TIDMJSE
RNS Number : 2773W
Jadestone Energy Inc.
22 April 2021
2020 Full Year Results and Final Dividend Announcement
22 April 2021-Singapore: Jadestone Energy Inc. (AIM:JSE)
("Jadestone" or the "Company"), an independent oil and gas
production company and its subsidiaries (the "Group"), focused on
the Asia Pacific region, reports today its audited consolidated
financial statements (the "Financial Statements"), as at and for
the financial year ended 31 December 2020, and announces its
intended final dividend. Management will host a conference call
today at 9:00 a.m. UK time, details of which can be found in the
release below.
Paul Blakeley, President and CEO commented:
"In 2020, the Jadestone business delivered strong operating cash
flow, declared its maiden dividend, acquired a near-term gas
development asset in Indonesia, and exited the year with double the
net cash it had at the beginning of January.
"This was accomplished against an external environment that
tested the resilience of our business model, and indeed for some of
our peers in the industry, challenged their very existence. Through
a mix of well-timed hedging gains, rapid adjustments to our
spending plans and a hard interrogation of our cost base, we
successfully protected our balance sheet while rephasing production
growth to coincide with a higher price environment. At the same
time, we maintained our steadfast commitment to our principles of
environmental stewardship, social responsibility, and high
governance standards, and have recorded no major incidents on any
of these fronts.
"Our balance sheet has grown stronger still in 2021. We are
generating higher unit cash flows as benchmark oil prices have
recovered and pricing premiums remain strong. Also, as planned, we
have now fully repaid our reserves based loan, being completely
debt free as of the end of Q1 2021. We are continuing in our
pursuit of constant improvement across the business, and continue
to find opportunities for greater efficiency in addition to having
locked in 25% of the cash flow savings we implemented in 2020
through Project Clover.
"Our commitment to ongoing shareholder returns remains intact
too, and I am pleased to announce the final portion of our 2020
dividend today, as well as re-affirming our dividend policy for
2021 and beyond. We are constantly focussed on delivering value for
shareholders and see both organic, and inorganic growth, as well as
direct shareholder returns as key components.
"I would also like to take the opportunity to offer my thanks to
the entire Jadestone team, and to their families for remaining
strong and resilient through what has been a very challenging year.
The performance we delivered in 2020 is a testament to the high
calibre of our workforce, and with their unwavering support for the
business, we are well positioned to continue delivering value for
shareholders in 2021 and beyond."
Paul Blakeley
EXECUTIVE DIRECTOR,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
2020 SUMMARY
-- Full year production of 11,438 bbls/d, 15% down on 2019 from
13,531 bbls/d, due to natural field production decline and an
intentional deferral of well workovers and well interventions
during a period of prolonged lower oil prices and heightened
COVID-19 restrictions on moving people and equipment;
-- Good performance against Target Zero, with no reportable
environmental incidents or injuries. Received one regulatory
enforcement notice related to internal processes, which has now
been resolved;
-- Reduced overall greenhouse gas emissions by 15%, led by a 40% reduction in flaring;
-- Net revenue of US$217.9 million in 2020, down 33% from
US$325.4 million in the prior year, due to the decline in oil
prices associated with the impact of COVID-19 and a slightly lower
liftings, partly offset by higher hedging income;
-- Average benchmark Dated Brent prices 35% lower at
US$41.84/bbl in 2020, compared to US$64.21/bbl in 2019. Jadestone's
average realised price(1) in 2020 was US$44.79/bbl, down 35% from
US$69.07/bbl in 2019, as the Group continued to realise strong
premiums on lifted cargos in 2020, at US$4.17/bbl (2019:
US$4.97/bbl). Inclusive of hedges, the average realised price was
US$52.32/bbl (2019: US$72.39/bbl), compared to Dated Brent of
US$41.84/bbl (2019: US$64.21/bbl);
-- Total crude oil sold for the year was 4,165,612 bbls, 7% down
on 2019 of 4,496,164 bbls, from a total of 10 liftings (2019: 10),
largely due to lower production;
-- Costs of production in 2020 were US$105.3 million, a decrease
of 12% from 2019. This equates to unit operating costs(2) of
US$23.10/bbl, broadly in line with 2019 of US$22.85/bbl, despite
the lower production in 2020, largely as a result of the various
cash flow savings initiatives delivered under Project Clover;
-- An impairment loss of US$50.5 million (2019: nil) due to the
relinquishment of Philippines service contract 56 ("SC56"),
announced in November 2020, reflecting the capitalised intangible
exploration value of US$50.5 million, most of which relates to
spending by the Group's previous management team;
-- Net post tax loss of US$60.2 million, compared to net profit
after tax of US$40.5 million in 2019, reflecting the impairment of
SC56, as well as the 35% drop in realised prices and lower
