management
personnel during the current or prior year.
| G | Other transactions and balances with key management
personnel |
There were no transactions with key management
personnel or their related parties during the current or prior year other than those mentioned above.
| H | Company Performance – Graph needs to be updated |
The Company’s performance is reflected
in the movement in the Company’s earnings/(loss) per share (EPS) over time. The graph below shows Samson Oil & Gas Limited’s
basic EPS history for the past five years, including the current period as well as the average share price quoted from the ASX.
EPS for the years ended 30 June 2015, 2014,
2013, 2012 and 2011 has been measured based on the net (loss)/profit as calculated by the application of Australian Accounting
Standards.
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 16 of 80 |
DIRECTORS’
REPORT
for the year ended 30 June 2015
CORPORATE STRUCTURE
Samson Oil & Gas Limited is a Company
limited by shares that is incorporated and domiciled in Australia.
EMPLOYEES
The Consolidated Entity employed 9 employees
at 30 June 2015 (2014: 10 employees).
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The likely developments of the Consolidated
Entity during the next financial year involve the ongoing principal activities of oil and gas exploration, development and production
in the United States of America.
The Consolidated Entity plans to pursue
three objectives:
| 1) | The appraisal and development of acreage in the Hawks Springs Project, Goshen County, Wyoming |
| 2) | The appraisal and development of acreage in the Rainbow Project in Williams County, North Dakota
and |
| 3) | The continued review and appraisal of possible exploration targets in the United States of America. |
SIGNIFICANT CHANGES IN THE STATE OF
AFFAIRS
Other than the changes mentioned above
in the operating review or below in significant events after balance date, there has not been any matter or circumstance that has
occurred during the year or that has arisen since the end of the financial year that has significantly affected, or may significantly
affect:
| · | the results of those operations; |
| · | or the state of affairs of the Consolidated
Entity in subsequent financial years. |
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 17 of 80 |
DIRECTORS’
REPORT
for the year ended 30 June 2015
ENVIRONMENTAL REGULATIONS AND PERFORMANCE
The Consolidated Entity has various permits
and licenses to operate in different states within the United States of America.
There have been no significant known breaches
of the Consolidated Entity’s licence or permit conditions during the year ended 30 June 2015.
DIRECTORS’ MEETINGS
The numbers of meetings of the Company’s
board of Directors and of the Audit Committee held during the year ended 30 June 2015, and the numbers of meetings attended by
each director were:
| |
Full meetings of Directors | | |
Audit Committee Meetings | | |
Compensation Committee | |
| |
Meetings attended | | |
No. of Meetings held while in office | | |
Meetings attended | | |
No. of Meetings held while in office | | |
Meetings attended | | |
No. of Meetings held while in office | |
T.M. Barr | |
| 18 | | |
| 18 | | |
| *** | | |
| *** | | |
| *** | | |
| *** | |
D. Craig | |
| 18 | | |
| 18 | | |
| 4 | | |
| 4 | | |
| 6 | | |
| 6 | |
K. Skipper | |
| 18 | | |
| 18 | | |
| 4 | | |
| 4 | | |
| 6 | | |
| 6 | |
V. Rudenno | |
| 18 | | |
| 18 | | |
| 4 | | |
| 4 | | |
| 6 | | |
| 6 | |
E. McColley | |
| 16 | | |
| 18 | | |
| 3 | | |
| 4 | | |
| 4 | | |
| 6 | |
*** Not a member of
the Audit Committee or Compensation Committee
INDEMNIFICATION AND INSURANCE OF DIRECTORS
During the financial year, the Consolidated
Entity incurred a premium of $128,277 (2014: $129,527) to insure Directors and officers of the Consolidated Entity.
The liabilities insured include costs and
expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity
as officers of the Consolidated Entity, and any other payments arising from liabilities incurred by the officers in connection
with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the
officers or the improper use by the officers of their position or of any information to gain advantage for themselves or someone
else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to insurance against
legal costs and those relating to other liabilities.
INDEMNIFICATION AND INSURANCE OF AUDITORS
The terms of engagement of Samson’s external auditor includes
an indemnity in favour of the external auditor. This indemnity is in accordance with RSM Bird Cameron Partners standard Terms of
Business and is conditional upon RSM Bird Cameron Partners acting as external auditor. Samson has not otherwise indemnified or
agreed to indemnify the external auditors of Samson at any time during the financial year.
CORPORATE GOVERNANCE
The Directors of Samson Oil & Gas Limited
aspire to maintain the standards of corporate governance appropriate to the size of the Company. The Company’s corporate
governance statement is contained within the next section of this report.
AUDIT COMMITTEE
The members of the Audit Committee during
the year were Dr Victor Rudenno, Dr DeAnn Craig, Mr Eugene McColley (prior to his resignation) and Mr Keith Skipper.
See detail under Directors Meetings for
details of Audit Committee meetings attended by the Directors.
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 18 of 80 |
DIRECTORS’
REPORT
for the year ended 30 June 2015
SIGNIFICANT EVENTS AFTER THE BALANCE
DATE
Except for the above matters, no other
matter or circumstance has arisen since 30 June 2015 that has significantly affected, or may significantly affect:
| · | the Consolidated Entity’s operations
in future financial years; or |
| · | the results of those operations in future
financial years; or |
| · | the Consolidated Entity’s state
of affairs in future financial years. |
NON-AUDIT SERVICES
The Company may decide to employ the auditor
on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company are
important.
No non-audit services were provided by
RSM Bird Cameron Partners (the Company’s auditors for the year ended 30 June 2015) during the current year.
No non-audit services were provided by
PricewaterhouseCoopers (the Company’s auditors for the year ended 30 June 2014) during the year ended 30 June 2014.
AUDITOR INDEPENDENCE
A copy of the auditor’s independence
declaration as required under section 307C of the Corporations Act 2001 is set out on page 20.
This report is made in accordance with
a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
Signed in accordance with a resolution
of the Board of Directors.
Terence M. Barr
Director
Denver, Colorado
16 September 2015
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 19 of 80 |
|
AUDITORS INDEPENDENCE DECLARATION |
|
for the year ended 30 June 2015 |
|
RSM Bird Cameron
Partners |
|
8 st George’s Terrace Perth WA 6000 |
|
GPO Box R1253 Perth WA 6844 |
|
T +61 8 9261 9100 F +61 8 9261 9101 |
|
www.rsmi.com.au |
AUDITOR'S
INDEPENDENCE DECLARATION
As
lead auditor for the audit at the financial report of Samson Oil & Gas Limited for the year ended 30 June 2015, I declare that,
to the best of my knowledge and belief, there have been no contraventions of:
| (i) | the
auditor independence requirement of the Corporations Act 2001 in relation to the audit; and |
| (ii) | any applicable code
of professional conduct in relation to the audit. |
|
|
|
RSM BIRD CAMERON
PARTNERS |
|
|
|
|
|
|
Perth, WA |
J A KOMNINOS |
Dated: 16 September 2015 |
Partner |
Liability limited by a Scheme approved under Professional Standards Legislation |
|
Major Offices in:
Perth, Sydney, Melbourne,
Adelaide and Canberra
ABN 36 965 185 036 |
|
RSM Bird Cameron Partners is a member of the RSM network. Each member of the RSM network is an independent accounting and advisory firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. |
|
|
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 20 of 80 |
CORPORATE
GOVERNANCE STATEMENT
for the year ended 30 June 2015
CORPORATE GOVERNANCE STATEMENT
Samson Oil & Gas Limited (“the
Company”) and the board are committed to achieving and demonstrating the highest standards of Corporate Governance. The Board
continues to review the framework and practices to ensure they meet the interests of shareholders. The Company and its controlled
entities together are referred to as the Consolidated Entity in this statement.
A description of the Consolidated Entity’s
main corporate governance practice is set out below. All these practices, unless stated otherwise, were in place for the entire
year. They comply with the 2013 ASX Corporate Governance Principles and Recommendations.
Principle 1 – Lay solid foundations
for management and oversight.
The relationship between the board and
senior management is critical to the Consolidated Entity’s long term success. The Directors are responsible to the shareholders
for the performance of the Consolidated Entity in both the short and longer term and seek to balance often competing objectives
in the best interests of the Consolidated Entity as a whole. Their focus is to enhance the interests of the shareholders and other
key stakeholders and to ensure the Consolidated Entity is properly managed.
The responsibilities of the Board include:
| · | providing leadership and setting the strategic
objectives of the entity; |
| · | appointing the Chairman of the Board; |
| · | appointing and when necessary replacing
the CEO; |
| · | overseeing management’s implementation
of the entity’s strategic objectives and its performance generally; |
| · | approving operating budgets and major
capital expenditure; |
| · | overseeing the integrity of the entity’s
accounting and corporate reporting systems, including the external audit |
| · | overseeing the entity’s process
for making timely and balanced disclosure of all material information concerning the entity |
| · | ensuring that the entity has in place
an appropriate risk management framework |
| · | approving the entity’s remuneration
framework; and |
| · | monitoring the effectiveness of the entity’s
governance practices. |
Management is responsible for implanting
the Board’s strategy and objectives within the risk framework established by the Board. Management is also responsible for
providing the Board with accurate, timely and clear information in order to enable the Board to perform its responsibilities as
outlined above.
The Board Charter, available on the Company’s
website, recognizes and acknowledges that the Board acts on behalf of the shareholders and is accountable to the shareholders.
The Board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical expectations and obligations.
In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place
to adequately manage those risks.
All members of the Board, and in particular
non-executive Directors, are entitled to seek independent professional advice, at expense to the entity, when such advice is necessary
to allow the Directors to discharge their responsibilities as Directors.
The Company Secretary of the Consolidated
Entity plays an important role in supporting the effectiveness of the Board and its Committees. The role of the Company Secretary
includes:
| · | advising the Board and its committees
on governance matters; |
| · | monitoring that Board and committee policy
and procedures are followed; |
| · | coordinating the timely completion and
despatch of board and committee papers; |
| · | ensuring that the business at Board and
committee meetings is accurately captured in the minutes; and |
| · | helping to organise and facilitate the
induction and professional development of the directors |
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 21 of 80 |
CORPORATE
GOVERNANCE STATEMENT
for the year ended 30 June 2015
The Company Secretary reports directly
to the Board through the Chairman and is accessible to all directors.
The Board is responsible for the removal
and appointment of the Company Secretary.
The Board had not formalised a Diversity
Policy due to the size of the Company, however the Company is committed to diversity and recognises the benefits arising from employee
and board diversity and the importance of benefiting from all available talent. The Company operates a strictly non-discriminatory
employment policy under which employees are recruited and promoted on the basis of merit alone without regard to gender, age, race,
cultural background or ethnicity.
As a matter of record, the Consolidated
Group currently employs 2 women fill-time and one part time (out of a total staff of 9), including Ms Robyn Lamont the Company’s
Chief Financial Officer. In addition, Dr DeAnn Craig is one of three non-executive directors of the company.
The company undertakes comprehensive reference
checks prior to appointing a director, or putting that person forward as a candidate to ensure that person is competent, experienced,
and would not be impaired in any way from undertaking the duties of director. The company provides relevant information to shareholders
for their consideration about the attributes of candidates together with whether the Board supports the appointment or re-election.
Although the process has not been formalised,
the Board of Directors regularly reviews its performance, the performance of senior executives and the entity’s performance
against goals periodically set. The most recent review happened in April 2015.
The terms of the appointment of a non-executive
director, executive directors and senior executives are agreed upon and set out in writing at the time of appointment.
Principle 2 – Structure the Board
to add value
The board operates in accordance with the
broad principles set out in its charter which is available from the corporate governance information section of the company’s
website at www.samsonoilandgas.com. The charter details the board’s composition and responsibilities.
Board composition
The charter states:
| · | The board is to be comprised of both executive
and non-executive Directors with a majority of non-executive Directors. Non-executive Directors bring a fresh perspective to the
board’s consideration to strategic, risk and performance matters |
| · | In recognition of the importance of independent
views and the board’s role in supervising the activities of management, the Chair must be independent of management and all
Directors are required to exercise independent judgement and review and constructively challenge the performance of management |
| · | The Chair is elected by the full board
and is required to meet regularly with the Managing Director |
| · | The Company is to maintain a mix of Directors
on the board from different backgrounds with complementary skills and experience. |
The board seeks to ensure that:
| · | At any point in time, its membership represents
an appropriate balance between Directors with experience and knowledge of the Consolidated Entity and Directors with an external
or fresh perspective |
| · | The size of the board is conducive to
effective discussion and efficient decision-making. |
Directors’ Independence
The board has adopted specific principles
in relation to Directors’ independence. These state that when determining independence, a director must be a non-executive
and the board should consider whether the director:
| · | Is a substantial shareholder of the Company
or an officer or, or otherwise associated directly with, a substantial shareholder of the Company |
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 22 of 80 |
CORPORATE
GOVERNANCE STATEMENT
for the year ended 30 June 2015
| · | Is or has been employed in an executive
capacity by the Company or any other Consolidated Entity member within three years before commencing to serve on the board |
| · | Within the last year has been a principal
of a material professional adviser or material consultant to the Company or any other Consolidated Entity member, or an employee
materially associated with the service provided |
| · | Is a material supplier or customer of
the Company or any other Consolidated Entity member, or an officer or otherwise associated directly or indirectly with a material
supplier or customer |
| · | Has a material contractual relationship
with the Company or a controlled entity other than as director of the Consolidated Entity |
| · | Is free from any business or other relationship
which could, or could reasonably be perceived to, materially interfere with the director’s independent exercise of their
judgement. |
“Materiality” for these purposes
is determined on a qualitative basis. A transaction of any amount or a relationship is deemed material if knowledge of it may impact
the shareholders’ understanding of the director’s performance.
Recent thinking on corporate governance
has introduced the view that a director’s independence may be perceived to be impacted by lengthy service on the board. To
avoid any potential concerns, the board has determined that a director will not be deemed independent if he or she has served on
the board of the Company for more than ten years. The board continues to monitor developments on this issue.
The board assess independence each year.
To enable this process, the Directors must provide all information to the Chief Financial Officer that may be relevant to the assessment.
Board members
Details of the members of the board, their
experience, expertise, qualifications, term of office and their independent status are set out in the Directors report under the
heading “Directors”. At the date of signing the Directors’ report, there is one executive director and three
non-executive Directors. All non-executive Directors are deemed to be independent.
The Board's skills matrix indicates the
mix of skills, experience and expertise that are considered necessary at Board level for optimal performance of the Board. The
matrix reflects the Board's objective to have an appropriate mix of industry and professional experience including skills such
as leadership, governance, strategy, finance, risk, IT, HR, policy development, international business and customer relationship.
External consultants may be brought it with specialist knowledge to address areas where this is an attribute deficiency in the
Board.
Although not formally documented, the Board
feels that it has the appropriate mix of skills and diversity to appropriately perform its duties and obligations.
New directors undertake an induction program
coordinated by the Company Secretary that briefs and informs the director on all relevant aspects of the company's operations and
background. A director development program is also available to ensure that directors can enhance their skills and remain abreast
of important developments.
Term of office
The Company’s Constitution specifies
that all non-executive Directors appointed during the year, automatically retire at the next annual general meeting (“AGM”)
and are eligible for re-election at that general meeting. Any director that has been appointed during the year and is subject to
automatic retirement at the AGM is not taken into account in the automatic retirement of one third of the Directors as detail below.
At each AGM:
| (a) | one third (or if that is not a whole number, the whole number nearest to one third) of the
Directors who are not: |
| (i) | appointed, and required to retire, as detailed above;
or |
| (ii) | the Managing Director; or |
| (iii) | Directors only because they are Alternates; and |
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 23 of 80 |
CORPORATE
GOVERNANCE STATEMENT
for the year ended 30 June 2015
| (b) | any Director who would, if that Director remained in
office until the next AGM, have held that office for more than 3 years must retire from office and is eligible for re-election. |
Chair and Chief Executive Officer
The Chair is responsible for leading the
board, ensuring Directors are properly briefed in all matters relevant to their role and responsibilities, facilitating board discussions
and managing the board’s relationship with the Company’s senior executives. In accepting the position, the Chair has
acknowledged that it will require a significant time commitment and has confirmed that other positions would not hinder his effective
performance in the role of Chair.
The CEO is responsible for implementing
the Consolidated Entity’s strategies and policies. The board charter specifies that these are separate roles to be undertaken
by separate people. The CEO role is performed by the Managing Director.
Commitment
The board held 18 meetings (including those
held by circulating resolution) during the year. The number of meetings of the Company’s board of Directors and of each board
committee held during the year ended 30 June 2015, and the number of meetings attended by each director is disclosed on page 18.
It is the Company’s practice to allow
its non-executive Directors to accept appointments outside the Company with prior written approval of the board. No appointments
of this nature were requested during the year.
Prior to appointment or being submitted
for re-election, each non-executive director is required to specifically acknowledge that they will have and continue to have the
time available to discharge their responsibilities to the Company.
Board committees
The board has established an Audit Committee
to assist in the execution of the supervision of the audit by the Board. Effective 28 July 2011, the Board also formed a Compensation
Committee to assist in the Board in its responsibility in relation to the compensation of the Consolidated Entity’s executive
officers and Directors.
Audit Committee
The Audit Committee consists entirely of
independent Directors, being Dr. DeAnn Craig, Mr. Keith Skipper, Mr Eugene McColley (prior to his resignation) and Dr. Victor Rudenno.
The Audit Committee operates in accordance with a formal written charter, a copy of which is available on the Company’s website.
This committee oversees, reviews and acts on reports to the board on various auditing and accounting matters, selects the independent
auditors and oversees the scope of annual audits, fees to be paid to the independent auditors, the performance of the independent
auditors and our accounting practices. In addition, the Audit Committee oversees the Company’s compliance programs relating
to legal and regulatory requirements.
It is the board’s responsibility
to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both
the effectiveness and efficiency of significant business processes. This also includes the safeguarding of assets, the maintenance
of proper accounting records, and the reliability of financial information.
Nomination Committee
The Company has a Nomination Committee;
however the Board as a whole review the qualifications of any new board member and approve new appointments due to the size of
the Board and the Company’s operations.