production levels;
-- Strong operating cashflow generation, despite the
extraordinary conditions during the year, with positive operating
cash flows of US$86.9 million, before movements in working capital,
down 51% compared to 2019 of US$ 176.9 million;
-- Capital expenditure of US$24.1 million down 69% compared to
the prior year. Management deferred approximately US$160.0 million
of spending intended for organic growth projects amidst the
COVID-19 pandemic;
-- Project Clover cashflow savings in 2020, in line with plan,
of US$33.0 million, with approximately 25% of these savings
reflecting structural changes in Jadestone's future cost base;
-- Completion of the acquisition of a 90% operated interest in
the Lemang PSC in December 2020, for a cash consideration of
US$12.1 million, including closing statement adjustments;
-- Gross cash and net cash as at 31 December 2020 of US$89.4
million and US$82.1 million (2019: US$99.4 million and US$39.3
million), respectively, a more than doubling of the net cash
balance year-on-year;
-- Following the final scheduled repayment on the Group's
reserved based loan on 31 March 2021 of US$7.4 million, Jadestone's
capital structure is now entirely debt free;
-- Maari acquisition long stop date revised to 30 June 2021,
with both the seller and Jadestone continuing to work together to
try to close the transaction as soon as possible;
-- An intention to recommend a final dividend of US 1.08/share
(US$0.0108/share) , a distribution of US$5.0 million, following the
completion of the internal reorganisation and the planned capital
reduction at Jadestone Energy plc, and following approval of that
dividend by shareholders at the planned annual general meeting, to
be paid in the latter part of June. This results in total dividends
in respect of 2020, Jadestone's maiden year of dividends, of US$7.5
million;
-- Adoption of the Quoted Companies Alliance corporate
governance code as part of the Company's ongoing pivot toward
practices more typical of a UK company; and
-- Jadestone's internal reorganisation is expected to become
effective on 23 April 2021, resulting in a new UK-based parent
company for the Group, Jadestone Energy plc , unlocking significant
further cash flow savings for the Company and for shareholders.
(1) Realised oil price represents the actual selling price, before any impact from hedging.
(2) Unit operating costs per barrel before workovers and
movement in inventories, but including net lease payments and
certain other adjustments (see non-IFRS measures below).
2021 OUTLOOK
-- Average crude oil production in 2021 of 11,500-13,500 bbls/d,
assuming the successful drilling of the H6 infill well at Montara,
two Skua well workovers, and completion of the Group's acquisition
of a 69% operated interest in Maari at the end of H1 2021;
-- Maari's contribution to the full year production guidance
range is assumed to be 1,500 bbls/d on an annualised basis (i.e.
3,000 bbls/d average production in H2 2021), and with the
completion of Maari's MR6 well workover in early May, there is
scope for additional production upside. The effective date of the
acquisition is 1 January 2019. Conditional on completion of the
acquisition, the entire economic benefit from Maari barrels
produced from the effective date up to the closing date will accrue
to the Group;
-- Average unit production costs of US$25.50-29.50/bbl, a slight
increase on 2020, reflecting approximately
US$1.00/bbl of rephased costs from 2020 resulting from Project
Clover, a stronger Australian dollar compared to 2020, and
additional one-off repairs and maintenance activity in
Australia;
-- Capital expenditures of US$85.0-95.0 million, including
drilling the H6 infill well and the two Skua well workovers;
-- Commitment to continue to pay cash dividends, in keeping with
the Group's dividend policy to maintain and grow dividends in line
with underlying cashflow generation;
-- Further inorganic growth opportunities in the Asia Pacific
region under active evaluation; and
-- Ongoing adherence to our principles on environmental, social,
and governance responsibilities, including
enhanced sustainability reporting, maintaining our commitment to
Target Zero with regards to deviations from safe operating
parameters, and adopted the Quoted Companies Alliance corporate
governance code.
Enquiries
Jadestone Energy Inc. +65 6324 0359 (Singapore)
Paul Blakeley, President and CEO +44 7392 940 495 (UK)
Dan Young, CFO ir@jadestone-energy.com
Robin Martin, Investor Relations
Manager
Stifel Nicolaus Europe Limited (Nomad, +44 (0) 20 7710 7600 (UK)
Joint Broker)
Ashton Clanfield / Callum Stewart
/ Simon Mensley
Jefferies International Limited +44 (0) 20 7029 8000 (UK)
(Joint Broker)
Tony White/ Will Soutar
Camarco (Public Relations Advisor) +44 (0) 203 757 4980 (UK)
Billy Clegg / James Crothers jse@camarco.co.uk
Conference call and webcast
The management team will host an investor and analyst conference
call at 4:00 p.m. (Singapore) and 9:00 a.m. (London) today, 22
April 2021, including a question and answer session.
The live webcast of the presentation will be available at the
below webcast link. Dial-in details are provided below. Please
register approximately 15 minutes prior to the start of the
call.
The results for the financial year ended 31 December 2020 will
be available on the Company's website at:
www.jadestone-energy.com/investor-relations/
Webcast link:
https://produceredition.webcasts.com/starthere.jsp?ei=1451257&tp_key=3401948e85
Event conference title: Jadestone Energy Inc. - Full Year 2020
Results
Start time: 4:00 p.m. (Singapore), 9:00 a.m. (London)
Date: 22 April 2021
Conference ID: 32221662
Dial-in number details:
Country Dial-In Numbers
Australia 1800076068
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Canada (Toronto) 416-764-8688
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Canada (Toll free) 888-390-0546
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France 0800916834
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Germany 08007240293
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Germany (Mobile) 08007240293
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Hong Kong 800962712
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Indonesia 0078030208221
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Ireland 1800939111
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Ireland (Mobile) 1800939111
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Japan 006633812569
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Malaysia 0018030208221
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New Zealand 0800453421
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Singapore 8001013217
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Switzerland 0800312635
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Switzerland (Mobile) 0800312635
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United Kingdom 08006522435
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United States (Toll free) 888-0390-0546
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DIVID
The Directors intend to recommend a 2020 final dividend of US
1.08/share, or US$5.0 million in total. The Directors intend to
recommend the 2020 final dividend following the completion of the
internal restructuring, including the arrangement agreement
becoming effective on or around 23 April 2021, and the completion
of the capital reduction of Jadestone Energy plc which is expected
to become effective during the second half of May. At that point,
the Directors will confirm the recommended 2020 final dividend,
including the record date and the ex dividend date. Jadestone
Energy plc's first annual general meeting ("AGM") is scheduled for
16 June 2021, at which time it is expected that shareholders will
vote to approve this 2020 final dividend. The actual payment date
is expected to occur seven calendar days following the AGM.
The Company's growth-oriented strategy remains unchanged; the
business model is highly cash-generative, and, as a result, is
fundamentally pre-disposed to providing cash returns, after
allowing for organic reinvestment needs, whilst maintaining a
conservative capital structure, and not unduly limiting options for
further inorganic growth. The Company intends to maintain and grow
the dividend over time, in line with underlying cash flow
generation. The Company does not offer a dividend reinvestment
plan, and does not offer dividends in the form of ordinary
shares.
ENVIRONMENT, SOCIAL AND GOVERNANCE ("ESG")
As a leading oil and gas development and production company in
the Asia Pacific region, Jadestone strives to deliver sustainable
value for all of its stakeholders in a safe, secure,
environmentally and socially responsible manner. It achieves this
by ensuring it reduces its environmental footprint through the life
cycle of developments and by bringing social and economic benefits
for people associated with its operations.
Jadestone's ESG Framework has evolved over the course of 2020 to
depict its continued alignment with wider societal challenges
addressed by the Sustainable Development Goals (SDGs). Whilst its
business activities touch directly or indirectly on many of the
SDGs, Jadestone has selected the goals that most closely align with
its current business strategy, activities and purpose. It has also
considered how these specific goals relate to the material matters,
orientating its 2021 strategic corporate goals around them.
Jadestone's ESG commitments include:
-- Continually improve Jadestone's environment, health, safety
and social performance, in line with industry best practice;
-- Uphold the highest standards of governance and obey the law
in the countries and communities where it operates;
-- Commit to reducing greenhouse gas emissions from Jadestone operations; and
-- Consider the ESG expectations of its stakeholders.
In 2020, the Group has maintained safe operations at all assets,
with no significant recordable personnel or environmental
incidents, and no disruptions to offshore operations due to the
COVID-19 pandemic. Jadestone has continued its focus on improving
the carbon footprint of its operations, targeting reductions in
flaring and diesel use, exceeding both targets over three-fold. As
per Jadestone's business strategy of acquiring mature, mid-life
assets and transforming them into more productive entities, the
Group has invested in efficiency measures and introduced
improvements to its Montara asset's operational practices. Through
an increase of unprocessed gas reinjection at the site, an
estimated 90,000 t of CO(2) -e of emissions was eliminated. These
efforts have resulted in overall GHG emissions being 15% less in
2020 when compared to the 2019 baseline(1) .
Jadestone has also increased its alignment with the
recommendations of the Task Force on Climate-Related Financial
Disclosures (TCFD) in its reporting and programmes, with major
progress around climate risk and governance. Jadestone has also
committed to 2021 ESG targets across all of its material matters,
which form a part of annual executive key performance indicators,
translating directly to performance pay.
Finally, the Board has adopted the Quoted Companies Alliance
("QCA") corporate governance code, effective from 31 December 2020,
as part of Jadestone's ongoing pivot from Canadian to UK corporate
governance practices and norms. The resultant changes that arise
from the adoption of the QCA corporate governance code have been
implemented and are a testimony to the Company's commitment to
further strengthening transparent and effective corporate
governance practices.