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 24 of 80 |
CORPORATE
GOVERNANCE STATEMENT
for the year ended 30 June 2015
Principle 3 – Act ethically and
responsibly
Code of Conduct
The Company has developed a Code of Conduct
(“the Code”) which has been fully endorsed by the board and applies to all Directors and employees. The Code is regularly
reviewed and updated as necessary to ensure it reflects the highest standards of behaviour and professionalism and the practices
necessary to maintain confidence in the Consolidated Entity’s integrity and to take into account legal obligations and reasonable
expectations of the Company’s stakeholders.
In summary, the Code requires that at all
times all Company employees will:
| · | Act in the best interests of the Consolidated
Entity |
| · | Act honestly and with high standards or
personal integrity |
| · | Comply with the laws and regulations that
apply to the Consolidated Entity and its operations |
| · | Not knowingly participate in any illegal
or unethical activity |
| · | Not enter into any arrangement or participate
in any activity that would conflict with the entity’s best interests or that would be likely to negatively affect the entity’s
reputation |
| · | Not take advantage of the property or
information of the Consolidated Entity or its customers for personal gain or to cause detriment to the Consolidated Entity or its
customers; and |
| · | Not take advantage of their position or
the opportunities arising therefrom for personal gain. |
The Consolidated Entity also has an Insider
Trading Policy which outlines the appropriate times for the purchase and sale of the Company’s securities by Directors and
employees. The purchase and sale of Company securities by Directors and employees is only permitted during non-black out periods.
Black out periods are defined in the Company’s Insider Trading Policy. Any transactions undertaken must be notified to the
CEO or CFO prior to being entered into.
The Code and the Company’s trading
policy is discussed with each new employee. Further training is periodically provided and all employees are asked to sign an annual
declaration confirming their compliance with the Code and trading policy.
The Code requires employees who are aware
of unethical practices with the Consolidated Entity or breaches of the Company’s trading policy to report these using the
Company’s whistleblower program.
The Directors are satisfied that the Consolidated
Entity has complied with its policies on ethical standards, including trading in securities.
A copy of the Code and the Insider Trading
Policy are available on the Company’s website.
Principle 4 – Safeguard integrity
in corporate reporting
Audit Committee
The Audit Committee consists of the following
non-executive independent Directors:
D. Craig
K. Skipper
V. Rudenno
E. McColley (prior to his resignation)
Details of these Directors’ qualifications
and attendance at Audit Committee meetings are set out in the Directors report on pages 2, 3 and 18.
All members of the Audit Committee are
financially literate and have an appropriate understanding of the oil and gas industry. Dr Rudenno is deemed to be the financial
expert.
The Audit Committee operates in accordance
with a charter which is available on the Company’s website. The main responsibilities of the committee are to review and
make recommendations to the Board in relation to:
| · | The adequacy of the Consolidated Entity’s
corporate reporting processes; |
| · | Whether the Consolidated Entity’s
financial statements reflect the understanding of the Committee members of, and otherwise provide a true and fair view of, the
financial position and performance of the Consolidated Entity; |
| · | The appropriateness of the accounting
judgements or choices exercised by management in preparing the Consolidated Entity financial statements; |
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 25 of 80 |
CORPORATE
GOVERNANCE STATEMENT
for the year ended 30 June 2015
| · | The appointment or removal of the external
auditor; |
| · | The rotation of the audit engagement partner; |
| · | The scope and adequacy of the external
audit; |
| · | The independence and performance of the
external auditor; |
| · | Any proposal for the external auditor
to provide non-audit services and whether it might compromise the independence of the external auditor |
Prior to approving the Consolidated Entity’s
financial statements for a financial period, the Audit Committee receives a declaration from the CEO and CFO that, in their opinion,
the financial records of the Consolidated Entity have been properly maintained and that the financial statements comply with the
appropriate accounting standards and give a true and fair view of the financial position and performance of the entity. The CEO
and CFO also certify that the opinion has been formed on the basis of sounds system of risk management and internal control which
is operating effectively.
In fulfilling its responsibilities, the
Audit Committee:
| · | receives regular reports from management
and the external auditors; |
| · | meets with external auditors at least
twice a year, or more frequently if necessary; |
| · | reviews the processes the CEO and CFO
have in place to support their certifications to the board; |
| · | reviews any significant disagreements
between the auditors and management, irrespective of whether they have been resolved; |
| · | is given the opportunity to meet with
external auditors without the presence of management if required; and |
| · | provides the external auditors with a
clear line of communication at any time to the either the audit committee or the Chair of the board. |
The Audit Committee has authority, within
the scope of its responsibilities, to seek any information it requires from any employee or external party.
External auditors
The Company’s and Audit Committee’s
policy is to appoint external auditors who clearly demonstrate quality and independence. The performance of the external auditor
is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking into consideration
assessment of performance, existing value and tender costs. The external audit was put to tender in 2008 with PricewaterhouseCoopers
being appointed external auditors in October 2008.
The external audit was put to tender again
in 2014 and RSM Bird Cameron Partners was appointed external auditors in November 2014.
An analysis of fees paid to the external
auditors, including a break-down of fees for non-audit services, is provided in the Directors’ report and in note 21 to the
financial statements. It is the policy of the external auditors to provide an annual declaration of their independence to the Audit
Committee.
The external auditor will attend the AGM
and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.
Principle 5 - Make timely and balanced
disclosures
The Company recognises the importance of
ensuring its continuous disclosure requirements are met, and maintains a written policy that outlines the responsibilities relating
to the directors, officers and employees in complying with the company's disclosure obligations. Where any such person is of any
doubt as to whether they possess information that could be classified as market sensitive, they are required to notify the Company
Secretary immediately in the first instance. The Company Secretary is required to consult with the CEO in relation to matters brought
to his or her attention for potential announcement.
The Company Secretary has been nominated
as the person responsible for communications with the Australian Securities Exchange (“ASX”). This role includes responsibility
for ensuring compliance with the continuous disclosure requirements in the ASX Listing Rules and overseeing and co-ordinating information
disclosure to the ASX, analysts, brokers, shareholders, the media and the public.
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 26 of 80 |
CORPORATE
GOVERNANCE STATEMENT
for the year ended 30 June 2015
All announcements and presentations made
by the Consolidated Entity, are prepared by management and reviewed and authorised by the Board prior to being released. The authorisation
process in place seeks to ensure that announcements made are factual, complete, balanced and expressed in a clear and objective
manner that allows investors to assess the impact of the information when making investment decisions.
Principle 6 – Respect the rights
of security holders
The Consolidated Entity actively seeks
to provide its security holder appropriate information and facilities to allow them to exercise their rights as security holders
effectively. This includes:
| · | giving security holders ready access to
information about the Consolidated Entity and its governance; |
| · | communicating openly and honestly with
security holders; and |
| · | encouraging and facilitating their participation
in meetings of security holders. |
Detailed information with respect to the
Directors and Executives of the Consolidated Entity is included on the Consolidated Entity’s website: www.samsonoilandgas.com.
The following information is also available on the Consolidated Entity’s website:
| · | Compensation Committee Charter |
| · | Corporate Governance and Nominating Committee
Charter |
All information disclosed to the ASX is
posted on the Company’s website as soon as it is disclosed to the ASX. When analysts are briefed on aspects of the Consolidated
Entity’s operations, the material used in the presentation is released to the ASX and posted on the Company’s website.
Procedures have also been established for reviewing whether any price sensitive information has been inadvertently disclosed and,
if so, this information is also immediately released to the market.
The Company actively promotes communication
with shareholders through a variety of measures, including the use of the Company’s website and email. The Company’s
reports and ASX announcements may be viewed and downloaded from its website: www.samsonoilandgas.com or the ASX website:
asx.com.au under ASX code “SSN”. The Company also maintains an email list for the distribution of the Company’s
announcements via email in a more timely manner.
The Consolidated Entity also welcomes communication
and feedback from its security holders. The Consolidated Entity’s website contains information in order to enable security
holders to contact the Directors or Management via email, phone or mail. The Consolidated Entity also makes time available at the
Annual General Meeting for questions from security holders and holds meeting with security holders at other times as necessary.
From 30 June 2009, shareholders could elect
whether or not they wished to receive a hard copy of the Annual Report. A copy of the Annual Report is sent to all shareholders
who elected to receive one. All shareholders receive the Notice of Meeting for the Company’s Annual General Meeting.
Principle 7- Recognise and manage risk
The board, through the Audit Committee,
is responsible for ensuring there are adequate policies in relation to risk management, compliance and internal control systems.
A separate Risk Committee has not been established. The Company believes that the regular communication between senior management
and the board ensures that risks are identified and dealt with, when appropriate, in a timely manner.
The Board and the Audit Committee are responsible
for:
| · | The adequacy of the Consolidated Entity’s processes for managing
risk; and |
| · | The response of the Consolidated Entity for incidents involving fraud
or other break down of the Consolidated Entity’s internal controls. |
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 27 of 80 |
CORPORATE
GOVERNANCE STATEMENT
for the year ended 30 June 2015
Each year, the Board performs a review
of the Consolidated Entity’s fraud risk environment and makes any recommendations necessary to management to decrease fraud
risk. No recommendations were made during the current years review.
Considerable importance is placed on maintaining
a strong control environment. There is an organisation structure with clearly drawn lines of accountability and delegation of authority.
Adherence to the Code of Conduct is required at all times and the board actively promotes a culture of quality and integrity.
The Consolidated Entity has outsourced
its internal audit function to an accounting firm in the United States unrelated to its external auditors. This internal audit
function assists the Consolidated Entity with its internal controls by bringing a systematic, disciplined approach to evaluating
and continually improving the effectiveness of its risk management and internal control processes.
Environmental Risk System
The Company recognises the importance of
environmental risk management and is committed to the highest level of sound environmental management. The Company has established
best practice environmental policies for those fields that it operates and seeks to ensure the operators of its non-operated properties
operate in an environmentally sound manner.
Principle 8 – Remunerate fairly
and responsibly
A Compensation Committee was formed on
28 July 2011. The Compensation Committee Charter can be found on the Consolidated Entity’s website. The Compensation Committee
is chaired by an independent director.
The Compensation Committee is responsible
for determining and reviewing compensation arrangements for the Directors. Further detail in relation to the Company’s remuneration
policies can be found in the Remuneration Report included within the Directors’ Report.
Members of the senior executive team sign
a formal employment contract at the time of their appointment covering a range of matters including their duties, rights, responsibilities
and any entitlements on termination. The standard contract refers to a specific formal job description.
Further information on Directors’
and executives’ remuneration, including principles used to determine remuneration, is set out in the Directors’ report
under the heading “Remuneration report”.
The board also assumes responsibility for overseeing management
succession planning.
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 28 of 80 |
CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
| |
| | |
Consolidated Entity | |
| |
Note | | |
2015 | | |
2014 | |
| |
| | |
$ | | |
$ | |
| |
| | |
| | |
| |
Revenue from operations | |
| | | |
| | | |
| | |
Sale of oil and
gas | |
| 3
(a) | | |
| 13,295,006 | | |
| 10,618,628 | |
Total Revenue | |
| | | |
| 13,295,006 | | |
| 10,618,628 | |
| |
| | | |
| | | |
| | |
Cost of Sales | |
| | | |
| (12,887,425 | ) | |
| (7,644,040 | ) |
| |
| | | |
| | | |
| | |
Gross Profit | |
| | | |
| 407,581 | | |
| 2,974,588 | |
| |
| | | |
| | | |
| | |
Gain on sale of oil and gas properties | |
| 3
(a) | | |
| - | | |
| 2,918,083 | |
| |
| | | |
| | | |
| | |
Other Income | |
| 3
(a) | | |
| 168,616 | | |
| 138,846 | |
| |
| | | |
| | | |
| | |
General and administrative expenses | |
| 3
(b) | | |
| (4,949,782 | ) | |
| (6,580,570 | ) |
Finance costs | |
| 3
(c) | | |
| (788,925 | ) | |
| (204,556 | ) |
Exploration and evaluation expense | |
| 3
(e) | | |
| (12,686,943 | ) | |
| (380,283 | ) |
Derivative instruments | |
| 3
(f) | | |
| 3,112,268 | | |
| (504,592 | ) |
Abandonment cost | |
| | | |
| (412,588 | ) | |
| (468,432 | ) |
Impairment expense | |
| 11 | | |
| (19,857,456 | ) | |
| (272,438 | ) |
| |
| | | |
| | | |
| | |
Loss before income tax | |
| | | |
| (35,007,229 | ) | |
| (2,379,354 | ) |
| |
| | | |
| | | |
| | |
Income tax (expense)/benefit | |
| 4 | | |
| (3,021 | ) | |
| (885,215 | ) |
| |
| | | |
| | | |
| | |
Loss after income
tax from continuing operations | |
| | | |
| (35,010,250 | ) | |
| (3,264,569 | ) |
| |
| | | |
| | | |
| | |
Net loss for
the year attributable to owners of Samson Oil & Gas Limited | |
| 16 | | |
| (35,010,250 | ) | |
| (3,264,569 | ) |
| |
| | | |
| | | |
| | |
Other comprehensive expense, net of
tax Item that may be classified to profit and loss | |
| | | |
| | | |
| | |
Currency translation
differences | |
| | | |
| (305,838 | ) | |
| (676,153 | ) |
Total comprehensive
expense for the year attributable to the owners of Samson Oil & Gas Limited | |
| | | |
| (35,316,088 | ) | |
| (3,940,722 | ) |
| |
| | | |
| | | |
| | |
Basic loss per share (cents) from continuing
operations attributable to ordinary equity holds of the Company | |
| 22 | | |
| (1.23 | ) | |
| (0.13 | ) |
| |
| | | |
| | | |
| | |
Diluted loss per share (cents) | |
| 22 | | |
| (1.23 | ) | |
| (0.13 | ) |
| |
| | | |
| | | |
| | |
Basic loss per share for profit attributable
to the ordinary equity holders of the company | |
| 22 | | |
| (1.23 | ) | |
| (0.13 | ) |
Diluted loss per share (cents) | |
| 22 | | |
| (1.23 | ) | |
| (0.13 | ) |
The above Consolidated Statement of Comprehensive Income
should be read in conjunction with the accompanying notes.
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 29 of 80 |
CONSOLIDATED
BALANCE SHEET
As at 30 June 2015
CONSOLIDATED BALANCE SHEET
| |
| | |
Consolidated Entity | |
| |
Note | | |
2015 | | |
2014 | |
| |
| | |
$ | | |
$ | |
| |
| | |
| | |
| |
Current assets | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
| 6 | | |
| 2,062,720 | | |
| 6,846,394 | |
Trade and other receivables | |
| 7 | | |
| 3,645,152 | | |
| 5,533,444 | |
Derivative instruments | |
| 23 | | |
| 159,216 | | |
| - | |
Prepayments | |
| 8 | | |
| 372,080 | | |
| 5,388,428 | |
Total current assets | |
| | | |
| 6,239,168 | | |
| 17,768,266 | |
| |
| | | |
| | | |
| | |
Non-current assets | |
| | | |
| | | |
| | |
Other receivables | |
| 7 | | |
| 117,258 | | |
| 140,885 | |
Derivative instruments | |
| 23 | | |
| 101,269 | | |
| - | |
Plant and equipment | |
| 9 | | |
| 248,521 | | |
| 365,566 | |
Exploration and evaluation
assets | |
| 10 | | |
| 3,880,220 | | |
| 15,732,416 | |
Oil
and gas properties | |
| 11 | | |
| 28,794,738 | | |
| 32,261,936 | |
Total non-current
assets | |
| | | |
| 33,142,006 | | |
| 48,500,803 | |
Total assets | |
| | | |
| 39,381,174 | | |
| 66,269,069 | |
| |
| | | |
| | | |
| | |
Current liabilities | |
| | | |
| | | |
| | |
Trade and other payables | |
| 12 | | |
| 3,358,846 | | |
| 6,939,186 | |
Provisions | |
| 14 | | |
| - | | |
| 1,044,228 | |
Derivative instruments | |
| 23 | | |
| - | | |
| 284,376 | |
Total current liabilities | |
| | | |
| 3,358,846 | | |
| 8,267,790 | |
| |
| | | |
| | | |
| | |
Non-current liabilities | |
| | | |
| | | |
| | |
Derivative Instruments | |
| 23 | | |
| - | | |
| 128,998 | |
Borrowings | |
| 13 | | |
| 18,474,188 | | |
| 5,681,716 | |
Provisions | |
| 14 | | |
| 1,682,383 | | |
| 964,600 | |
Total non-current
liabilities | |
| | | |
| 20,156,571 | | |
| 6,775,314 | |
Total Liabilities | |
| | | |
| 23,515,417 | | |
| 15,043,104 | |
| |
| | | |
| | | |
| | |
Net assets | |
| | | |
| 15,865,757 | | |
| 51,225,965 | |
| |
| | | |
| | | |
| | |
Equity | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Contributed equity | |
| 15 | | |
| 98,296,001 | | |
| 98,340,121 | |
Accumulated losses | |
| 16 | | |
| (88,703,374 | ) | |
| (53,693,124 | ) |
Reserves | |
| 15 | | |
| 6,273,130 | | |
| 6,578,968 | |
Total equity
| |
| | | |
| 15,865,757 | | |
| 51,225,965 | |
The above Consolidated Balance Sheet should be read in conjunction
with the accompanying notes.
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 30 of 80 |
CONSOLIDATED STATEMENT OF CASHFLOWS
for the
year ended 30 June 2015
CONSOLIDATED STATEMENT OF CASHFLOWS
| |
| | |
Consolidated Entity | |
| |
Note | | |
2015 | | |
2014 | |
| |
| | |
$ | | |
$ | |
| |
| | |
| | |
| |
Cash flows from operating activities | |
| | |
| | |
| |
Receipts
from customers | |
| | | |
| 13,177,704 | | |
| 8,411,998 | |
Cash received from
commodity derivative instruments | |
| | | |
| 2,275,026 | | |
| - | |
Payments to suppliers
& employees | |
| | | |
| (10,987,741 | ) | |
| (9,892,748 | ) |
Interest received | |
| | | |
| 31,061 | | |
| 118,351 | |
Interest paid | |
| | | |
| (481,714 | ) | |
| (60,780 | ) |
Payment for derivative
instruments | |
| | | |
| - | | |
| (80,593 | ) |
Payments of abandonment
costs | |
| | | |
| (862,762 | ) | |
| (23,491 | ) |
Income
taxes refund received | |
| | | |
| (107,135 | ) | |
| - | |
Net cash flows
from/(used in) operating activities | |
| 19 | | |
| 3,044,439 | | |
| (1,527,263 | ) |
| |
| | | |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | | |
| | |
Proceeds from sale
of oil and gas properties | |
| | | |
| - | | |
| 5,192,819 | |
Payments for furniture
and fittings | |
| | | |
| (20,249 | ) | |
| (66,845 | ) |
Cash proceeds from
cash calls | |
| | | |
| - | | |
| 490,338 | |
Payments for plant
& equipment | |
| | | |
| - | | |
| - | |
Payments for exploration
and evaluation | |
| | | |
| (2,406,192 | ) | |
| (68,968 | ) |
Payments
for oil and gas properties | |
| | | |
| (17,670,628 | ) | |
| (27,122,802 | ) |
Net cash flows
used in investing activities | |
| | | |
| (20,097,069 | ) | |
| (21,575,458 | ) |
| |
| | | |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | | |
| | |
Proceeds from issue
of share capital | |
| | | |
| 880 | | |
| 12,777,722 | |
Proceeds from borrowings | |
| | | |
| 13,000,000 | | |
| 6,000,000 | |
Repayments of borrowings | |
| | | |
| (301,000 | ) | |
| - | |
Payments for costs
associated with borrowings | |
| | | |
| (83,690 | ) | |
| (276,856 | ) |
Payments
for costs associated with capital raising | |
| | | |
| (45,000 | ) | |
| (1,045,856 | ) |
Net cash flows
from financing activities | |
| | | |
| 12,571,190 | | |
| 17,455,010 | |
| |
| | | |
| | | |
| | |
Net decrease in cash and cash equivalents | |
| | | |
| (4,481,440 | ) | |
| (5,647,711 | ) |
| |
| | | |
| | | |
| | |
Cash and cash equivalents
at the beginning of the financial year | |
| | | |
| 6,846,394 | | |
| 13,170,627 | |
| |
| | | |
| | | |
| | |
Effects
of exchange rate changes on cash and cash equivalents | |
| | | |
| (302,234 | ) | |
| (676,522 | ) |
| |
| | | |
| | | |
| | |
Cash and cash
equivalents at end of year | |
| | | |
| 2,062,720 | | |
| 6,846,394 | |
The above Consolidated Statement of Cash Flows should be
read in conjunction with the accompanying notes.
Samson Oil & Gas Limited | Financial Statements – 30 June 2015 |
| |
| Page 31 of 80 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the
year ended 30 June 2015
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
| |
Attributable to equity holders of the parent | |
CONSOLIDATED | |
Contributed Equity | | |
Accumulated Losses | | |
Foreign Currency Translation Reserve | | |
Equity Reserve | | |
Share Based Payments Reserve | | |
Total Equity | |
| |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
Balance at 1 July 2013 | |
| 86,608,255 | | |
| (50,428,555 | ) | |
| 3,076,029 | | |
| (1,097,780 | ) | |
| 5,190,628 | | |
| 43,348,577 | |
Loss for the year | |
| - | | |
| (3,264,569 | ) | |
| - | | |
| - | | |
| - | | |
| (3,264,569 | ) |
Other comprehensive expense | |
| - | | |
| - | | |
| (676,153 | ) | |
| - | | |
| - | | |
| (676,153 | ) |
Total comprehensive expense for the year | |
| - | | |
| (3,264,569 | ) | |
| (676,153 | ) | |
| - | | |
| - | | |
| (3,940,722 | ) |
Transactions with owners in their capacity as owners: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Options vested | |
| - | | |
| - | | |
| - | | |
| - | | |
| 86,244 | | |
| 86,244 | |
Issue of share capital | |
| 12,777,722 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 12,777,722 | |
Share issue costs | |
| (1,045,856 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,045,856 | ) |
Balance at 30 June 2014 | |
| 98,340,121 | | |
| (53,693,124 | ) | |
| 2,399,876 | | |
| (1,097,780 | ) | |
| 5,276,872 | | |
| 51,225,965 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at 1 July 2014 | |
| 98,340,121 | | |
| (53,693,124 | ) | |
| 2,399,876 | | |
| (1,097,780 | ) | |
| 5,276,872 | | |
| 51,225,965 | |
Loss for the year | |
| - | | |
| (35,010,250 | ) | |
| - | | |
| - | | |
| - | | |
| (35,010,250 | ) |
Other comprehensive expense | |
| - | | |
| - | | |
| (305,838 | ) | |
| - | | |
| - | | |
| (305,838 | ) |
Total comprehensive expense for the year | |
| - | | |
| (35,010,250 | ) | |
| (305,838 | ) | |
| - | | |
| - | | |
| (35,316,088 | ) |
Transactions with owners in their capacity as owners: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Options issued | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Issue of share capital | |
| 880 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 880 | |
Share issue costs | |
| (45,000 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (45,000 | ) |
Balance at 30 June 2015 | |
| 98,296,001 | | |
| (88,703,374 | ) | |
| 2,094,038 | | |
| (1,097,780 | ) | |
| 5,276,872 | | |
| 15,865,757 | |
The above statement of Consolidated Changes in Equity should
be read in conjunction with the accompanying notes.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 32 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
| NOTE 1. | CORPORATE INFORMATION |
The financial statements of the Company
for the year ended and as at 30 June 2015 were authorised for issue in accordance with a resolution of the Directors on 16 September
2015. The financial statements include the financial statements for the Consolidated Entity comprised of Samson Oil & Gas Limited
and its subsidiaries, referred to hereafter as the Consolidated Entity.
Samson Oil & Gas Limited is a Company
limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. Samson also
trades an American Depository Share (“ADS”) on NYSE AMEX under the symbol "SSN". Effective 30 March 2015,
the Company changed the number of ordinary shares represented by each ADS from 20 to 200. The number of the Company’s ordinary
shares outstanding was not affected.
The nature of the operations and principal
activities of the Consolidated Entity are described in Note 18 Segment Reporting.
| NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The principal accounting
policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently
applied to all the years presented, unless stated otherwise.
Basis of preparation
These general purpose financial statements
have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards
Board and the Corporations Act 2001.
Statement on liquidity, capital resources
and capital requirements
The Group has cash and cash equivalents
of $2.0 million as at 30 June 2015 (2014 - $6.8 million) and a working capital surplus of $2.7 million (2014 - $9.5 million). The
Consolidated Entity’s primary use of capital resources has been the exploration and development of existing projects. The
Consolidated Entity has no obligation to execute exploration activities within a set timeframe and therefore has the ability to
select the timing of these activities as long as the minimum amounts required to retain tenure are met. Refer Note 17 for further
information on these commitments. Accordingly, the Consolidated Entity’s actual capital expenditure can be accelerated or
decelerated largely at its discretion.
Cash balances and ongoing cash generated
from current operations may place limits on the Consolidated Entity’s ability to facilitate further necessary development
of existing exploration and development projects. Therefore the Consolidated Entity must extend or secure sufficient funding through
renewed or additional borrowings, equity raising and or asset sales to enable sufficient cash to be available to further its development
plans. An additional $13.0 million has been drawn down from the Mutual of Omaha Bank facility and $0.3 million was repaid. $0.3
million remains available for drawdown. The Directors expect that the Consolidated Entity will be able to secure the necessary
ongoing financing through one, or a combination of, the aforementioned alternatives. Accordingly, these consolidated financial
statements have been prepared on a going concern basis in the belief that the Consolidated Entity will realise its assets and settle
its liabilities and commitments in the normal course of business and for at least the amounts stated, for a period not less than
one year from the date of signing the financial report.
Historical cost convention
These financial statements have been prepared
under the historical cost convention, except for derivative instruments, which have been measured at fair value.
Critical
accounting estimates
The preparation of financial statements
requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process
of the applying the Consolidated Entity’s accounting policies. The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the financial statements are discussed at d) below.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 33 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
The consolidated
financial statements of the Consolidated Entity also comply with International Financial Reporting Standards (IFRS) as issued by
International Accounting Standards Board (IASB).
| b) | New and
amended accounting standards adopted by the Consolidated Entity |
The Consolidated Entity has applied
the following standards and amendments for first time for their annual reporting period commencing 1 July 2015:
Reference |
|
Title |
|
Summary |
|
Application
date
(financial
years
beginning) |
|
Expected
Impact |
|
AASB 2015-3 |
|
Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality |
|
The Standard completes the AASB’s project to
remove Australian guidance on materiality from Australian Accounting Standards. |
|
1 July 2015 |
|
No expected impact |
|
AASB 2014-3 |
|
Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations |
|
This Standard amends AASB 11 to provide guidance on the accounting for acquisitions of interests in joint operations in which the activity constitutes a business. |
|
1 January 2016 |
|
No expected impact |
|
AASB 2014-4 |
|
Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation |
|
This Standard amends AASB 116 and AASB 138 to establish the principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset, and to clarify that revenue is generally presumed to be an inappropriate basis for that purpose. |
|
1 January 2016 |
|
No expected impact |
|
AASB 2014-10 |
|
Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture |
|
This amending standard requires a full gain or loss to be recognised when a transaction involves a business (even if the business is not housed in a subsidiary), and a partial gain or loss to be recognised when a transaction involves assets that do not constitute a business (even if those assets are housed in a subsidiary). |
|
1 January 2016 |
|
No expected impact |
|
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 34 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30 June 2015
AASB 2015-1 |
Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 Cycle |
The Standard makes amendments to various Australian Accounting Standards arising from the IASB’s Annual Improvements process, and editorial corrections. |
1 January 2016 |
No expected impact |
AASB 2015-2 |
Amendments to Australian Accounting Standards –Disclosure Initiative: Amendments to AASB 101 |
The Standard makes amendments to AASB 101 Presentation of Financial Statements arising from the IASB’s Disclosure Initiative project. |
1 January 2016 |
Disclosures Only |
AASB 9
|
Financial Instruments |
This Standard supersedes both AASB 9 (December 2010) and AASB 9 (December 2009) when applied. It introduces a “fair value through other comprehensive income” category for debt instruments, contains requirements for impairment of financial assets, etc. |
1 January 2018 |
No expected impact |
AASB 2014-7 |
Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) |
Consequential amendments arising from the issuance of AASB 9 |
1 January 2018 |
No expected impact |
| c) | New standards and interpretation not yet adopted by the Consolidated Entity |
Certain new accounting standards
and interpretations have been published that are not mandatory for 30 June 2015 reporting periods. The Consolidated Entity’s
assessment of the impact of the new standards and interpretations is set out below.
AASB 9 Financial Instruments,
AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian
Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2015) AASB 9 Financial Instruments
addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not
applicable until 1 January 2017. When adopted, the standard will affect the Consolidated Entity’s accounting for its available
for sale financial assets (if any are held), since AASB 9 only permits the recognition of fair value gains and losses in other
comprehensive income if they relate to equity instruments that are not held for trading. Fair value gains and losses on available
for sale debt instruments, for example, will therefore have to be recognised directly in profit or loss.
The Consolidated Entity has not
yet assessed how its derivative liabilities would be affected by the new rules, and it has not yet decided whether to adopt any
part of AASB 9 early.
The de-recognition rules have been
transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The Consolidated
Entity does not intend to adopt the new standard before its operative date of 1 January 2017.
There are no other standards that
are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods
and on foreseeable future transactions.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 35 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| d) | Principles of Consolidation |
The consolidated
financial statements incorporate the assets and liabilities of all subsidiaries of Samson Oil & Gas Limited (“parent
entity” or “Company”) as at 30 June 2015 and the results of all subsidiaries for the year then ended.
Subsidiaries
are all those entities over which the Consolidated Entity has the power to govern the financial and operating policies, generally
accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when assessing whether the Consolidated Entity controls another entity.
Subsidiaries
are fully consolidated from the date on which control is transferred to the Consolidated Entity. They are deconsolidated from the
date that control ceases.
The acquisition
method of accounting is used to account for the acquisition of subsidiaries by the Consolidated Entity (refer to Note 2 (cc)).
All intercompany
balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised
losses are eliminated unless costs cannot be recovered.
The financial
statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies.
Non-controlling
interests not held by the Consolidated Entity are allocated their share of net profit after tax in the profit and loss and are
presented within equity in the Consolidated Balance Sheet, separately from parent shareholders’ equity.
The Consolidated
Entity treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners
of the Consolidated Entity. A change in ownership interest results in an adjustment between the carrying amounts of the controlling
and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment
to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable
to owners of Samson Oil & Gas Limited.
When the Consolidated
Entity ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its
fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the
purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In
addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the
Consolidated Entity had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised
in other comprehensive income are reclassified to profit or loss.
If the
ownership interest in a jointly-controlled entity or an associate is reduced but joint control or significant influence is
retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to
profit or loss where appropriate.
| e) | Significant accounting judgments, estimates and assumptions |
Estimates and
judgements are continually evaluated and are based on historical experience and other factors, including expectations of future
events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
Critical
judgements in applying the entity’s accounting policies
Management has
identified the critical accounting policies set out below for which significant judgments, estimates and assumptions are made.
Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results
of the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be
found in the relevant notes to the financial statements.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 36 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
Exploration
and evaluation
The Consolidated
Entity’s accounting policy for exploration and evaluation is set out in Note 2 (r). The application of this policy necessarily
requires management to make certain estimates and assumptions as to future events and circumstances, in particular the assessment
of whether economic quantities of reserves have been found. Any such estimates and assumptions may change as new information becomes
available. If, after having capitalised expenditure under our policy, we conclude that we are unlikely to recover the expenditure
by future exploitation or sale, then the relevant capitalised amount will be written off to the profit and loss.
When assessing
whether deferred exploration expenditure should be carried forward from the prior year the Consolidated Entity reviews each project
on an individual basis, taking into account, but not limited, to the ongoing activity in relation to that field, including any
new agreements or contracts entered into during the year and the Consolidated Entity’s near future plans for the field or
prospect.
The Consolidated
Entity believes that exploration expenditures are incurred with the intent of making further investment decisions and are not directly
related to the revenue producing activities of the Consolidated Entity and are therefore more appropriately presented as investing
activities.
Critical
accounting estimates and assumptions
The carrying
amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The key estimates and assumptions that have
a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual
reporting period are:
Share-based
payment transactions
The Consolidated
Entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value is determined using a Black-Scholes option pricing model.
The value of
equity-settled transactions with other service providers, excluding employees, are measured based on the value of the service received
by the Consolidated Entity. If a value for this cannot be reasonably measured, the value will be measured by reference to the fair
value of the equity instruments at the date services are provided. The Consolidated Entity also uses a Black-Scholes option pricing
model to determine this fair value, where appropriate.
Impairment
of assets
In determining
the recoverable amount of assets, in the absence of quoted market prices, estimations are made regarding the present value of future
cash flows using asset specific discount rates. For oil and gas properties, expected future cash flow estimation is based on proved
and probable reserves, future production profiles, commodity prices and costs. The estimates of future cash flows are made as at
each balance date, using the price estimates from the forward curve as at that date.
Restoration
obligations
The Consolidated
Entity estimates the future removal costs of oil and gas wells and production facilities at the time of installation of the assets.
In most instances, the removal of assets will occur many years into the future. This requires judgmental assumptions regarding
removal data, future environmental legislation, and the extent of reclamation activities required the engineering methodology for
estimating future cost, future removal technologies in determining the removal cost, and liability specific discount rates to determine
the present value of these cash flows. For more detail regarding the policy in respect of the provision for restoration refer to
Note 2 (v). The discount rate used to determine the present value of the cash flows was 6.45% (2014:6.45%).
Reserves
estimates
Estimates of
recoverable quantities of proven and probable reserves, that are used to review the carrying value of oil and gas properties, include
assumptions regarding commodity prices, exchange rates, discount rates, and production and transportation costs for future cash
flows. It also requires interpretation of complex and difficult geological and geophysical models in order to make an assessment
of the size, shape, depth and quality of reservoirs and their anticipated recoveries. The economic, geological and technical factors
used by the Consolidated Entity to estimate reserves may change from period to period. Changes in reserves can impact asset carrying
values, the provision for restoration and the recognition of deferred tax assets, due to changes in estimated future cash flows.
Reserves are integral to the amount of depreciation, depletion, amortisation and impairment charged to the profit and loss.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 37 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
The impairment
expense recognised in the Consolidated Statement of Comprehensive Income is $19.9 million (2014: $0.3 million).
Reserve estimates
are prepared by internal engineers and external independent third parties in accordance with guidelines prepared by the Society
of Petroleum Engineers. The reserve estimates as at 30 June 2015 and 30 June 2014 were prepared by independent reserve engineers,
Ryder Scott Company.
Units of
production method of depreciation and amortisation
The Consolidated
Entity applies the units of production method for depreciation of its oil and gas properties and assets based on hydrocarbons produced.
These calculations require the use of estimates and assumptions. Significant judgment is required in assessing the available reserves
and future production associated with the assets to be depreciated under this method. Factors that must be considered in determining
reserves and future production are the Company’s history of exploiting reserves and the relevant time frames, markets and
future developments. When these factors change or become known in the future, such differences will impact pre-tax profit and carrying
values of assets. It is impracticable to quantify the effect of these changes in these estimates and assumptions in future periods.
The reassessment of rates occurs at 31 December and 30 June each and is performed consistently from period to period.
Revenue is recognised
and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits
will flow to the Consolidated Entity and the revenue can be reliably measured. Amounts disclosed as revenue are net of rebates
and amounts collected on behalf of third parties.
The following
specific recognition criteria must also be met before revenue is recognised:
Sale of oil
and gas
Revenue is recognised
when the significant risks and rewards of ownership of the product have passed to the buyer and the amount of revenue can be measured
reliably. Risks and rewards are considered to have passed to the buyer at the time of delivery of the product to the customer.
Gas imbalances
occur when the Consolidated Entity sells more or less than its entitled ownership percentage of total gas production. Any amount
received in excess of the Consolidated Entity’s share is treated as a liability. If the Company receives less than its entitled
share, the underproduction is recorded as a receivable.
Interest income
Interest
income is recognised using the effective interest method. When a receivable is impaired, the Consolidated Entity reduces the carrying
amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the
instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the
original effective interest rate
Dividend
income
Revenue is
recognised when the Consolidated Entity’s right to receive the payment is established.
Borrowing costs
incurred for the construction of any qualifying assets are capitalised during the period of time that is required to complete and
prepare the asset for its intended use or sale. Other borrowing costs are expensed.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 38 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
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 whether the arrangement conveys a right
to use the asset.