The Company's 2020 Sustainability Report, as part of the 2020
Annual Report provides further details and enhanced disclosures on
the Group's ESG priorities and progress to date.
(1) Jadestone's 2020 GHG emissions were compared to a full 2019
emissions data set, inclusive of the Montara asset operations
during the period January - July 2019, prior to JSE becoming the
site's operator in 2019.
OPERATIONAL REVIEW
Producing Assets
Australia
Montara Project
The Montara Project is located in production licenses AC/L7 and
AC/L8, offshore Western Australia, in a water depth of
approximately 77 meters. The Montara assets, comprising the three
separate fields being Montara, Skua and Swift/Swallow, are produced
through an owned floating production storage and offloading vessel,
the Montara Venture. As at 31 December 2020, the Montara assets had
proven plus probable reserves of 22.7mm barrels of oil, 100% net to
Jadestone. The fields produce light sweet crude ( 42(o) API, 0.067%
mass sulphur), which typically sells at a premium to Dated Brent.
The premium in 2020 ranged between a discount of US$2.19/bbl to a
premium of US$7.54/bbl due to the impacts on demand of COVID-19.
The most recent lifting was agreed at a premium of US$0.66/bbl.
During the year, the Group completed a 3D seismic acquisition
programme covering the AC/L7 and AC/L8 licences, to improve
reservoir imaging for future infill wells and to assess prospects
for future exploration targets. Interpretation work on the seismic
data is being carried out by licence area and is expected to be
completed by 2023.
Production averaged 9,045 bbls/d in 2020 (2019: 10,483 bbls/d).
Lower production was primarily the result of natural field
production decline, and identified problems within the well bores
of the two Skua field wells, which were taken offline while
workovers are planned.
During 2021, the Group plans to drill the H6 well, which was
deferred from 2020 in response to COVID-19 and to perform the two
Skua workovers. In the meantime, production volumes deferred from
the Skua satellite field are being substantially offset by
increased rates from the Swift and Swallow fields.
There were six liftings in 2020, resulting in total sales of
3,221,258 bbls, compared to 3,577,199 bbls in 2019 from the same
number of liftings.
Stag Oilfield
The Stag Oilfield, in block WA-15-L, is located 60km offshore
Western Australia in a water depth of approximately 47 meters. As
at 31 December 2020, the field contained total proved plus probable
reserves of 13.7mm barrels of oil, 100% net to Jadestone. The Stag
oilfield produces heavier sweet crude ( 18(o) API, 0.14% mass
sulphur), which historically sells at a premium to Dated Brent. The
premium in 2020 ranged between US$5.50/bbl to US$21.00/bbl, due to
the impacts on demand from COVID-19. The most recent lifting was
agreed at a premium of US$13.88/bbl.
In May 2020, the owners of the Dampier Spirit floating storage
and offloading vessel ("FSO") advised the Group of their intention
to retire the vessel. In response, the Group adopted a tanker
shuttle operating model, whereby modern double hulled tankers are
loaded directly, on a rotational basis, thus eliminating the need
for ship to ship oil transfers in field. The new model commenced in
September 2020, immediately following the departure of the Dampier
Spirit. The tanker shuttle operating model offers environmental
benefits relative to the permanently moored Dampier Spirit, as well
as cost savings of approximately 20% per annum.
Reduced manning on the facility, due to restrictions arising
from COVID-19, impacted upon the ability to conduct major
activities, other than mandatory and core maintenance requirements.
To work within these restrictions and in view of the lower oil
price during the year, workover activity was reduced in the second
and third quarters, before picking up again in the last quarter of
2020.
Production was 2,394 bbls/d in 2020, compared to 3,049 bbls/d in
2019. Lower production was primarily the result of the pull-back on
well workovers during a period of prolonged lower oil prices and
amidst heightened COVID-19 restrictions and costs on moving people
and equipment.
There were four liftings in 2020, for total sales of 944,354
bbls, compared to 918,961 bbls in 2019 from the same number of
liftings.
During 2021, the Group will continue the well workover
programme, primarily as a result of the need to replace electronic
submersible pumps at the end of their useful lives, and will
conduct well planning work, in preparation for future drilling
activities.
New Zealand
Maari Oilfield
On 16 November 2019, the Group executed a sale and purchase
agreement ("SPA") with OMV New Zealand Limited ("OMV New Zealand"),
to acquire an operated 69% interest in the Maari project, shallow
water offshore New Zealand, for a total cash consideration of
US$50.0 million, and subject to customary closing adjustments.
The transaction has achieved several key milestones with regard
to regulatory approvals, and the Group continues to focus on
securing Ministerial consent. Jadestone and OMV New Zealand
continue to work towards completion of the transaction. The SPA
long stop date has been revised to 30 June 2021. The Group will
assume the operatorship upon completion of the transaction. The
economic benefits from 1 January 2019 until the closing date will
be adjusted in the final consideration price. This is now
anticipated to be a net receipt to the Group.