Consolidated
Entity as lessee
Finance leases,
which transfer to the Consolidated Entity substantially all the risks and benefits incidental to ownership of the leased item,
are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the
minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as an expense in
profit or loss.
Capitalised
leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable
certainty that the Consolidated Entity will obtain ownership by the end of the lease term.
Operating lease
payments are recognised as an expense in the profit and loss on a straight line basis over the lease term. Operating lease incentives
are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction
of the liability.
| i) | Cash and cash equivalents |
Cash and cash
equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months
or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purposes
of Consolidated Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding
bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the balance sheet.
Cash and cash
equivalents exclude restricted cash.
The Consolidated
Entity may be required to place funds with third parties as bonds for environmental restoration. These bonds are carried as non-current
receivables when the release of cash is not expected to occur within twelve months. The bonds are represented by cash and are valued
as cash.
| k) | Trade and other receivables |
Trade receivables
are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less
provision for impairment. Trade receivables are generally due for settlement within 30-90 days. They are presented as current assets
unless collection is not expected for more than 12 months from reporting date.
Collectability
of trade receivables is reviewed on an ongoing basis. Debts that 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 Consolidated Entity will not be able to collect all amounts due according to the original terms of the receivables.
Significant financial difficulties in the debtor, probability that the debtor will enter bankruptcy or financial reorganisation,
and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable is impaired.
The amount of the 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.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 39 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
The amount of
the impairment loss is recognised in profit and 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 and loss.
Prepayments
relate to certain goods and services whereby the payment has been made and the resultant benefit is derived over future periods.
| m) | Foreign currency translation |
(i) Functional
and presentation currency
The functional
currency of Samson Oil & Gas Limited is Australian Dollars. The functional currency of Samson Oil & Gas USA, Inc and Samson
Oil and Gas USA Montana, Inc is United States Dollars. The presentation currency of the Consolidated Entity is United States Dollars.
(ii)Transaction
and balances
Foreign currency
transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange
rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are
deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment
in a foreign operation.
Foreign exchange
gains and losses that relate to borrowings are presented in the profit and loss, within finance costs. All other foreign exchange
gains and losses are presented in the profit and loss on a net basis within other income or other expenses.
Non-monetary
items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value
was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value
gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through
profit or loss are recognised in profit or loss as part of the value gain or loss and translation differences on non-monetary assets
such as equities classified as available-for-sale financial assets are recognised in other comprehensive income.
(iii) Translation
of Consolidated Entity functional currency to presentation currency
The results
and financial position of Consolidated Entity entities (none of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are translated into the presentation currency as follows:
| · | Assets and liabilities for each balance
sheet presented are translated at the closing rate at the date of that balance sheet |
| · | Income and expense for each profit and
loss are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates
prevailing on transaction dates, in which case income and expenses are translated at the dates of the transactions) |
| · | Equity is translated at the historical
exchange rate that approximates the rate in effect at the date of the transaction, and |
| · | All resulting exchange differences are
recognised in other comprehensive income. |
On consolidation,
exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial
instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is sold
or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences are recognised
in profit and loss, as part of the gain or loss on sale where applicable.
Goodwill and
fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities
and translated at the closing rate.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 40 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
The income tax
expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
and to unused tax losses.
The current
income tax charge is calculated on the basis of the tax rates and laws enacted or substantively enacted at the end of the reporting
period in the countries where the company’s subsidiaries operate and generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income
tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of
the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled.
Deferred tax
assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts
will be available to utilise those temporary differences and losses.
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 tax 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.
| o) | Goods and Services Tax (GST) |
Revenues, expenses
and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority.
In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables
and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable
to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are
presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable
from, or payable to the taxation authority, are presented as operating cash flows.
Plant and equipment
is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of
replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major
overhaul is performed its cost is recognised in the carrying amount of plant and equipment as a replacement only if it is eligible
for capitalisation. All other repairs and maintenance are recognised in profit or loss as incurred.
Depreciation
expense is estimated over the useful life of the assets as follows:
Furniture and
fittings – over two to five years using the straight line method
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 41 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
Computer equipment
– over two to five years using the straight line method
Motor vehicles
– over three to five years using the straight line method
Lease and well
equipment – over the life of the reserve (usually 3-25 years) – approximated using the units of production method.
The assets’
residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.
Refer Note 2
(t) for the Consolidated Entity’s policy in relation to Impairment of Non-Financial Assets.
Derecognition
and disposal
An item of plant
and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.
Any gain or
loss arising on derecognition (calculated as the difference between the net disposal proceeds and the carrying amount of the asset)
is included in profit and loss in the year the asset is derecognised.
Oil and gas
properties include capitalised project expenditure and development expenditure.
The Consolidated
Entity uses the units of production method to amortise costs carried forward in relation to its oil and gas properties. For this
approach, the calculations are based on proved and probable reserves as determined by our reserves determination.
Impairment on
the carrying value of oil and gas properties is based on proved and probable reserves and is assessed on a field by field basis.
| r) | Exploration and evaluation assets |
Exploration and evaluation expenditure
in respect of each area of interest is accounted for using the successful efforts method of accounting. The successful efforts
method requires all exploration and evaluation expenditure to be expensed in the period in which it is incurred, except the costs
of wells and the costs of acquiring interests in new exploration assets, which are capitalised as intangible exploration and evaluation
assets. The costs of wells that have been initially capitalised pending the results of the well, are reviewed at the completion
of the well when well results are known and transferred to oil and gas properties or expensed as appropriate.
An
area of interest refers to an individual geographical area where the presence of oil or a natural gas field is considered favourable
or has been proved to exist, and in most cases will comprise an individual oil or gas field. This means all exploration and evaluation
costs, including general permit activity, geological and geophysical costs are expensed as incurred except where:
| · | the expenditure or asset acquired relates
to an exploration discovery, that at balance date, the assessment of whether or not an economically recoverable reserve is not
yet complete and active and significant operations in relation to the area of interest is continuing; or |
| · | it is expected that the expenditure or
asset acquired will be recouped through successful exploitation, or alternatively, by its sale. |
Exploration costs are classified
as cash flows from investing activities in the cash flow statement.
Exploration and evaluation assets
are assessed for impairment when facts and circumstances indicate that the carrying amount of an exploration and evaluation asset
may exceed its recoverable amount. When assessing for impairment consideration is given to but not limited to the following:
| · | the period for which the Consolidated
Entity has the right to explore |
| · | planned and budgeted future exploration
expenditure |
| · | activities incurred during the year, and |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 42 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| · | activities planned for future periods. |
| s) | Investments and other financial assets |
Investments
and financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either
financial assets at fair value through profit or loss, loans and receivables, or available-for-sale financial assets. The classification
depends on the purpose for which the investments were acquired. Designation is re-evaluated at each financial year end, but there
are restrictions on reclassifying to other categories.
When financial
assets are recognised initially, they are measured at fair value, plus in the case of assets not at fair value through profit or
loss, directly attributable transaction costs.
Recognition
and Derecognition
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. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the group has transferred substantially all the risks and rewards of ownership.
When securities
classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are
reclassified to profit or loss as gains and losses from investment securities.
Measurement
At initial recognition,
the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit
or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial
assets carried at fair value through profit or loss are expensed in profit or loss.
Loans and receivables
are subsequently carried at amortised cost using the effective interest method.
Available-for-sale
financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses
arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are
presented in profit or loss within other income or other expenses in the period in which they arise. Dividend income from financial
assets at fair value through profit or loss is recognised in profit or loss as part of revenue from when the Consolidated Entity’s
right to receive payments is established. Interest income from these financial assets is included in the net gains/(losses).
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 costs are recognised in profit or loss, and other changes in carrying
amount are recognised in other comprehensive income. Changes in the fair value of other monetary and non-monetary securities classified
as available-for-sale are recognised in the other comprehensive income.
(i) Financial
assets at fair value through profit or loss
Financial
assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’.
Financial assets are classified as held for trading in that they are acquired for the purpose of selling in the near term with
the intention of making a profit. Derivatives are also classified as held for trading unless they are designated as effective hedging
instruments. Gains or losses on financial assets held for trading are recognised in profit or loss and the related assets are classified
as current assets in the balance sheet.
(ii) Loans
and receivables
Loans and
receivables are non-derivative financial assets with fixed determinable payments that are not quoted in an active market. Such
assets are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in the profit and
loss when the loans and receivables are derecognised or impaired. These are included in current assets, except for those with maturities
greater than 12 months after the balance date, which are classified as non-current.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 43 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
(iii)
Impairment
The Consolidated
Entity assesses at each reporting period whether there is objective evidence that a financial asset or group of financial assets
is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective
evidence of impairment as result of one more events that occurred after the initial recognition of the asset (a ‘loss event’)
and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets
that can be reliability estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged
decline in the fair value of the security below its cost is considered an indicator that the assets are impaired. Impairment losses
are recognised through the profit and loss.
Assets
carried at amortised cost
For loans
and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s
original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated
profit and loss. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective
interest rate determined under the contract. As a practical expedient, the Consolidated Entity may measure impairment on the basis
of an instrument’s fair value using an observable market price.
If, in a
subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised (such as an improvement in a debtor’s credit rating), the reversal of the previously
recognised impairment loss is recognised in the consolidated profit and loss.
Assets
classified as available-for-sale
If there
is objective evidence of impairment for available-for-sale financial assets, the cumulative loss –measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised
in profit or loss – is removed from equity and recognised in profit or loss.
Impairment
losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent period.
If the fair
value of a debt instrument classified as available-for-sale increases in a subsequent period and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through
profit or loss.
| t) | Impairment of non-financial assets |
The Consolidated
Entity assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists,
or when annual impairment testing for an asset is required, the Consolidated Entity makes an estimate of the asset’s recoverable
amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined
for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets
or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset
is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating
unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable
amount. Impairment losses relating to continuing operations are recognised in profit and loss.
An assessment
is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer
exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment
loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since
the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount.
That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. After such a reversal the depreciation
charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic
basis over its remaining useful life.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 44 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| u) | Trade and other payables |
These amounts
represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year which are
unpaid. These amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented
as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their
fair value and subsequently measured at amortised cost using the effective interest method.
Provisions for
legal claims and make good obligations are recognised when the Consolidated Entity 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
including 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 end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the
passage of time is recognised as interest expense.
The Consolidated
Entity 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 rehabilitation of affected areas.
Typically, the
obligation arises when the asset is installed at the production location. When the liability is initially recorded, the estimated
cost is capitalised by increasing the carrying amount of the related oil and gas properties. Over time, the liability is increased
for the change in present value based on a risk adjusted pre-tax discount rate appropriate to the risks 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.
Each year, the
Consolidated Entity reviews the estimated restoration costs and the estimated period in which the obligation is likely to occur
to ensure that they are appropriate. The Consolidated Entity also reviews the discount rate to ensure it is still appropriate.
If changing any of these variables results in a decrease in the liability the difference is recorded against the corresponding
asset, which is included in oil and gas properties in the balance sheet.
Costs incurred
that relate to an existing condition caused by past operations, and that do not have a future economic benefit, are expensed.
| x) | Employee leave benefits |
Wages, salaries,
annual leave and sick leave
Liabilities
for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within
12 months of the reporting date are recognised in other payables in respect of employee’s services up to the reporting date.
They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave
are recognised when the leave is taken and measured at the rates paid or payable.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 45 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
Long service
leave
The liability
for long service is measured as the fair value of expected future payments to be made in respect of services provided by employees
up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting
date on national government bonds with terms to maturities and currencies that match, as closely as possible, the estimated future
cash outflows. The liability for long service leave is presented in current payables.
| y) | Share-based payment transactions |
Equity settled
transactions:
The Consolidated
Entity provides benefits to employees (including senior executives) of the Consolidated Entity in the form of share based payments,
whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).
The cost of
equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at
which they are granted. The fair value at grant date is 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.
In valuing equity
settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares
of Samson Oil & Gas Limited (market conditions) if applicable.
The cost of
equity-settled transactions is recognised, together with a corresponding increase in equity, over the period, if any, in which
the performance and/or services conditions are fulfilled, ending on the date on which the relevant employees become fully entitled
to the award (the vesting period).
At each subsequent
reporting date until vesting, the cumulative charge to profit and loss is the product of:
| i. | The grant date fair value of the award; |
| ii. | The current best estimate of the number of awards that will vest, taking into account such
factors as the likelihood of employee turnover during the vesting period and the likelihood of non-market performance
conditions being met; and |
| iii. | The expired portion of the vesting period. |
The charge
to profit and loss for the period is the cumulative amount as calculated above, less the amounts already charged in previous periods.
There is a corresponding entry to equity.
Until an award
has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than originally anticipated to
do so. Any award subject to a market condition is considered to vest irrespective of whether or not that market condition is fulfilled,
provided that all other conditions are satisfied.
If the terms
of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms had not been modified. In addition,
an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is
otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled
award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award
is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award
on the date that it is granted, the cancelled and the new award are treated as they were a modification of the original award,
as described in the previous paragraph.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 46 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
The dilutive
effect, if any, of the outstanding options is reflected as additional share dilution in the computation of earnings per share.
The expense
for share based payments in relation to Directors and executives is recognised in the parent entity.
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.
Where any member
of the Consolidated Entity purchases the Company’s equity instruments, for example as a result of a share buy-back or share
based payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted
from equity attributable to the owners of Samson Oil & Gas Limited. Where such ordinary shares are subsequently reissued, any
consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, and
is included in equity attributable of the owners of Samson Oil & Gas Limited.
| i) | Basic earnings per share |
Basic earnings
per share is calculated by dividing:
| · | The result 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 and excluding
treasury shares (Note 22). |
| ii) | Diluted earnings per share |
Diluted earnings
per share adjusts the figures used in the determination of basic earnings per share to take into account:
| · | The after income tax effect of interest
and other financing costs associated dilutive potential ordinary shares, and |
| · | The weighted average number of additional
ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. |
Joint arrangements
Under AASB 11 Joint Arrangements
investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the
contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Consolidated
Entity has joint operations. The Consolidated Entity recognises its direct right to the assets, liabilities, revenues and expenses
of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated
in the financial statements under the appropriate headings. Details of the joint operation are set out in note 25.
The acquisition method of accounting
is used to account for all business combinations, including business combinations involving entities or businesses under common
control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition
of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by
the group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair
value of any pre-existing equity interest in the subsidiary. Acquisition related costs are expensed as incurred. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially
at their fair values at the acquisition date. On an acquisition by acquisition basis, the group recognises any non-controlling
interesting in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s
net identifiable assets.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 47 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
The excess of the consideration
transferred and the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous
equity interest in the acquiree over the fair value of the group’s share 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 and the measurement
of all amounts has been reviewed, the different is recognised directly in profit or loss as a 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.
Contingent consideration is classified
either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value
with changes in fair value recognised in profit or loss.
Operating segments are reported
in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker “CODM”. The CODM,
who is responsible for allocating resources and assessing performance of operating segments, has been identified as the Board of
Directors.
| ee) | Derivative Financial Instruments |
The Company utilizes swap and
collar option contracts to hedge the effect of price changes on a portion of its future oil and natural gas production.
The objective of the Company’s hedging activities and the use of derivative financial instruments is to achieve more predictable
cash flows. While the use of these derivative instruments limits the downside risk of adverse price movements, they also may limit
future revenues from favorable price movements. The Company may, from time to time, opportunistically restructure existing derivative
contracts or enter into new transactions to effectively modify the terms of current contracts in order to improve the pricing parameters
in existing contracts or realize the current value of the Company’s existing positions. The Company may use the proceeds
from such transactions to secure additional contracts for periods in which the Company believes it has additional unmitigated commodity
price risk.
The use of derivatives involves
the risk that the counterparties to such instruments will be unable to meet the financial terms of such contracts. The Company’s
derivative contracts are with a single multinational bank with no history of default with the Company. The derivative contracts
may be terminated by a non-defaulting party in the event of default by one of the parties to the agreement. Previously, collateral
under the revolving credit facility supported the Company’s collateral obligations under the Company’s derivative contracts.
Therefore, the Company is not required to post additional collateral when the Company is in a derivative liability position.
The Company has elected not to
apply hedge accounting to any of its derivative transactions and, consequently, the Company recognizes mark-to-market gains and
losses in earnings currently, rather than deferring such amounts in accumulated other comprehensive income for those commodity
derivatives that would qualify as cash flow hedges.
Borrowings are initially recognised
at fair value, net of transaction costs incurred. Borrowing are subsequently measured at amortised costs. Any difference between
the proceeds (net of transaction costs) and the redemption amount is recognised in profit and loss over the period of the borrowings
using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the
loan to the extent that it is probable that some or all of the facility will be drawn down. Deferred transaction costs are expensed
to the profit and loss over the period of the borrowings using the effective interest rate.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 48 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
Borrowings are classified as current
liabilities unless the Consolidated Entity has an unconditional right to defer settlement of the liability for at least 12 months
after the reporting date.
| gg) | Parent entity financial information |
The financial information for
the parent entity, Samson Oil & Gas Limited, disclosed in Note 29 has been prepared on the same basis as the consolidated financial
statements, except as set out below.
| (i) | Investments in subsidiaries, associates and joint operations entities |
Investments in subsidiaries, associates
and joint operations entities are accounted for at cost in the financial statements of Samson Oil & Gas Limited.
The Consolidated Entity does not
meet the definition of a Group for the purposes of Tax Consolidation therefore there are no tax sharing or funding agreements in
place.
| hh) | Current and non-current classification |
Assets and liabilities are presented
in the statement of financial position based on current and non-current classification.
As asset is classified as current
when: it is either expected to be realised or intended to be sold or consumed in normal operating cycle; it is help primarily for
the purpose of trading; it is expected to be realised within 12 months after the reporting cycle; or the asset is cash or cash
equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current
when: it is either expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due
to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability
for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities
are always classified as non-current.
| ii) | Fair value measurement |
When an asset or liability, financial
or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the priced that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of principal
market, the most advantageous market.
Fair value is measured using the
assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests.
For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate
in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured
at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs use
in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based
on a reassessment of the lowest level of input that is significant to the fair value measurement.