As at 31 December 2020, the field holds 2P audited reserves of
10.6mm barrels of oil, net to Jadestone's 69% interest.
Pre-Production Assets
Vietnam
Block 51 PSC and Block 46/07 PSC
Jadestone holds a 100% operated working interest in Block 46/07
PSC and Block 51 PSC, both in shallow waters in the Malay Basin,
offshore Southwest Vietnam. The two contiguous blocks hold three
discoveries: the Nam Du gas field in Block 46/07 and the U Minh and
Tho Chu gas/condensate fields in Block 51.
The formal field development plan ("FDP") in respect of the Nam
Du/U Minh development was submitted to the Vietnam regulatory
authorities in late 2019. In mid-March 2020, amid delays in
Vietnamese Government approvals and the drop in global oil prices
related to COVID-19, the Group opted to delay the project, as part
of a review of its 2020 capital programme.
Discussions are continuing with Petrovietnam to agree a gas
production profile for the development, as a precursor to a gas
sales contract, and ultimately attaining government sanction for
the field development.
Indonesia
Lemang PSC
On 29 June 2020, the Group executed an acquisition agreement
with Mandala Energy Lemang Pte Ltd, to acquire an operated 90%
interest in the Lemang PSC, onshore Indonesia, for an acquisition
price of US$16.5 million, comprising cash consideration of US$12.1
million after closing statement adjustments and future estimated
fair value potential contingent payments of US$4.4 million .
The Lemang PSC is located onshore Sumatra, Indonesia. The block
includes the Akatara gas field, with a net to Jadestone 2C resource
of 17.2 mm boe.
The asset has been substantially de-risked with 11 wells drilled
into the structure, plus three years of oil production history, up
until the field ceased production in December 2019.
The acquisition closed on 11 December 2020, following the
receipt of governmental approval of the assignment of the interest
and of the Group's appointment as operator.
The Group intends to commence a gas development project on the
Lemang PSC and current efforts are focused on finalising a heads of
agreement on gas sales, to be followed by a gas sales agreement
with a buyer before seeking formal field development sanction. The
timeline for the Lemang development is highly flexible, and at
Jadestone's discretion.
Exploration Assets
Philippines
Service Contract 56 ("SC56")
Jadestone held a 25% interest in SC56 in partnership with
operator Total E&P Philippines B.V. ("Total"). The exploration
period on the block expired on 1 September 2020. During the year,
Total was granted a 12-month extension on the exploration period
until 1 September 2021, with the COVID-19 pandemic representing a
force majeure event under the service contract.
Following management's strategic review of available options for
the asset, mutual agreement was reached in mid-November between
Jadestone and Total regarding the voluntary relinquishment of SC56.
On 18 November 2020, Total and Jadestone expressed their intention
to the Philippines Department of Energy ("DOE") to voluntarily
surrender the entire interest in SC56 and accordingly, to terminate
the contract. The effective date of termination is 21 December
2020.
SC56 was inherited from the former Mitra Energy management team
and was not an asset consistent with Jadestone's strategy. It
remained in the Jadestone portfolio due to the carried well
commitment, which was intended to provide a cost-free option to
further test this frontier basin/new basin entry opportunity. It
was important for the Group and our shareholders to pursue this
potential to its ultimate conclusion. The Mitra Energy management
team had incurred an accumulated US$49.4 million of costs in
capitalised exploration value by 30 June 2016. Jadestone spent a
further US$1.1 million over the last four-and-a-half years.
The relinquishment decision has resulted in the recognition of
an impairment in Q4 2020 in relation to the capitalised intangible
exploration value of US$50.5 million.
Following the termination, the Group is liable for 25% of the
unfulfilled minimum work programme as at the termination date. The
total unfulfilled minimum work programme amount has been submitted
by Total to the DOE and is currently under review. The Group's
share of the unfulfilled minimum work programme will be funded from
the net arbitration proceeds of US$2.2 million received from Total
in Q1 2020.
Service Contract 57 ("SC57")
The Group holds a 21% working interest in SC57, which has been
under force majeure since 2011, and these conditions are not
expected to change in the foreseeable future.
FINANCIAL REVIEW
The following table provides select financial information of the
Group, which was derived from, and should be read in conjunction
with, the audited consolidated financial statements for the year
ended 31 December 2020.