For recurring and non-recurring
fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is
deemed to be significant. External valuers are selected based on market knowledge and reputation. Where this a significant change
in in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification
of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 49 of 80 |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
for
30 June 2015
| NOTE
3. | REVENUE
AND EXPENSES |
| |
Consolidated Entity | |
Revenue and Expenses from Continuing Operations | |
2015 | | |
2014 | |
| |
$ | | |
$ | |
a Revenue | |
| | | |
| | |
Sale of oil and
gas | |
| | | |
| | |
Oil
sales | |
| 12,460,171 | | |
| 9,616,660 | |
Gas sales | |
| 834,835 | | |
| 1,001,341 | |
Other
liquids | |
| - | | |
| 627 | |
Total
revenue | |
| 13,295,006 | | |
| 10,618,628 | |
| |
| | | |
| | |
Gain
on sale of oil and gas properties | |
| - | | |
| 2,918,083 | |
| | $2.5
million of the gain on sale of oil and gas properties shown on the Statement of Comprehensive
Income for the year ended 30 June 3014 relates to the sale of a portion of the Consolidated
Entity’s interest in undeveloped acreage in our North Stockyard project, $0.2 million
relates to the sale of our Deep Draw well, a single well field in Wyoming and $0.2 million
relates to the sale of the Rennerfeldt wells in our North Stockyard project. |
Other Income | |
| | | |
| | |
Interest
income | |
| 30,759 | | |
| 118,076 | |
Other | |
| 137,857 | | |
| 20,770 | |
Total
other income | |
| 168,616 | | |
| 138,846 | |
| |
Consolidated Entity | |
b General and Administration | |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Employee Benefits | |
| | | |
| | |
Salary
and employee benefits | |
| (2,682,292 | ) | |
| (2,963,028 | ) |
Share based
payments | |
| - | | |
| (86,244 | ) |
Total
employee expense benefits | |
| (2,682,292 | ) | |
| (3,049,272 | ) |
| |
| | | |
| | |
Other General
and Administration | |
| | | |
| | |
Consultants’
fees | |
| (284,770 | ) | |
| (476,626 | ) |
Lease payments | |
| (169,340 | ) | |
| (128,890 | ) |
Legal costs | |
| (235,455 | ) | |
| (694,972 | ) |
Assurance, accounting
and taxation advice | |
| (510,151 | ) | |
| (1,274,240 | ) |
Travel and accommodation | |
| (151,531 | ) | |
| (241,806 | ) |
Filing and listing
fees | |
| (5,451 | ) | |
| (38,876 | ) |
Insurance | |
| (266,779 | ) | |
| (302,690 | ) |
Investor and public
relations | |
| (295,031 | ) | |
| (342,169 | ) |
Printing, postage
and stationery | |
| (4,574 | ) | |
| (25,670 | ) |
Other | |
| (344,408 | ) | |
| (5,359 | ) |
Total
other general and administration expenses | |
| (2,267,490 | ) | |
| (3,531,298 | ) |
Total
general and administration expenses | |
| (4,949,782 | ) | |
| (6,580,570 | ) |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 50 of 80 |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
for
30 June 2015
| |
Consolidated Entity | |
c Finance costs | |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Interest expense | |
| (598,940 | ) | |
| (91,422 | ) |
Amortisation of borrowing costs | |
| (135,694 | ) | |
| (33,632 | ) |
Unwinding of discount
associated with restoration obligation | |
| (54,291 | ) | |
| (79,502 | ) |
Total finance
costs | |
| (788,925 | ) | |
| (204,556 | ) |
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
d Depreciation and amortisation | |
| | | |
| | |
Included in cost of sales: | |
| | | |
| | |
Depreciation on lease and
well equipment | |
| (1,226,618 | ) | |
| (693,325 | ) |
Depletion of oil
and gas properties | |
| (5,543,590 | ) | |
| (2,844,906 | ) |
Subtotal included
in cost of sales | |
| (6,770,208 | ) | |
| (3,538,231 | ) |
| |
| | | |
| | |
Included in general and administrative | |
| | | |
| | |
Depreciation of
furniture and fittings | |
| (137,114 | ) | |
| (122,759 | ) |
Total depreciation
and amortisation | |
| (6,907,322 | ) | |
| (3,660,990 | ) |
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
| |
| | |
| |
e Exploration and evaluation expense | |
| | | |
| | |
General exploration expense | |
| (222,427 | ) | |
| (193,429 | ) |
Deferred exploration expenditure written
off | |
| (12,416,909 | ) | |
| - | |
Dry hole costs | |
| (47,607 | ) | |
| (186,854 | ) |
Total exploration
and evaluation expense | |
| (12,686,943 | ) | |
| (380,283 | ) |
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
| |
| | |
| |
f Derivative instruments | |
| | | |
| | |
Realised income/(expense)
recognised in relation to derivative instruments | |
| 2,438,409 | | |
| (91,218 | ) |
Unrealised income/(expense)
recognised in relation to the movement in the fair value of derivative instruments | |
| 673,859 | | |
| (413,374 | ) |
Total derivative
instruments income/(expense) | |
| 3,112,268 | | |
| (504,592 | ) |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 51 of 80 |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
for
30 June 2015
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
The major components of income tax benefit
are: | |
| | | |
| | |
Profit and Loss | |
| | | |
| | |
Current income tax | |
| (3,021 | ) | |
| (885,215 | ) |
Deferred income
tax | |
| - | | |
| - | |
Income tax benefit
reported in the profit and loss | |
| (3,021 | ) | |
| (885,215 | ) |
| |
| | | |
| | |
Loss before
income tax | |
| (35,007,229 | ) | |
| (2,379,354 | ) |
| |
| | | |
| | |
At the Australian statutory income tax
rate of 30% (2014: 30%) | |
| 10,502,169 | | |
| 713,806 | |
Expenditure not allowable for income
tax purposes | |
| 42,481 | | |
| (91,181 | ) |
Change in deferred tax rate | |
| (101,415 | ) | |
| 190,633 | |
Effect of US tax rate differential | |
| 2,178,034 | | |
| 107,842 | |
Deferred tax assets not brought to account
as realisation is not considered probable | |
| (13,779,957 | ) | |
| (1,028,511 | ) |
Alternative minimum tax receivable written
off | |
| (2,821 | ) | |
| (777,804 | ) |
Adjustment for
deferred tax of prior periods | |
| 1,158,488 | | |
| - | |
Aggregate income
tax benefit | |
| (3,021 | ) | |
| (885,215 | ) |
In
the prior year, the Consolidated Entity has recognised income tax expense of $0.1 million with respect to income tax payable to
the State of North Dakota following the sale of exploration acreage in Wyoming in 2011. The Consolidated Entity has also recognised
$0.8 million in federal income tax expense following a change in recoverability with respect to an amount previously recognised
as a receivable from the Internal Revenue Service. During the course of an ongoing audit by the IRS, the Consolidated Entity has
concluded that it does not qualify for the Small Business tax payer exemption from the payment of AMT and therefore is not entitled
to a refund.
This
audit was concluded during year ended 30 June 2015 and the Consolidated Entity was required to pay $2,087 in additional taxes
with respect to this audit.
| |
Balance Sheet | | |
Profit and Loss | |
Consolidated | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Deferred Income Tax | |
| | | |
| | | |
| | | |
| | |
Deferred income tax
at 30 June relates to the following: | |
| | | |
| | | |
| | | |
| | |
Deferred tax liabilities | |
| | | |
| | | |
| | | |
| | |
Hedge Liability | |
| - | | |
| - | | |
| - | | |
| - | |
Loan
fees | |
| - | | |
| - | | |
| - | | |
| - | |
Gross
deferred tax liabilities | |
| - | | |
| - | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Deferred tax assets | |
| | | |
| | | |
| | | |
| | |
Tax losses | |
| 25,995,717 | | |
| 16,570,466 | | |
| 9,425,250 | | |
| 2,993,524 | |
Oil and gas properties | |
| 2,897,275 | | |
| (1,510,321 | ) | |
| 4,407,596 | | |
| (4,394,885 | ) |
Other | |
| 265,771 | | |
| 167,944 | | |
| 97,828 | | |
| 54,611 | |
Alternative minimum
tax credit | |
| 780,444 | | |
| - | | |
| 780,444 | | |
| - | |
Deferred
tax assets not brought to account as realisation is not regarded as probable | |
| (29,939,207 | ) | |
| (15,228,089 | ) | |
| (14,711,118 | ) | |
| 1,346,750 | |
Gross
deferred tax assets | |
| - | | |
| - | | |
| | | |
| | |
Deferred tax benefit | |
| - | | |
| - | | |
| - | | |
| - | |
Net
deferred tax recognised in the balance sheet | |
| - | | |
| - | | |
| | | |
| | |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 52 of 80 |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
for
30 June 2015
The
Consolidated Entity has tax losses carried forward arising in Australia of $13,316,288 (2014: $11,040,738). The benefit of these
losses of $3,994,887 (2014: $3,312,221) will only be obtained in future years if:
| i. | the
Consolidated Entity derives future assessable income of a nature and an amount sufficient
to enable the benefit from the deduction for the losses to be realised; and |
| ii. | the
Consolidated Entity has complied and continue to comply with the conditions for deductibility
imposed by law; and |
| iii. | no
changes in tax legislation adversely affect the Consolidated Entity in realising the
benefit from deduction for the losses. |
The
Consolidated Entity has Federal net operating tax losses in the United States of approximately $61,688,534 (2014: $36,755,473).
Future years are limited to an estimated $403,194 per year as a result of a change in ownership of the one of the subsidiaries
which occurred in January 2005. Net operating losses generated after this ownership change are not limited due to any known ownership
changes. If not utilised, the tax net operating losses will expire during the period from 2020 to 2035.
In
addition to the above mentioned Federal carried forward losses in the United States, the Company also has approximately $31,231,317
(2014: $20,871,364) of State carried forward tax losses, with expiry dates between June 2016 and June 2034. A deferred income
tax asset in relation to these losses has not been recognised as realisation of the benefit is not regarded as probable.
The
deferred tax benefit the Consolidated Entity will ultimately realise is dependent both upon the loss recoupment legislation in
the United States and taxable income at the time recoupment.
The
Consolidated Entity does not meet the definition of a group for the purposes of applying tax consolidation.
No
dividends have been declared during the year (2014: $Nil).
The
balance of the franking account at the end of the year was nil (2014:$Nil).
| NOTE
6. | CASH
AND CASH EQUIVALENTS |
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Cash
at bank and on hand | |
| 2,062,720 | | |
| 6,846,394 | |
Cash
at bank earns interest at floating interest rates based on daily bank deposit rates.
The
Consolidated Entity’s exposure to interest rate risk is discussed in note 27. The maximum exposure to credit risk at the
reporting date is the carrying amount of cash mentioned above.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 53 of 80 |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
for
30 June 2015
| NOTE
7. | TRADE
AND OTHER RECEIVABLES |
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
CURRENT | |
| | | |
| | |
Trade
receivables (i) | |
| 3,224,595 | | |
| 3,107,292 | |
Net GST Receivable | |
| 30,665 | | |
| 20,314 | |
Receivable –
JO partner (ii) | |
| 251,028 | | |
| 473,398 | |
Accrued JO partner
receivables (iii) | |
| 24,120 | | |
| 1,022,820 | |
Receivable - sale
of well bore | |
| - | | |
| 890,781 | |
Other
receivables (iv) | |
| 114,744 | | |
| 18,839 | |
| |
| 3,645,152 | | |
| 5,533,444 | |
| (i) | These
receivables relate to the sale of oil and gas. They are non-interest bearing, unsecured
and are generally on 30-90 day terms. |
| (ii) | These
receivables relate to monies to be recovered from joint operation partners who participate
in wells that Samson are the operator of. These funds are non-interest bearing and unsecured. |
| (iii) | These
receivables relate to monies for which the costs have been incurred by Samson but have
not yet been billed to the joint operation partners. |
| (iv) | These
receivables are non-interest bearing, unsecured and are due for repayment within the
next twelve months. |
| a) | Foreign
exchange and interest rate risk - current receivables |
Information
about the Consolidated Entity’s exposure to foreign currency risk and interest rate risk in relation to trade and other
receivables is provided in Note 27.
| b) | Fair
value and credit risk – current receivables |
Due
to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.
The
maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. All
receivables are unsecured. Refer to Note 27 for more information on the risk management policy of the Consolidated Entity and
the credit quality of trade receivables.
No
receivables are past due (2014:$Nil). No impairment has been recognised in respect of any of these receivables (2014:$Nil).
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
| |
| | |
| |
NON CURRENT | |
| | | |
| | |
Other
receivables (v) | |
| 117,258 | | |
| 140,885 | |
| |
| 117,258 | | |
| 140,885 | |
| (v) | These
receivables are non-interesting bearing, unsecured and not due for repayment within the
twelve months. The carrying value of these receivables approximates their fair value. |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 54 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| c) | Risk Exposure – non current receivables |
Information about the Consolidated Entity’s
exposure to credit risk, foreign exchange and interest rate risk is provided in Note 27. The maximum exposure to credit risk at
the reporting date is the carrying amount of the receivables mentioned above.
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
CURRENT | |
| | | |
| | |
Prepaid drilling expenses (i) | |
| 153,846 | | |
| 5,163,708 | |
Other prepaid expenses | |
| 218,234 | | |
| 224,720 | |
| |
| 372,080 | | |
| 5,388,428 | |
| (i) | Prepaid drilling expenses include cash advanced to the operators of the drilling operations in
advance of the drilling commencing. |
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Office Equipment | |
| | | |
| | |
Cost | |
| 801,949 | | |
| 787,009 | |
Accumulated depreciation | |
| (553,428 | ) | |
| (421,433 | ) |
Total Plant and Equipment | |
| 248,521 | | |
| 365,576 | |
| |
| | | |
| | |
At 1 July, net of accumulated depreciation | |
| 365,566 | | |
| 367,656 | |
Additions | |
| 20,069 | | |
| 142,635 | |
Disposals | |
| - | | |
| (21,966 | ) |
Depreciation charge for the year | |
| (137,114 | ) | |
| (122,759 | ) |
At 30 June, net of accumulated depreciation and impairment | |
| 248,521 | | |
| 365,566 | |
| NOTE 10. | EXPLORATION AND EVALUATION ASSETS |
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Balance at the beginning of the year | |
| 15,732,416 | | |
| 14,831,749 | |
Expenditure capitalised | |
| 564,713 | | |
| 1,087,521 | |
Value written off to the Statement of Comprehensive Income | |
| (12,416,909 | ) | |
| (186,854 | ) |
Balance at the end of the year | |
| 3,880,220 | | |
| 15,732,416 | |
Expenditure incurred in the current year
and prior year, relates to drilling costs associated with the Bluff well in the Hawk Springs project. This well has been drilled
to the target depth and the plans for the completion of the well are currently being reviewed. During the drilling of this well,
hydrocarbon shows were recorded however the economic viability of this well has yet to be established.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 55 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
Expenditure written off in the current
year relates to the Consolidated Entity’s Roosevelt and South Prairie project. Although the Consolidated Entity reached an
agreement with Momentus Energy (“Momentus”) in the prior year with respect to the sale of acreage in the Roosevelt
project, Momentus failed to drill the well required under the agreement and the agreement was voided. The Consolidated Entity is
not planning any further exploration in the area and therefore the decision was made to write off all costs associated with the
project during the year. The Consolidated Entity has also written off certain costs associated with the Hawk Springs project in
Wyoming following the expiration of leases.
In September 2014, a second well was drilled
in the South Prairie project in North Dakota. This well was the second dry hole in the project, therefore the Consolidated Entity
wrote off all costs associated with the project during the year.
Expenditure written off in the prior year
relates to the costs associated with drilling of Spirit of America 2 in the Hawk Springs project.
The recoverability of the carrying value
of deferred exploration and evaluation expenditure is dependent on the successful exploitation, or alternatively sale, of the respective
areas of interest.
| NOTE 11. | OIL AND GAS PROPERTIES |
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Oil and Gas Properties | |
| 72,550,529 | | |
| 43,790,310 | |
Work in progress | |
| - | | |
| 6,308,468 | |
Accumulated depletion | |
| (19,884,806 | ) | |
| (13,343,949 | ) |
Accumulated Impairment | |
| (23,870,985 | ) | |
| (4,492,893 | ) |
Total Oil and
Gas Properties | |
| 28,794,738 | | |
| 32,261,936 | |
| |
| | | |
| | |
Proved Developed Producing Properties | |
| | | |
| | |
At 1 July, net of accumulated depreciation and impairment | |
| 32,261,936 | | |
| 18,801,422 | |
Additions | |
| 28,760,219 | | |
| 19,273,061 | |
Additions - WIP, net of amounts relating to wells completed during the year, which are recorded in additions | |
| (5,599,753 | ) | |
| 1,246,455 | |
Disposals | |
| - | | |
| (3,248,333 | ) |
Net impairment expense | |
| (19,857,456 | ) | |
| (272,438 | ) |
Depreciation charge | |
| (6,770,208 | ) | |
| (3,538,231 | ) |
At 30 June,
net of accumulated depreciation and impairment | |
| 28,794,738 | | |
| 32,261,936 | |
Work in progress
Work in progress in the prior year relates
to costs associated with the permitting and drilling of wells in Samson’s in fill development project in its North Stockyard
field. During the current year all wells that had costs recorded in work in progress at 30 June 2014 were completed and the associated
costs were transferred to proved developed producing properties.
Sale of Assets
On 15 August 2013, the Company divested half its equity position
in the undeveloped acreage in the North Stockyard project to Slawson Exploration Company Inc. (“Slawson”) for $5.6
million in cash, while retaining our full interest in the currently producing wells in the North Stockyard field. $0.9 million
of the purchase price was subject to the delivery of a useable well bore in the Billabong well. The workover of the Billabong well
has been completed and subsequent to year end, Slawson agreed to take ownership of the well bore. As a result this transaction
the rig contract with Frontier was also terminated, with no penalty payment or additional liability to Samson. Slawson are now
the operator of the project going forward for the development of the undeveloped acreage.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 56 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
Along with the undeveloped acreage for
which a gain on sale was recognized in the Statement of Comprehensive Income of $2.5 million (valued at $2.6 million less net assets
sold of $0.1 million), the Consolidated Entity has also transferred 25% working interest in the drilled but not yet completed,
at the time of sale, Billabong and Sail and Anchor wells, leaving the Consolidated Entity with a 25% working interest in each of
the two wells for $2.9 million, recognized as a reimbursement in the capitalised costs for these assets in the Balance Sheet.