USD'000 except where indicated 2020 2019
------------------------------------------- ---------- ----------
Sales volume, barrels (bbls) 4,165,612 4,496,164
Production, bbls/day 11,438 13,531
Realised oil price, $/bbl(1) 44.79 69.07
Revenue 217,938 325,406
Production costs (105,338) (119,898)
Operating costs/bbl ($/bbl)(2) 23.10 22.85
Adjusted EBITDAX(2) 62,582 187,505
Depletion, depreciation & amortisation
costs/bbl ($/bbl) 16.24 16.94
Impairment 50,455 -
(Loss)/Profit before tax (57,238) 73,281
(Loss)/Profit after tax (60,178) 40,505
(Loss)/Earnings per ordinary share: basic
& diluted (0.13) 0.09
Operating cash flows before movement in
working capital 86,883 176,908
Capital expenditure 24,065 77,240
Outstanding debt(2) 7,386 50,144
Net cash(2) 82,055 39,275
Benchmark commodity price and realised price
The annual average benchmark Brent crude decreased 35% to
US$41.84/bbl, compared to US$64.21/bbl. The average benchmark price
based on liftings was US$40.61/bbl in 2020, compared to 2019 at
US$64.13/bbl.
The actual average realised price in 2020 decreased in line with
the benchmark price, by 35% to US$44.79/bbl, compared to
US$69.07/bbl in 2019. The average annual premium in the year was
US$4.17/bbl, compared to 2019 at US$4.97/bbl. The premiums have
gradually improved from the oil price trough in Q2 2020, with the
Group achieving US$13.88/bbl and US$0.66/bbl from its latest
liftings of Stag and Montara crude oil, respectively.
Amidst an uncertain global outlook, including second and third
waves of COVID-19 pandemic, the Group has entered into Dated Brent
swaps covering approximately 30% of planned H1 2020 production at
an average swap price of U$55.16/bbl, to support the 2020 planned
organic growth capital programme.
Production and liftings
The Group generated average production in 2020 of 11,438 bbls/d,
compared to 13,531 bbls/d in 2019. Production at both Montara and
Stag was lower compared to 2019, primarily the result of natural
field production decline in addition to deferred production due to
an intentional pull-back on well workovers during a period of
prolonged lower oil prices and amidst heightened COVID-19
restrictions and costs on moving people and equipment.
(1) Realised oil price represents the actual selling price, net
of marketing fees, and before the net impact from commodity hedging
instruments. Inclusive of hedges, the average realised price in
2020 was US$ 52 . 32 /bbl (2019: US$ 72 . 39 /bbl), compared to
average annual Dated Brent of US$41.84/bbl (2019:
US$64.21/bbl).
(2) Operating cost per bbl, adjusted EBITDAX, outstanding debt
and net cash are non-IFRS measures and are explained in below.
The Group had 10 liftings during the year (2019: 10), resulting
in sales of 4,165,612 bbls (2019: 4,496,164 bbls), reflecting the
lower production compared to 2019.
Revenue
The Group generated US$217.9 million of revenues in 2020,
compared to US$325.4 million from 2019, a drop of 33%. Revenue
derived from the sale of crude oil declined by US$124.0 million or
40%, from US$310.5 million in 2019 to US$186.6 million in 2020, due
to:
-- Lower average realised prices in 2020, compared to 2019
(US$44.79/bbl vs US$69.07/bbl), giving rise to a decline of
US$101.2 million; and
-- Lower lifted volumes in 2020 at 4.2mm bbls, compared to 4.5mm
bbls in 2019, generating an additional decline of US$22.8
million.
This was partly offset by an increase in hedging income of
US$31.4 million, more than double 2019's hedging income of US$14.9
million.
Production costs
Production costs declined 12% in 2020 to US$105.3 million, from
US$119.9 million in 2019, predominately due to:
-- Logistics costs were lower by US$6.3 million compared to
2019, as a result of the reduction in the usage of transportation
facilities in the production process, in line with the decreased
production in 2020;
-- Workover costs were US$8.6 million lower compared to 2019,
due to the decision to defer several well interventions amid the
costs and logistics challenges posed by COVID-19. In addition,
workover costs in 2019 were unusually high due to the non-routine
replacement work associated with the riserless light well
intervention;
-- Operational staff costs were lower by US$2.9 million, as part
of the Project Clover cost savings initiatives implemented by the
Group in response to COVID-19; and
-- A positive variance of US$4.5 million in movement of crude
inventories, reflecting the year-on-year differential of the
Group's inventories on hand at year end. There were 601,999 bbls in
inventory as at 31 December 2020, compared to 581,133 bbls as at 31
December 2019.
Unit operating costs per barrel were US$23.10/bbl (2019:
US$22.85/bbl), before workovers and movement in inventories, but
including net lease payments and certain other adjustments (see non
IFRS measures below), with the variance a result of lower
production rates during the year.
DD&A
DD&A charges were US$84.6 million in 2020, compared to
US$90.7 million in 2019, reflecting lower production during the
year. The depletion cost on a unit basis was US$16.24/bbl in 2020
(2019: US$16.94/bbl), predominately due to a technical adjustment
on Montara reserves at December 2019 vs December 2018.