In April 2014, the Consolidated Entity
sold its interests in Rennerfeldt 1-13H and Rennerfeldt 2-13H in the North Stockyard project in North Dakota to the operator of
the project for $0.2 million, resulting in a $0.2 million gain. The Consolidated Entity had made cash prepayments with respect
to these wells to the operator, which were applied to new wells that it’s participating in.
In March 2014, the Consolidated Entity
finalised the sale of it’s Deep Draw well in Campbell County, Wyoming for cash of $0.2 million, resulting in a $0.2 million
gain. This well had been previously fully impaired and had no value.
There were no sales of properties during
the year ended 30 June 2015.
Impairment of oil and gas properties
At 30 June 2015, the Consolidated Entity
reviewed the carrying value of its oil and gas properties for impairment. An independent review by the Consolidated Entity’s
reserve engineers, Ryder Scott Company was performed to assess the recoverable amount based on the net present value of the Consolidated
Entity’s assets on a field by field basis (by cash generating unit). The factors used to determine net present value include,
but are not limited to, recent sales prices of comparable properties, the present value of future cash flows, net of estimated
operating and development costs using estimates of reserves, future commodity pricing, future production estimates, anticipated
capital expenditures and various discount rates commensurate with the risk associated with realizing the projected cash flows.
The discount rate used to assess the recoverable amount (based on the fair value less cost of disposal) was 10% (2014: 12%). The
fair value less cost of disposal has been based on the expected useful lives of the respective fields.
The current year impairment expense of
$19.9 million (2014: $0.3 million) is result of the impact of the decreasing oil price on the Consolidated Entity’s reserve
value in relation to the North Stockyard and Rainbow properties. The prior year impairment relates to poor production results of
our non-operated Abercrombie well in our Roosevelt project in Montana.
| NOTE 12. | TRADE AND OTHER PAYABLES |
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Trade payables (i) | |
| 3,139,432 | | |
| 6,576,551 | |
Accrual of bonus payable (ii) | |
| - | | |
| 132,324 | |
Other payables (iii) | |
| 219,414 | | |
| 230,311 | |
Total Trade
and Other Payables | |
| 3,358,846 | | |
| 6,939,186 | |
| (i) | Trade payables are non-interest bearing and normally settled on 30 day terms. |
| (ii) | The accrual in the prior year relates to the accrual of the bonus payable for the period 1 January
2014 to 31 December 2014. This was paid out during the current year. There is no bonus plan in place for the calendar year ended
31 December 2015, therefore no accrual has been made. |
| (iii) | Other payables include accruals for annual leave. The entire obligation is presented as current,
since the Consolidated Entity does not have an unconditional right to defer settlement. Based on past experience, the Consolidated
Entity expects employees to take the full amount of accrued leave within the next twelve months. |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 57 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| |
Consolidated Entity | |
Non Current | |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Secured | |
| | | |
| | |
Credit facility with Mutual of Omaha (i) | |
| 18,699,000 | | |
| 6,000,000 | |
Less deferred borrowing costs | |
| (224,812 | ) | |
| (318,284 | ) |
| |
| | | |
| | |
| |
| 18,474,188 | | |
| 5,681,716 | |
| (i) | Fair values are not materially different to their carrying amounts |
In January 2014, the Consolidated Entity
entered into a $25 million credit facility with Mutual of Omaha Bank, with an initial borrowing base (funds available to be drawdown)
of $8 million, of which $6 million has been drawn down at 30 June 2014. During the current year, the borrowing base was increased
to $19 million, of which $18.7 million is drawdown. The next borrowing base redetermination is expected to be completed in October
2015, based on June 2015 reserve values. The facility matures 28 January 2017. The interest rate is LIBOR plus 4.0% or approximately
4.02% for the year ended 30 June 2015 (2014: 3.98%).
The credit facility includes the following
covenants, tested on a quarterly basis:
| · | Current ratio greater than 1 |
| · | Debt to EBITDAX (annualized) ratio no
greater than 3.5 |
| · | Interest coverage ratio minimum of between
2.5 and 1.0 |
As at 30 June 30 2015 we were in compliance
with all of these quarterly covenants.
The credit facility also includes an annual
cap on general and administrative expenditure of $6.0 million per calendar year. The first test date for this covenant was for
the 12 months ended 31 December 2014 and the Consolidated Entity was in compliance with this covenant.
While the Consolidated Entity expect to
be in compliance with these covenants based on the current debt levels, if the Consolidated Entity is not in compliance with the
financial covenants in the credit facility, or the Consolidated Entity does not receive a waiver from the lender, and if the Consolidated
Entity fails to cure any such noncompliance during the applicable cure period, the due date of the debt could be accelerated by
the lender. In addition, failure to comply with any of the covenants under the credit facility could adversely affect the Consolidated
Entity’s ability to fund ongoing operations.
The credit facility is secured by all assets
of the Consolidated Entity.
The Consolidated Entity incurred $0.2 million
in borrowing costs which have been deferred and will be amortized over the life of the facility using the effective interest rate
method.
| |
Consolidated Entity | |
| |
2014 | | |
2013 | |
| |
$ | | |
$ | |
| |
| | | |
| | |
Provision for Restoration - current | |
| - | | |
| 1,044,228 | |
| |
| | | |
| | |
Provision for Restoration - non current | |
| 1,682,383 | | |
| 964,600 | |
Total provision
for restoration | |
| 1,682,383 | | |
| 2,008,828 | |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 58 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
A provision for restoration is recognised
in relation to the oil and gas activities for costs such as reclamation, plugging wells and other costs associated with the restoration
of oil and gas properties. Estimates of the restoration obligations are based on anticipated technology and legal requirements
and future costs, which have been discounted to their present value. In determining the restoration provision, the entity has assumed
no significant changes will occur in the relevant government legislation in relation to the restoration of such oil and gas properties
in the future.
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Provision for Restoration | |
| | | |
| | |
Balance at beginning of year | |
| 2,008,828 | | |
| 1,333,095 | |
Recognised upon acquisition or development of new assets | |
| 169,561 | | |
| 245,407 | |
Work performed | |
| (876,742 | ) | |
| (23,493 | ) |
Increase/(decrease) in liability due to change in estimated costs | |
| 326,445 | | |
| 374,317 | |
Unwinding of discount | |
| 54,291 | | |
| 79,502 | |
Balance
at end of the year | |
| 1,682,383 | | |
| 2,008,828 | |
The increase during the year ended 30 June
2015 relates to the provision recognised for new drilling in our North Stockyard field.
| NOTE 15. | CONTRIBUTED EQUITY AND RESERVES |
| (a) | Issued and paid up capital |
Contributed Equity | |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
2,837,847,022 ordinary fully paid shares including shares to be issued (2014 – 2,837,821,933 ordinary fully paid shares including shares to be issued) | |
| 98,296,001 | | |
| 98,340,121 | |
Movements in contributed equity
for the year | |
2015 | | |
2014 | |
| |
No. of shares | | |
$ | | |
No. of shares | | |
$ | |
Opening balance | |
| 2,837,756,933 | | |
| 98,340,121 | | |
| 2,229,165,163 | | |
| 86,608,255 | |
Capital Raising (i) | |
| - | | |
| - | | |
| 608,562,986 | | |
| 12,776,715 | |
Shares issued upon exercise of options (ii) | |
| 25,089 | | |
| 880 | | |
| 28,784 | | |
| 1,007 | |
Transaction costs incurred | |
| - | | |
| (45,000 | ) | |
| - | | |
| (1,045,856 | ) |
Shares on issue at balance date | |
| 2,837,782,022 | | |
| 98,296,001 | | |
| 2,837,756,933 | | |
| 98,340,121 | |
| |
| | | |
| | | |
| | | |
| | |
Shares to be issued as part of Kestrel acquisition (iii) | |
| 65,000 | | |
| - | | |
| 65,000 | | |
| - | |
Closing Balance | |
| 2,837,847,022 | | |
| 98,296,001 | | |
| 2,837,821,933 | | |
| 98,340,121 | |
| (i) | In August and September 2013, the Company issued 318,452,166 ordinary shares priced at 2.5 cents
(Australian) each to raise US$7,337,138 to investors in the United States and Australia. |
In April 2014, the Company issued
290,110,820 ordinary shares priced at 0.02 cents (Australian) each to raise US$5,439,577 to investors in the United States and
Australia
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 59 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| (ii) | During the course of the year the Company issued 25,089 (2014: 28,784) ordinary shares upon
the exercise of 25,089 (2014: 28,784) options. |
The exercise price of the options
exercised was (average price based on the exchange rate on the date of exercise) A$0.038 per share/US$0.035 per share (2014: A$0.038
per share/US$0.035 per share) to raise US$880 (2014: US$1,007).
| (iii) | These shares were issued to Kestrel shareholders throughout 2008 as part of the offer to non-US
resident shareholders whereby they received five Samson shares for every one Kestrel share held. The Samson share price on the
date the acceptance of the offer was received was deemed to be the fair value of the share. As at balance date acceptances had
been received for 65,000 (2014:65,000) shares which have not yet been issued. These shares will be issued upon the presentation
of Kestrel Share Certificates by the owner of the shares. |
All references to exercise price
and deemed value of options are in Australian Dollars.
At the end of the year, there
were 324,667,765 (2014: 389,192,854) unissued ordinary shares under option. All option exercise prices are denominated in Australian
Dollars unless noted otherwise.
In November 2010, 29,000,000
options were issued to the Directors. These options have an exercise price of 8 cents per share and an expiry date of 31 October
2014. These options vested immediately and expired unexercised.
In December 2010, 32,000,000
options were issued to employees of the Company. These options have an exercise price of 8 cents and an expiry date of 31 December
2014. One third of the options vested on 31 January 2011, one third vested on 31 January 2012 and the remaining third vested on
31 January 2013. 500,000 of these options were exercised during the year ended 30 June 2011. The remaining options expired unexercised.
In July 2011, 4,000,000 options
were issued to an employee of the Company. These options have an exercise price of 16.4 cents and an expiry date of 31 December
2014. One third of the options vested on 31 July 2011, one third vested on 31 July 2012 and the remaining third vested on 31 July
2013. These options expired unexercised.
In November 2011, 4,000,000
options were issued to a Non-executive Director of the Company. These options have an exercise price of 15.5 cents and an expiry
date of 31 October 2015. These options vested immediately.
During the year ended June 30,
2013, we issued 97,307,526 options in conjunction with two placements and a rights offering. The options have an exercise price
of 3.8 cents and an expiry date of 31 March 2017. During the current year 25,089 (2014: 28,784) were exercised.
In August and September 2013,
we issued 132,380,866 options in conjunction with two placements. The options have an exercise price of 3.8 cents and an expiry
of 31 March 2017.
In November 2013, we issued
4,000,000 options to a Director of the Company. These options have an exercise price of 3.9 cents and an expiry of 30 November
2017. The options vested immediately.
In April 2014, we issued 87,033,246
options in conjunction with a placement. The options have an exercise price of 3.3 cents and an expiry of 30 April 2018.
| (c) | Terms and Conditions of Contributed Equity |
| | Ordinary shares have the right to receive dividends as declared and, in the event of winding up
the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid
up on shares held. |
Ordinary shares entitle their
holder to one vote, either in person or by proxy, at a meeting of the Company.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 60 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| |
Consolidated Entity | |
Reserves | |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Foreign currency translation reserve | |
| 2,094,038 | | |
| 2,399,876 | |
Equity reserve | |
| (1,097,780 | ) | |
| (1,097,780 | ) |
Share based payments reserve | |
| 5,276,872 | | |
| 5,276,872 | |
Total Reserves | |
| 6,273,130 | | |
| 6,578,968 | |
| |
Consolidated Entity | |
Movement in Reserves | |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Foreign currency translation reserve | |
| | | |
| | |
Balance 1 July | |
| 2,399,876 | | |
| 3,076,029 | |
Currency translation differences | |
| (305,838 | ) | |
| (676,153 | ) |
Balance at 30 June | |
| 2,094,038 | | |
| 2,399,876 | |
| |
| | | |
| | |
Share based payments reserve | |
| | | |
| | |
Balance 1 July | |
| 5,276,872 | | |
| 5,190,628 | |
Options vested | |
| - | | |
| 86,244 | |
Balance at 30 June | |
| 5,276,872 | | |
| 5,276,872 | |
Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve
is used to record exchange rate differences arising from the translation of financial statements of the Parent Entity with a functional
currency that differs to the presentation currency of the Consolidated Entity.
Share Based Payments Reserve
This reserve is used to record the value
of share based payments granted.
Equity Reserve
This reserve is used to recognise the difference
between the consideration paid and book value of minority interests’ acquired.
| NOTE 16. | ACCUMULATED LOSSES |
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Balance previously reported at the beginning of the year | |
| (53,693,124 | ) | |
| (50,428,555 | ) |
| |
| | | |
| | |
Net (loss)/profit attributable to members of Samson Oil & Gas Limited, after income tax | |
| (35,010,250 | ) | |
| (3,264,569 | ) |
| |
| | | |
| | |
Balance at the
end of the year | |
| (88,703,374 | ) | |
| (53,693,124 | ) |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 61 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| (a) | Exploration Commitments |
Due to the nature of the Consolidated Entity’s
operations in exploring and evaluating areas of interest, it is very difficult to accurately forecast the nature or amount of future
expenditure, although it will be necessary to incur expenditure in order to retain present interests. Expenditure commitments on
mineral tenure for the Consolidated Entity can be reduced by selective relinquishment of exploration tenure or by the renegotiation
of expenditure commitments.
The minimum level of exploration commitments
expected as at year ended 30 June 2015 is $25,000 (2014: $200,000), which includes the minimum amounts required to retain tenure.
It is anticipated that the exploration expenditure commitments in the ensuing periods will be at a similar level.
| (b) | Development Expenditure |
As at 30 June 2015, the Consolidated Entity
has to drill a second well in its Rainbow project area prior to 4 February 2016. If the Consolidated Entity fails to drill this
well, it will lose 655 acres in the Rainbow project. This well has yet to proposed and the Consolidated Entity has not yet determined
if this well will be drilled.
| (c) | Operating Lease Commitments – Consolidated Entity
as lessee |
The Parent and its subsidiaries have entered
into operating leases for the lease of its office space in Perth, Western Australia and Denver, Colorado.
Future minimum rentals payable under non-cancellable
operating leases as at 30 June are as follows:
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Minimum lease payments | |
| | | |
| | |
- not later than one year | |
| 135,658 | | |
| 139,032 | |
- later than one year and not later than five years | |
| 19,944 | | |
| 136,633 | |
Aggregate lease
expenditure contracted for at balance date | |
| 155,602 | | |
| 275,665 | |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 62 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| NOTE 18. | SEGMENT REPORTING |
Operating segments are now reported in
a manner that is consistent with the internal reporting provided to the chief operating decision maker (“CODM”). The
CODM, who is responsible for allocating resources and assessing performance of operating segments, has been identified as the Board
of Directors.
The group operates primarily in one business
segment being oil and gas exploration, development and production in the United States of America.
The following table presents revenue and loss
information regarding geographic segments for the year ended 30 June 2015 and 30 June 2014 as presented to the Board
of Directors.
| |
United States of America – continuing operations | | |
Other segments | | |
Consolidated | |
| |
2015 $ | | |
2014 $ | | |
2015 $ | | |
2014 $ | | |
2015 $ | | |
2014 $ | |
Segment
revenue from external customers | |
| 13,295,006 | | |
| 10,618,628 | | |
| - | | |
| - | | |
| 13,295,006 | | |
| 10,618,628 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Segment result before amortisation and impairment | |
| (7,705,200 | ) | |
| 2,312,654 | | |
| (537,251 | ) | |
| (758,580 | ) | |
| (8,242,451 | ) | |
| 1,554,074 | |
Impairment | |
| (19,857,456 | ) | |
| (272,438 | ) | |
| - | | |
| - | | |
| (19,857,456 | ) | |
| (272,438 | ) |
Depreciation and amortisation | |
| (6,907,322 | ) | |
| (3,660,990 | ) | |
| - | | |
| - | | |
| (6,907,322 | ) | |
| (3,660,990 | ) |
Total Segment
result | |
| (34,469,978 | ) | |
| (1,620,774 | ) | |
| (537,251 | ) | |
| (758,580 | ) | |
| (35,007,229 | ) | |
| (2,379,354 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Segment Assets | |
| 38,172,627 | | |
| 64,181,496 | | |
| 1,208,546 | | |
| 2,087,573 | | |
| 39,381,173 | | |
| 66,269,069 | |
Additions to non current assets | |
| 23,745,248 | | |
| 21,749,672 | | |
| - | | |
| - | | |
| 23,745,248 | | |
| 21,749,672 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Segment Liabilities | |
| (23,007,265 | ) | |
| (14,875,744 | ) | |
| (154,607 | ) | |
| (167,360 | ) | |
| (23,161,872 | ) | |
| (15,043,104 | ) |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 63 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| NOTE 18. | SEGMENT REPORTING (CONT) |
Segment Result | |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Total segment result | |
| (35,007,229 | ) | |
| (2,379,354 | ) |
Income tax expense from continuing operations | |
| (3,021 | ) | |
| (885,215 | ) |
Net loss for the year attributable to owners of Samson Oil & Gas Limited | |
| (35,010,250 | ) | |
| (3,264,569 | ) |
All revenue from the United States of America segment is from
customers based in the United States of America.
Other Segments revenue relates principally to interest income
earned on cash balances in Australia.
NOTE 19. RECONCILIATION OF LOSS AFTER INCOME TAX TO NET
CASH FLOW FROM OPERATING ACTIVITIES
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
| |
| | |
| |
Reconciliation of the net loss after tax to the net cash flows from operations | |
| | | |
| | |
| |
| | | |
| | |
Net loss after tax | |
| (35,010,250 | ) | |
| (3,264,569 | ) |
Depreciation of non-current assets | |
| 6,907,322 | | |
| 3,660,990 | |
Net gain on sale of assets | |
| - | | |
| (2,918,083 | ) |
Share based payments | |
| - | | |
| 86,244 | |
Amortisation of borrowing costs | |
| 135,694 | | |
| 33,632 | |
| |
| | | |
| | |
Unwinding of discount associated with restoration obligation | |
| 54,291 | | |
| 79,502 | |
| |
| | | |
| | |
Abandonment costs | |
| 412,588 | | |
| 468,432 | |
Exploration expenditure expensed | |
| 12,686,943 | | |
| 380,283 | |
Net (gain)/ loss on fair value movement of fixed forward swaps | |
| (673,859 | ) | |
| 423,999 | |
Impairment losses of oil and gas properties | |
| 19,857,456 | | |
| 272,438 | |
| |
| | | |
| | |
Changes in assets and liabilities: | |
| | | |
| | |
| |
| | | |
| | |
(Increase)/decrease in receivables | |
| (223,559 | ) | |
| (1,376,522 | ) |
(Decrease)/increase in employee benefits | |
| (10,897 | ) | |
| (12,057 | ) |
(Decrease)/increase in payables | |
| (1,091,290 | ) | |
| 638,448 | |
| |
| | | |
| | |
NET CASH FLOWS
USED IN OPERATING ACTIVITIES | |
| 3,044,439 | | |
| (1,527,263 | ) |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 64 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| NOTE 20. | RELATED PARTY DISCLOSURES |
The consolidated financial statements include
the financial statements of Samson Oil & Gas Limited and the following subsidiaries:
| |
| |
% Equity
Interest | | |
Investment | |
| |
Country of | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
Name | |
Incorporation | |
| | |
| | |
$ | | |
$ | |
Samson Oil & Gas USA Inc | |
United States | |
100 | | |
100 | | |
38,505,362 | | |
30,079,414 | |
Samson Oil and Gas Montana USA,
Inc (100% owned subsidiary of Samson Oil & Gas USA Inc) | |
United States | |
| 100 | | |
| 100 | | |
| 34,167,452 | | |
| 33,926,739 | |
| |
| |
| | | |
| | | |
| 72,672,814 | | |
| 64,006,153 | |
Ultimate parent
Samson Oil & Gas Limited is the ultimate
parent Company.
Key management personnel compensation
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Short Term | |
| 1,484,833 | | |
| 1,715,460 | |
Post Employment | |
| 68,338 | | |
| 64,499 | |
Share-based Payments | |
| - | | |
| 80,989 | |
| |
| 1,553,171 | | |
| 1,860,948 | |
Other related party transactions
There were
no related party transactions during 2015 and 2014.
| NOTE 21. | AUDITORS’ REMUNERATION |
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Amounts received or due and receivable 2015: by RSM Bird Cameron Partners and 2014: PricewaterhouseCoopers (Australia) for: | |
| | | |
| | |
| |
| | | |
| | |
an audit or review of the financial report of the entity and any other entity in the Consolidated Entity | |
| 70,000 | | |
| 98,371 | |
| |
| 70,000 | | |
| 98,371 | |
| |
| | | |
| | |
Amounts received or due and receivable by 2015: Hein & Associates and 2014:PricewaterhouseCoopers International for: | |
| | | |
| | |
| |
| | | |
| | |
an audit or review of the reporting forms of the Consolidated Entity | |
| 220,000 | | |
| 670,000 | |
| |
| 220,000 | | |
| 670,000 | |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 65 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
Basic loss per share amounts are calculated
by dividing net result for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary
shares outstanding during the year.
Diluted loss per share amounts are calculated
by dividing the net result attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares
outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive
potential ordinary shares into ordinary shares.
The following reflects the income and share
data used in the basic and diluted loss per share computations:
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Net loss for the year attributable to owners of Samson Oil & Gas Limited (used in calculating basic and diluted loss per share) | |
| (35,010,250 | ) | |
| (3,264,569 | ) |
| |
Number of Shares | |
Weighted average number of ordinary shares used as the denominator
in calculating basic loss per share | |
2015 | | |
2014 | |
| |
| 2,837,777,322 | | |
| 2,558,418,209 | |
Adjustments for calculation of diluted earnings per share: | |
| | | |
| | |
Options | |
| - | | |
| - | |
Bonus element for rights issue | |
| - | | |
| - | |
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share | |
| 2,837,777,322 | | |
| 2,558,418,209 | |
At the end of the current year there were
324,667,765 (2014:389,192,854) potential ordinary shares on issue. These potential ordinary shares are not dilutive for 30 June
2015 or 2014 as applicable.
There have been no transactions involving
ordinary shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between
the reporting date and the date of completion of these financial statements.
| NOTE 23. | FINANCIAL INSTRUMENTS |
The parent entity has provided a guarantee
to Mutual of Omaha Bank with respect to the credit facility provided to Samson Oil and Gas USA, Inc. for the entire outstanding
balance. (2014: the Mutual of Omaha Bank facility).
The Company enters into derivative contracts,
primarily collars, swaps and option contracts, to hedge future crude oil and natural gas production in order to mitigate the risk
of market price fluctuations. All derivative instruments are recorded on the balance sheet at fair value. All of the Company's
derivative counterparties are commercial banks that were previously parties to its revolving credit facility. The Company has elected
not to apply hedge accounting to any of its derivative transactions and consequently, the Company recognizes mark-to-market gains
and losses in earnings currently, rather than deferring such amounts in other comprehensive income for those commodity derivatives
that qualify as cash flow hedges.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 66 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
At 30 June 2015, the Company’s commodity
derivative contracts consisted of collars and fixed price swaps, which are described below:
| Collar | Collars contain a fixed floor price (put) and fixed ceiling price (call). If the market price exceeds the call strike price
or falls below the put strike price, the Company receives the fixed price and pays the market price. If the market price is between
the call and the put strike price, no payments are due from the either party. |
| Fixed price swap | The Company receives a fixed price for the contract and
pays a floating market price to the counterparty over a specified period for a contracted volume. |
All of the Company’s derivative contracts
are with the same counterparty and are shown on a net basis on the Balance Sheet. The Company’s counterparty has entered
into an inter-creditor agreement with Mutual of Omaha Bank, the provider of the Company’s credit facility, as such, no additional
collateral is required by the counterparty.
Fair value is defined as the price that
would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing
the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These
inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based
on the observability of those inputs. The FASB has established a fair value hierarchy that prioritizes the inputs used to measure
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy
are as follows:
|
Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. |
|
|
|
Level 2—Pricing inputs are other than quoted prices in active markets included in level 1, but are either directly or indirectly observable as of the reported date and for substantially the full term of the instrument. Inputs may include quoted prices for similar assets and liabilities. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. |
|
Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. |
As at 30 June 2015 and 2014, the fair value
of the Consolidated Entity’s derivative instruments was as follows:
| |
Fair Value at 30 June 2015 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Netting (1) | | |
Total | |
Current Assets | |
| | | |
| | | |
| | | |
| | | |
| | |
Derivative instruments | |
| - | | |
| 379,540 | | |
| - | | |
| (220,324 | ) | |
| 159,216 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Non Current Assets | |
| | | |
| | | |
| | | |
| | | |
| | |
Derivative instruments | |
| - | | |
| 298,703 | | |
| - | | |
| (197,434 | ) | |
| 101,269 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Current Liability | |
| | | |
| | | |
| | | |
| | | |
| | |
Derivative instruments | |
| - | | |
| 220,324 | | |
| - | | |
| (220,324 | ) | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Non Current Liability | |
| | | |
| | | |
| | | |
| | | |
| | |
Derivative instruments | |
| - | | |
| 197,434 | | |
| - | | |
| (197,434 | ) | |
| - | |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 67 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| |
Fair Value at 30 June 2014 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Netting (1) | | |
Total | |
Current Assets | |
| | | |
| | | |
| | | |
| | | |
| | |
Derivative instruments | |
| - | | |
| 56,380 | | |
| - | | |
| (56,380 | ) | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Non Current Assets | |
| | | |
| | | |
| | | |
| | | |
| | |
Derivative instruments | |
| - | | |
| 61,493 | | |
| - | | |
| (61,493 | ) | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Current Liability | |
| | | |
| | | |
| | | |
| | | |
| | |
Derivative instruments | |
| - | | |
| 340,756 | | |
| - | | |
| (56,380 | ) | |
| 284,376 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Non Current Liability | |
| | | |
| | | |
| | | |
| | | |
| | |
Derivative instruments | |
| - | | |
| 190,491 | | |
| - | | |
| (61,493 | ) | |
| 128,998 | |
(1) Financial assets and liabilities
are offset and the net amount reported in the balance sheet where the Consolidated Entity currently has a legally enforceable right
to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously. Agreements with derivative counterparties are based on an ISDA Master Agreement. Under the terms of these arrangements,
only where certain credit events occur (such as default), the net position owing/ receivable to a single counterparty in the same
currency will be taken as owing and all the relevant arrangements terminated.
Commodity Derivative Contracts.
The Company’s commodity derivative instruments consisted of collars and swap contracts for oil. The Company values
the derivative contracts using industry standard models, based on an income approach, which considers various assumptions including
quoted forward prices and contractual prices for the underlying commodities, time value and volatility factors, as well as other
relevant economic measures. Substantially all of the assumptions can be observed throughout the full term of the contracts, can
be derived from observable data or are supportable by observable levels at which transactions are executed in the marketplace and
are therefore designated as level 2 within the fair value hierarchy. The discount rates used in the assumptions include consideration
of non-performance risk. The Company accounts for its commodity derivatives at fair value on a recurring basis.
There are no unrecorded contingent assets
or liabilities in place for the Consolidated Entity at balance date (2014: $Nil).
| NOTE 25. | INTEREST IN JOINTLY CONTROLLED OPERATIONS |
The Consolidated Entity has an interest
in the following joint operations whose principal activities are oil and gas exploration and production.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 68 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| |
| |
Working Interest Held | |
Project/Property Name | |
Location | |
|
% | | |
|
% | |
Exploration | |
| |
|
2015 | | |
|
2014 | |
Baxter Shale | |
United States of America | |
| - | | |
| 10.00 | |
Hawk Springs | |
United States of America | |
| 25-100 | | |
| 25-100 | |
Gold Coast Unit CBM | |
United States of America | |
| - | | |
| 50.00 | |
South Goose Lake | |
United States of America | |
| 25.00 | | |
| 25.00 | |
Roosevelt | |
United States of America | |
| 66.00 | | |
| 66.00 | |
| |
| |
| | | |
| | |
Production | |
| |
| | | |
| | |
Big Hand | |
United States of America | |
| 4.00 | | |
| 4.00 | |
Bird Canyon | |
United States of America | |
| 16.00 | | |
| 16.00 | |
Deep Draw | |
United States of America | |
| 0.00 | | |
| 0.00 | |
Hilight | |
United States of America | |
| 9.00 | | |
| 9.00 | |
Jalmat | |
United States of America | |
| 60.00 | | |
| 60.00 | |
Jayson Unit | |
United States of America | |
| 2.00 | | |
| 2.00 | |
Kicken Draw | |
United States of America | |
| 15.00 | | |
| 15.00 | |
LA Ward | |
United States of America | |
| 3.00 | | |
| 3.00 | |
Neta | |
United States of America | |
| 13.00 | | |
| 13.00 | |
Powder River Basin | |
United States of America | |
| 18.00 | | |
| 18.00 | |
San Simon | |
United States of America | |
| 27.00 | | |
| 27.00 | |
Scribner | |
United States of America | |
| 28.00 | | |
| 28.00 | |
Wagensen | |
United States of America | |
| 8.00 | | |
| 8.00 | |
North Stockyard | |
United States of America | |
| 25-34.5 | | |
| 25-34.5 | |
Sabretooth | |
United States of America | |
| 12.50 | | |
| 12.50 | |
Oil and gas properties held as jointly
controlled assets total $28,794,738 (2014: $32,261,936).
| NOTE 26. | EVENTS SUBSEQUENT TO BALANCE DATE |
The Directors are not aware of any matters
or circumstances not otherwise dealt with in this report that have significantly or may significantly affect the operations of
the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated Entity in the subsequent financial
years.
| NOTE 27. | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES |
The Consolidated Entity’s principal
financial assets and financial liabilities comprise receivables, payables, derivative instruments and cash.
The Consolidated Entity manages its exposure
to key financial risk in accordance with the Board’s financial risk management strategy. The objective of the strategy is
to support the delivery of the Consolidated Entity’s financial targets whilst protecting future financial security.
The Consolidated Entity may enter into
derivative transactions, principally oil and gas price fixed forward swaps, to manage the price risk arising from the Consolidated
Entity’s operations. These derivatives have not previously qualified for hedge accounting.
The main risks arising from the Consolidated
Entity’s financial instruments are interest rate risk, foreign currency risk, credit risk, price risk and liquidity risk.
The Consolidated Entity uses different methods to measure and manage the different types of risks to which it is exposed. These
include monitoring levels of exposure to foreign currency and price risk and assessments of market forecasts for foreign exchange
and commodity prices. Ageing analysis and monitoring of specific debtors are undertaken to manage credit risk and liquidity risk
is monitored through the development of future rolling cash flow forecasts.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 69 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
Primary responsibility for identification
and control of financial risks rests with the executive management group, specifically the Chief Executive Officer and Chief Financial
Officer, under the authority of the Board. The Board reviews and approves policies and strategies for managing each of the risks
identified below.
Risk Exposures and Responses
Capital Management
When managing capital, management’s
objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits
for other stakeholders. The Consolidated Entity funds its activities through capital raisings and debt funding, where appropriate.
The Consolidated Entity is not subject to any externally imposed capital requirements.
Interest rate risk
The Consolidated Entity continually reviews
its interest rate exposure. Consideration is given to potential restructuring of its existing positions and alternative financing.
The Consolidated Entity has $18,699,000
in borrowings which is subject to a floating interest rate of the 90 day LIBOR (London Interbank Offered Rate) plus 4.0%. The Consolidated
Entity does not have any derivative instruments in place to protect the Consolidated Entity from movements in this interest rate.
While this rate is subject to change, it has remained around 0.23% in recent months.
At 30 June 2015 if interest rates had moved,
as illustrated in the table below (estimated from historical movements), with all other variables held constant, the impact would
be:
| |
Pre tax result | | |
Other Equity | |
| |
Higher/(Lower) | | |
Higher/(Lower) | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Borrowings | |
| | | |
| | | |
| | | |
| | |
+ 0.25% (25 basis points) | |
| 46,748 | | |
| 15,000 | | |
| - | | |
| | |
- 0.23% (23 basis points) | |
| (43,008 | ) | |
| (13,800 | ) | |
| - | | |
| - | |
The Consolidated Entity’s cash assets
are exposed to minimal interest rate risk. The Consolidated Entity’s cash accounts are primarily held in low or no interest
rate accounts. Interest revenue is not a significant income item for the Consolidated Entity and the Consolidated Entity does not
rely on the cash generated from interest income.
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Cash exposed to Australian interest rates | |
| 1,105,573 | | |
| 1,961,774 | |
Cash exposed to United States of America interest rates | |
| 957,149 | | |
| 4,884,620 | |
| |
| 2,062,722 | | |
| 6,846,394 | |
The average floating interest rate for
the Consolidated Entity in the United States was 0.016% per annum (2014: 0.052%).
The average fixed interest rate for the
Consolidated Entity in the United States was 2.861% (2014: 0.0%).
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 70 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
The average floating interest rate for
the Consolidated Entity in Australia was per annum 2.183% (2014: 2.213%)
The average fixed interest rate for the
Consolidated Entity in Australia was 0.0% per annum (2014:3.072%).
At year end, the Consolidated Entity
has $nil (2014: $nil) in short term deposits that have fixed interest rates. These term deposits have terms no longer than 90
days.
At 30 June 2015 if interest rates had moved,
as illustrated in the table below (estimated from historical movements), with all other variables held constant, the impact would
be:
| |
Pre tax result | | |
Other Equity | |
| |
Higher/(Lower) | | |
Higher/(Lower) | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Cash exposed to AUS interest rates | |
| | | |
| | | |
| | | |
| | |
+ 0.25% (25 basis points) | |
| 2,764 | | |
| 4,904 | | |
| - | | |
| - | |
- 0.50% (50 basis points) | |
| (5,528 | ) | |
| (9,809 | ) | |
| - | | |
| - | |
| |
Pre tax result | | |
Other Equity | |
| |
Higher/(Lower) | | |
Higher/(Lower) | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Cash exposed to US interest rates | |
| | | |
| | | |
| | | |
| | |
+ 0.10% (10 basis points) | |
| 957 | | |
| 4,885 | | |
| - | | |
| - | |
- 0.25% (25 basis points) | |
| (2,393 | ) | |
| (12,212 | ) | |
| - | | |
| - | |
Foreign Currency Risk
As a result of significant operations in the United States,
the Consolidated Entity’s financial statements can be affected significantly by movements in the US$/A$ exchange rates.
The majority of the transactions (both revenue and expenses)
of the United States subsidiaries are denominated in US dollars.
The Consolidated Entity does not have any foreign currency cash
flow hedges.
At balance date, the Consolidated Entity had the following exposure
to A$ foreign currency that is not designated in cash flow hedges:
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Financial Assets | |
| | | |
| | |
Cash and cash equivalents | |
| 1,105,573 | | |
| 1,961,774 | |
Trade and other receivables | |
| 102,184 | | |
| 124,829 | |
| |
| | | |
| | |
Financial Liabilities | |
| | | |
| | |
Trade and other payables | |
| 155,762 | | |
| 169,672 | |
| |
| | | |
| | |
Net Exposure | |
| 1,051,995 | | |
| 1,916,931 | |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 71 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
At 30 June 2015 if foreign exchange rates had moved, as illustrated
in the table below (estimated from historical movements), with all other variable held constant, the impact would be:
| |
Pre tax result | | |
Other Equity | |
| |
Higher/(lower) | | |
Higher/(lower) | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Consolidated | |
| | | |
| | | |
| | | |
| | |
A$:US$ +10% | |
| - | | |
| - | | |
| 80,943 | | |
| 192,021 | |
A$:US$ -10% | |
| - | | |
| - | | |
| (80,943 | ) | |
| (192,021 | ) |
Consolidated Entity
The impact of the foreign exchange on the Consolidated Entity
relates to the value of assets, net of liabilities that are held in the Consolidated Entity which are held in the Parent Entity,
which has a functional currency of Australian Dollars.
For the Consolidated Entity, the change
in foreign exchange rate does not have any impact on the profit and loss of the entity as the impact of the foreign exchange movements
is recorded in the foreign exchange reserve.
Management believes the balance date risk
exposures are representative of the risk exposure inherent in the financial instruments.
Price risk
Price risk arises from the Consolidated
Entity’s exposure to oil and gas prices. These commodity prices are subject to wide fluctuations and market uncertainties
due to a variety of factors that are beyond the control of the Consolidated Entity. Sustained weakness in oil and natural gas prices
may adversely affect the Consolidated Entity’s financial condition.