Other expenses
Other expenses in 2020 totalled US$26.9 million (2019: US$9.4
million). The variance of US$17.5 million was predominately due
to:
-- One-off litigation costs related to the settlement of SC56 of
US$8.8 million and 05-1 PSC of US$0.3 million (see also other
income, with respect to the arbitration awards to Jadestone that
more than offset these costs);
-- Rig contract deferral costs in Australia of US$3.0 million,
following the decision to defer the Australian 2020 drilling
campaign in response to the impact of COVID-19;
-- Unrealised foreign exchange loss of US$2.6 million (2019:
US$0.2 million), due to the depreciation of the United States
Dollar against the Australian Dollar; and
-- Professional and consultancy charges of US$1.3 million, in
support of several business development projects in 2020, including
the acquisition of the Lemang PSC.
Other income
Other income was US$26.4 million (2019: US$3.0 million). The
variance of US$23.4 million was predominately due to:
-- Monetary damages awarded of US$11.1 million, for the breach
of the SC56 farm out agreement by Total;
-- Release of the provision made in relation to the Stag FSO of
US$5.0 million, payable to the crew at the expiration of the
Dampier Spirit FSO lease. Following the termination of the lease,
the Group was no longer required to make this payment, and the
provision reversed;
-- Rebate income of US$3.6 million from the Group's helicopter
lease contract, arising from the sublease of the right-of-use
assets to a third party;
-- Gain of US$1.4 million from the termination of the Dampier
Spirit FSO lease in September 2020; and
-- Settlement sum of US$1.0 million received from Inpex to
resolve the dispute over the Block 05-1 PSC.
Impairment
The Group recorded an impairment of US$50.5 million associated
with the capitalised intangible exploration costs at SC56, as the
costs are no longer deemed recoverable. In Q4 2020, the Group and
Total decided to voluntarily relinquish their interests in the
block. US$49.4 million of the impaired amount was incurred by the
previous Mitra Energy management team up to 30 June 2016.
Taxation
Taxation charges declined 91% to US$2.9 million from US$32.8
million in 2019.
The current tax charge was US$11.7 million, which consists of
US$10.0 million of corporate tax expense and net PRRT paid of
US$1.7 million, which is lower, compared to corporate tax expense
of US$43.4 million and net PRRT refunded of US$1.9 million in 2019.
This was due to:
-- Lower corporate tax expense by US$33.4 million due to the
significant decrease in realised average lifting price and slightly
lower lifted volumes. The Group was in a taxable position, despite
the loss before tax position as presented in the consolidated
statement of profit or loss, which was mainly the result of
non-deductible expenses including the SC56 impairment and DD&A
recognised for oil and gas properties; and
-- Net PRRT paid of US$1.7 million, compared to net PRRT
refunded of US$1.9 million in 2019, which was predominately due to
the liftings made in the first half of the year, prior to the
significant decline in commodity prices, and the Group spending
less on capital expenditure, resulting in lower PRRT deductibles
generated, compared to 2019, when the 49H infill well was
drilled.
The corporate tax expense was partly offset by a deferred tax
credit of US$8.7 million, which consists of US$4.0 million (2019:
US$20.3 million) for the unwinding of deferred tax liabilities and
US$4.7 million of deferred PRRT credit (2019: expense of US$6.3
million). The smaller unwinding of deferred tax liabilities in 2020
versus 2019 was due to the lower production and depletion charges
in 2020, and hence a smaller gap between the book depletion charge
and the tax charge . The deferred PRRT credit of US$4.7 million in
2020 was due to the reduction of deferred tax liabilities
associated with Stag PRRT, mostly attributable to the lower
realised prices and the lower capital expenditure in 2020.
Impact of COVID-19
In view of the low crude oil price environment arising from the
impacts of the COVID-19 pandemic, the Group has undertaken an
impairment review on its non-financial assets, as at 31 December
2020, reflecting, among other factors, the then spot price for
Dated Brent of US$50.48/bbl and the outlook for crude oil prices.
Following this review, no impairment is required with respect to
the Group's producing assets in Australia (Stag and Montara), and
the exploration assets in Montara and Vietnam.
2020 RECONCILIATION OF NET CASH
US$'000 US$'000
--------------------------------------------- ---------- -----------
Cash and cash equivalents, 31 December 2019 75,934
Restricted cash(1) , 31 December 2019 13,485
-----------
Total cash and cash equivalent, 31 December
2019 89,419
Revenue 217,938
Other operating income 19,690
Operating costs (105,338)
Staff costs (20,775)
General and administrative expenses (24,632)
Cash flows from operations 86,883
Movement in working capital 25,225
Tax paid (25,969)
Interest paid (1,542)
Purchases of intangible exploration assets,
oil and gas properties, and
plant and equipment(2) (19,458)
Net cash outflows on acquisition of Lemang
PSC (11,959)
Other investing activities 257
Financing activities (53,415)
-----------
Total cash and cash equivalent, 31 December
2020 89,441
Outstanding debt, 31 December 2020 (7,386)
-----------
Net cash(3) , 31 December 2020 82,055
===========
Despite the dramatic fall in average realised prices in 2020,
and the Group's reduced production and hence liftings amidst the
pullback in workovers due to COVID-19 restrictions and the lower
oil price environment, the business still generated positive
operating cash flow. Additionally, after financing activities
including US$4 2 . 8 million of debt principal repayments and
interest payments on the Group's RBL, the Group also generated
positive organic equity free cashflow during the year (before the
acquisition cost of the Lemang PSC).