The Consolidated Entity manages this risk
by continually monitoring the oil and gas price and the external factors that may affect it. The Board reviews the risk profile
associated with commodity price risk periodically to ensure that it is appropriately managing this risk. Derivatives are used to
manage this risk where appropriate. The Board must approve any derivative contracts that are entered into by the Company. As at
Balance Date, the Consolidated Entity has the following derivative contracts in place:
Oil Price
Collars - WTI | |
Volumes (bbls) | | |
Floor US$ | | |
Ceiling US$ | |
2016 | |
| 2,788 | | |
| 85.00 | | |
| 89.85 | |
Oil Price
Swaps - WTI | |
Volumes (bbls) | | |
Call Option Price US$ | |
2016 | |
| 2,788 | | |
| 105.00 | |
Oil Price
Swaps - WTI | |
Volumes (bbls) | | |
Sub Floor - US$ | | |
Floor US$ | | |
Ceiling US$ | |
2015 | |
| 55,200 | | |
| 32.50 | | |
| 45.00 | | |
| 70.25 | |
2016 | |
| 36,600 | | |
| 67.50 | | |
| 82.50 | | |
| - | |
2016 | |
| 27,450 | | |
| 40.00 | | |
| 55.00 | | |
| 80.00 | |
| |
| | | |
| | | |
| | | |
| | |
At 30 June 2015 if the price of natural
gas and oil had moved, as illustrated in the table below (estimated from historical movements, with all other variable held constant,
the impact would be:
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 72 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
Consolidated | |
Pre tax result | | |
Other Equity (pre tax) | |
| |
Higher/(lower) | | |
Higher/(lower) | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Oil | |
| | | |
| | | |
| | | |
| | |
Oil price + 10% | |
| 1,095,701 | | |
| 174,966 | | |
| - | | |
| - | |
Oil price – 20% | |
| (2,091,163 | ) | |
| (195,512 | ) | |
| - | | |
| - | |
Credit Risk
The Consolidated Entity manages its credit
risk through constantly monitoring its credit exposure, to ensure it is acceptable.
Credit risk arises from the financial assets
of the Consolidated Entity, which comprise cash and cash equivalents and trade and other receivables. The Consolidated Entity’s
exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount
of these instruments. Exposure at balance date is addressed in each applicable note.
The Consolidated Entity trades only with
recognised, creditworthy third parties, and as such collateral is not requested nor is it the Consolidated Entity’s policy
to securitise its trade and other receivables.
The Consolidated Entity holds its cash
with large well respected banks, with no history of default and therefore its credit exposure to cash is minimal. The minimum credit
rating of the Consolidated Entity’s bank is Prime-1 as determined by Moody’s Rating Agency.
Receivables balances are monitored on an
ongoing basis with the result that the Consolidated Entity’s exposure to bad debts is not significant.
Whilst a small number of debtors account
for a large percentage of the Consolidated Entity’s receivable balance, the Board does not consider this a significant risk
to the Consolidated Entity as the debtors are all creditworthy with no history of default. As at the date of this report, the Consolidated
Entity does not have any receivables which are past their due date and the Consolidated Entity has not recorded any impairment
in relation to its receivables.
Liquidity Risk
The Consolidated Entity’s objective
is to fund future development through cash flow from operations, equity and debt, where appropriate. It is the Consolidated Entity’s
policy to review the cash flow forecasts regularly to ensure that the Consolidated Entity can meet its obligations when they fall
due.
The table below reflects all contractual
repayments and interest resulting from recognised financial liabilities, including derivative instruments as of 30 June 2015. For
derivative financial instruments the market value is presented, whereas for the other obligations the undiscounted cash flows for
the respective upcoming fiscal years are presented. Cash flows for financial liabilities without fixed amounts or timing are based
on the conditions existing at 30 June 2015.
The remaining contractual maturities of the Consolidated
Entity’s financial liabilities are:
| |
Consolidated Entity | |
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
6 months or less | |
| 3,139,432 | | |
| 6,576,551 | |
1-5 years | |
| 18,474,188 | | |
| 5,681,716 | |
| |
| 21,613,620 | | |
| 12,258,267 | |
The Consolidated Entity monitors rolling
forecasts of liquidity reserve on the basis of expected cash flow.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 73 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
At balance date, the Consolidated Entity has $301,000 in unused
credit facility available for draw down (2014: $9.5 million).
Fair Value
The methods for estimating fair value and the fair value of
the financial assets and liabilities are outlined in the relevant notes to the financial statements.
The carrying amount of trade receivables
and payables approximates their fair value. Derivatives are carried at their fair value on the balance sheet. All financial assets
and liabilities are held as level 2 (quoted prices in active markets for identical assets or liabilities) in the fair value measurement
hierarchy.
| NOTE 28. | SHARE BASED PAYMENT PLANS |
The Consolidated Entity
provides benefits to employees (including senior executives) of the Consolidated Entity in the form of share based payments, whereby
employees render services in exchange for shares or rights over shares (equity-settled transactions).
In a prior year, the Consolidated Entity
filed a Form S-8 with the Securities and Exchange Commission. The Form S-8 is a registration statement used by U.S. public
companies to register securities to be offered pursuant to employee benefit plans; in this case the ordinary shares issuable and
reserved for issuance underlying the options which may be issued pursuant to the Samson Oil & Gas Limited Stock Option Plan
were registered.
All references to inputs in this note are
in Australian Dollars as they refer to Australian listed securities, unless noted otherwise.
There we no options issued to Directors,
Executives or other employees during the year ended 30 June 2015.
Options issued to Directors
During the year ended 30 June 2014 4,000,000
options were issued to a new Director with a value of $0.0217 per option. The options have an exercise price of 3.9 cents and an
expiry date of 30 November 2017. A Black-Scholes option pricing model taking into the following variables was used to value the
options:
Share price at grant date (cents) | |
| 2.4 | |
Exercise price (cents) | |
| 3.9 | |
Time to expiry (years) | |
| 4 | |
Risk free rate (%) | |
| 1.25 | |
Share price volatility (%) | |
| 176.52 | |
Dividend yield | |
| Nil | |
There were no share based payments during
the year ended 30 June 2013, other than the vesting expense recognised in relation to options issued during the year ended 30 June
2011.
At year end there were 8,000,000 (2014:
72,500,000) options outstanding that had been granted to employees, Directors and other service providers. The weighted average
exercise price was 9.7 cents (2014: 8.65 cents) per option.
The weighted average remaining contractual
life for the share options outstanding as at 30 June 2015 is between 2.5 and 3.0 years (2014: between 6 months and 3.5 years).
The range of exercise prices for options
outstanding at the end of the year was 3.8-16 cents (2014: 3.8 – 16 cents).
No options were issued during the year
ended 30 June 2015. The weighted average fair value of options granted during the year ended 30 June 2014 was 2.17 cents per option.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 74 of 80 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for 30
June 2015
| NOTE 29. | PARENT ENTITY FINANCIAL INFORMATION |
| (a) | Summary financial information |
The individual financial statements
for the parent entity show the following aggregate amounts:
| |
2015 | | |
2014 | |
| |
$ | | |
$ | |
Balance Sheet | |
| | | |
| | |
Current assets | |
| 1,154,669 | | |
| 2,021,488 | |
Total assets | |
| 13,401,204 | | |
| 35,899,282 | |
| |
| | | |
| | |
Current liabilities | |
| 154,607 | | |
| 167,360 | |
Total liabilities | |
| 154,607 | | |
| 167,360 | |
| |
| | | |
| | |
Net assets | |
| 13,246,597 | | |
| 35,731,922 | |
| |
| | | |
| | |
Shareholders’ equity | |
| | | |
| | |
Issued capital | |
| 98,296,001 | | |
| 98,340,121 | |
| |
| | | |
| | |
Reserves | |
| | | |
| | |
Share based payments reserve | |
| 5,276,872 | | |
| 5,276,872 | |
Foreign currency translation reserve | |
| (5,736,155 | ) | |
| 1,706,043 | |
Accumulated Losses | |
| (84,590,121 | ) | |
| (69,591,114 | ) |
Net shareholders’
equity | |
| 13,249,597 | | |
| 35,731,922 | |
| |
| | | |
| | |
Profit for the year | |
| (14,999,007 | ) | |
| (2,748,156 | ) |
Total comprehensive income | |
| (7,556,809 | ) | |
| (3,270,637 | ) |
Samson Oil and Gas Limited has
provided a guarantee of the credit facility of Samson Oil and Gas USA, Inc to Mutual of Omaha Bank. (2014: Mutual of Omaha Facility).
| (c) | Contingent liabilities of the parent entity |
The parent entity did not have
any contingent liabilities at 30 June 2015 or 30 June 2014.
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 75 of 80 |
DIRECTORS’ DECLARATION |
30 June 2015 |
DIRECTORS’ DECLARATION
In accordance with a resolution of the
Directors of Samson Oil & Gas Limited, I state that:
In the opinion
of the Directors:
| (a) | the financial statements and notes set out on pages 29 to 76 are in accordance with the Corporations
Act 2001, including : |
| (i) | giving a true and fair view of the Consolidated Entity’s financial position as at 30 June
2015 and of its performance for the financial year ended on that date; and |
| (ii) | complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and |
| (b) | there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable. |
Note 2(a) confirms that the financial
statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations
by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution
of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
|
|
Terence M. Barr |
Director |
|
Denver, Colorado |
16 September 2015 |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 76 of 80 |
|
SHAREHOLDER INFORMATION |
|
for the year ended 30 June 2015 |
|
|
INDEPENDENT AUDIT REPORT
|
RSM Bird Cameron Partners |
|
8 st George’s Terrace Perth WA 6000 |
|
GPO Box R1253 Perth WA 6844 |
|
T +61 8 9261 9100 F +61 9261 9101 |
|
www.rsmi.com.au |
INDEPENDENT
AUDITOR'S REPORT
TO
THE MEMBERS OF
SAMSON
OIL & GAS LIMITED
Report
on the Financial Report
We
have audited the accompanying financial report of Samson Oil & Gas Limited, which comprises the consolidated statement
of financial position as at 30 June 2015, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting
policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and
the entities it controlled at the year's end or from time to lime during the financial year.
Directors'
Responsibility for the Financial Report
The
directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine
is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or
error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditors
Responsibility
Our
responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian
Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements
and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.
An
audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures
selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors,
as well as evaluating the overall presentation of the financial report.
We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Liability limited by a Scheme approved under Professional Standards Legislation |
|
Major Offices in:
Perth, Sydney, Melbourne,
Adelaide and Canberra
ABN 36 965 185 036 |
|
RSM Bird Cameron Partners is a member of the RSM network. Each member of the RSM network is an independent accounting and advisory firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. |
|
|
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 77 of 80 |
|
SHAREHOLDER INFORMATION |
|
for the year ended 30 June 2015 |
|
|
Independence
In
conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the
independence declaration required by the Corporations Act 2001, which has been given to the directors of Samson Oil &
Gas Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.
Opinion
In
our opinion:
| (a) | the
financial report of Samson Oil & Gas Limited is in accordance with the Corporations Act 2001, including: |
| (i) | giving
a true and fair view of the consolidated entity's financial position as at 30 June 2015 and of its performance for the year
ended on that date; and |
| (ii) | complying
with Australian Accounting Standards and the Corporations Regulations 2001; and |
| (b) | the
financial report also complies with International Financial Reporting Standards as
disclosed in Note 2. |
Report
on the Remuneration Report
We
have audited the Remuneration Report contained within the directors' report for the year ended 30 June 2015. The directors
of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A
of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In
our opinion the Remuneration Report of Samson Oil & Gas Limited for the year ended 30 June 2015 complies
with section 300A of the Corporations Act 2001.
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RSM BIRD CAMERON PARTNERS |
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Perth, WA |
J A KOMNINOS |
Dated: 16 September 2015 |
Partner |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 78 of 80 |
SHAREHOLDER INFORMATION
for the
year ended 30 June 2015
SHAREHOLDER INFORMATION
Statement of Issued Securities at 14
September 2015
| (a) | There are 2,837,834,301 fully paid ordinary shares and 229,582,240 options on issue which are quoted on the Australian Stock
Exchange. |
| (b) | Members are entitled to one vote for each share held. |
| (c) | The twenty largest shareholders hold 79.63% of the Company’s
issued capital. |
Distribution of Securities
Spread of Holdings | |
Holders | | |
Securities | | |
% of Issued Capital | |
NIL holding | |
| 0 | | |
| 0 | | |
| 0.00 | % |
1 - 1,000 | |
| 929 | | |
| 258,238 | | |
| 0.01 | % |
1,001 - 5,000 | |
| 462 | | |
| 1,477,066 | | |
| 0.05 | % |
5,001 - 10,000 | |
| 352 | | |
| 2,886,256 | | |
| 0.10 | % |
10,001 - 100,000 | |
| 1,445 | | |
| 60,545,539 | | |
| 2.13 | % |
Over 100,000 | |
| 831 | | |
| 2,772,667,202 | | |
| 97.71 | % |
| |
| | | |
| | | |
| | |
TOTAL ON REGISTER | |
| 4,019 | | |
| 2,837,834,301 | | |
| 100 | % |
There are 3,084 shareholders who do not hold a marketable parcel
of shares.
The following details appear in the company’s register
of Substantial Shareholdings at 14 September 2015.
Substantial Shareholder |
|
No. of Shares |
|
Percentage |
Nil |
|
|
|
|
Twenty Largest Shareholders
Rank | |
Holder Name | |
Securities | | |
% | |
1 | |
National Nom Ltd | |
| 2,040,148,085 | | |
| 71.89 | % |
2 | |
Hussein Jamil Mahomed | |
| 21,500,000 | | |
| 0.76 | % |
3 | |
Vogliotti Peter Anthony | |
| 19,000,009 | | |
| 0.67 | % |
4 | |
Mirkazemi Pedram | |
| 18,000,000 | | |
| 0.63 | % |
5 | |
Milanto Pl | |
| 14,000,000 | | |
| 0.49 | % |
6 | |
NEFCO Nom PL | |
| 13,450,289 | | |
| 0.47 | % |
7 | |
Citicorp Nom PL | |
| 13,230,794 | | |
| 0.47 | % |
8 | |
Baxter Michael | |
| 13,171,576 | | |
| 0.46 | % |
9 | |
Miningnut PL | |
| 12,800,000 | | |
| 0.45 | % |
10 | |
Doswell Julie | |
| 11,936,010 | | |
| 0.42 | % |
11 | |
Paesler C B + A | |
| 10,000,000 | | |
| 0.35 | % |
12 | |
Flush Nom PL | |
| 10,000,000 | | |
| 0.35 | % |
13 | |
El-Bayeh Yvonne | |
| 8,989,477 | | |
| 0.32 | % |
14 | |
JP Morgan Nom Aust Ltd | |
| 8,663,996 | | |
| 0.31 | % |
15 | |
Kampar PL | |
| 8,046,312 | | |
| 0.28 | % |
16 | |
Monna Mirkazemi Super PL | |
| 8,000,000 | | |
| 0.28 | % |
17 | |
Barr Super PL | |
| 7,834,621 | | |
| 0.28 | % |
18 | |
O'brien John Walter G | |
| 7,129,012 | | |
| 0.25 | % |
19 | |
Armdig PL | |
| 7,000,000 | | |
| 0.25 | % |
20 | |
Stratford Linda | |
| 6,999,999 | | |
| 0.25 | % |
| |
TOTAL | |
| 2,259,900,180 | | |
| 79.63 | % |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 79 of 80 |
SHAREHOLDER INFORMATION
for the
year ended 30 June 2015
Twenty Largest Listed Option Holders
Rank | |
Holder Name | |
Securities | | |
% | |
1 | |
Danty General Partnership | |
| 19,365,407 | | |
| 8.44 | % |
2 | |
Seaside 88 LP | |
| 15,403,870 | | |
| 6.71 | % |
3 | |
Alpha Cap Anstalt | |
| 12,509,904 | | |
| 5.45 | % |
4 | |
Merrill Lynch Aust Nom PL | |
| 11,625,972 | | |
| 5.06 | % |
5 | |
Cranshire Cap Fund Ltd | |
| 11,264,928 | | |
| 4.91 | % |
6 | |
Citicorp Nom PL | |
| 7,818,428 | | |
| 3.41 | % |
7 | |
Ironman Energy Fund | |
| 7,673,125 | | |
| 3.34 | % |
8 | |
Paesler Trading PL | |
| 7,000,000 | | |
| 3.05 | % |
9 | |
Empery Asset Ltd | |
| 6,405,072 | | |
| 2.79 | % |
10 | |
Hartz Cap Inv LLC | |
| 6,405,072 | | |
| 2.79 | % |
11 | |
Rattler General Ptnship | |
| 5,208,336 | | |
| 2.27 | % |
12 | |
Anson Inv Fund LP | |
| 4,803,800 | | |
| 2.09 | % |
13 | |
Colbern Fiduciary Nom PL | |
| 4,500,000 | | |
| 1.96 | % |
14 | |
Hawthorne Peter | |
| 4,323,854 | | |
| 1.88 | % |
15 | |
Wolverine Flagship FT Ltd | |
| 3,850,968 | | |
| 1.68 | % |
16 | |
Carpenter Philip | |
| 3,472,224 | | |
| 1.51 | % |
17 | |
Jones Thomas + Audrey E | |
| 3,251,499 | | |
| 1.42 | % |
18 | |
GCA Strategic Inv Fund IT | |
| 3,080,774 | | |
| 1.34 | % |
19 | |
Rattler General Partnersh | |
| 3,049,966 | | |
| 1.33 | % |
20 | |
Winnell Timothy | |
| 3,026,667 | | |
| 1.32 | % |
| |
TOTAL | |
| 144,039,866 | | |
| 62.75 | % |
Unlisted options
Exercise Price | | |
Expiry Date | |
Number of Unlisted
Options | |
$ | 0.155 | | |
31 October 2015 | |
| 4,000,000 | |
$ | 0.039 | | |
30 November 2017 | |
| 4,000,000 | |
$ | 0.033 | | |
30 April 2018 | |
| 87,033,246 | |
| Total | | |
| |
| 95,033,246 | |
Samson Oil & Gas Limited | Annual Report – 30 June 2015 |
| |
| Page 80 of 80 |