NON-IFRS MEASURES
The Group uses certain performance measures that are not
specifically defined under IFRS, or other generally accepted
accounting principles. These non-IFRS measures comprise operating
cost per barrel (opex/bbl), adjusted EBITDAX, outstanding debt, and
net cash.
The following notes describe why the Group has selected these
non-IFRS measures, and reconciles amounts to the nearest equivalent
IFRS measure.
(1) Restricted cash in 2019 excludes US$10.0 million in support
of a bank guarantee to a key supplier in respect of Stag's FSO
vessel .
(2) Total capital expenditure was US$24.1 million (2019: US$77.2
million), comprising total capital expenditure paid of US$17.9
million (2019: US$68.3 million), plus accrued capital expenditure
of US$6.1 million (2019: US$8.9 million).
(3) Net cash is a non-IFRS measure and is explained in below.
Operating costs per barrel (Opex/bbl)
Opex/bbl is a non-IFRS measure used to monitor the Group's
operating cost efficiency, as it measures operating costs to
extract oil from the Group's producing reservoirs on a unit basis.
Opex/bbl is defined as total production costs excluding oil
inventories movement, write down of inventories, workovers (to
facilitate better comparability period to period) and non-recurring
repair and maintenance. It also includes lease payments related to
operational activities, net of any income earned from right-of-use
assets involved in production, and foreign exchange gains arising
from foreign exchange forwards in respect of local currency
operating expenditure, and excludes depletion, depreciation and
amortisation and short term COVID-19 subsidies. Adjusted aggregate
production cost is then divided by total produced barrels for the
prevailing period, to determine the unit cost per barrel.
USD'000 except where indicated 2020 2019
Production costs (reported) 105,338 119,898
Adjustments
Lease payments related to operating activity(1) 17,548 15,947
Movement in oil inventories(2) 2,806 7,337
Workover costs(3) (21,686) (30,331)
Impact from foreign exchange derivatives
apportioned to production (2,649) -
costs(4)
Other income(5) (3,634) -
Non-recurring repair and maintenance(6) (1,619) -
Australian Government JobKeeper scheme 600 -
Adjusted production costs 96,704 112,851
----------- -----------
Total production, barrels 4,186,478 4,938,867
Operating costs per barrel 23.10(7) 22.85
=========== ===========
(1) Lease payments related to operating activity are lease
payments considered to be operating costs in nature, including
leased helicopters for transporting offshore crews, and FSO rental
fees. The lease payments are added back to reflect the true cost of
production.
(2) Movement in oil inventories are added back to the
calculation to match the full cost of production with the
associated production volumes.
(3) Workover costs are excluded to normalise the opex/bbl so as
to enhance comparability. The frequency of workovers can vary
significantly, across periods, particularly at Stag.
(4) A portion of the net impact from foreign exchange hedging
instruments was apportioned to production costs, based on the
Group's actual local currency expenditure during the hedging
period.
(5) Other income represents the rental income from a helicopter
rental contract (a right-of-use asset) to a third party.
(6) Non-recurring repair and maintenance costs relates to costs
associated with Cyclone Damien.
(7) The Company previously announced unaudited estimate 2020
opex/bbl of US$23.24/bbl. This estimate was before removing the
Australian Government JobKeeper scheme of US$0.6 million and upward
revision of US$0.6 million to the Cyclone Damien costs noted in
footnote 6, following finalisation of works.
Adjusted EBITDAX
Adjusted EBITDAX is a non-IFRS measure which does not have a
standardised meaning prescribed by IFRS. This non-IFRS measure is
included because management uses the information to analyse cash
generation and financial performance of the Group.
Adjusted EBITDAX is defined as profit from continuing activities
before income tax, finance costs, interest income, DD&A, other
financial gains and exploration.
The calculation of adjusted EBITDAX is as follow:
USD'000 2020 2019
Revenue 217,938 325,406
Production cost (105,338) (119,898)
(22, 027
Staff cost (21,903) )
Impairment of assets (50,455) -
Other expenses (26,918) (9,379)
Other income, excluding interest income 26,119 -
Other financial gains 359 3,389
---------- ----------
Unadjusted EBITDAX 39,802 177,491
Non-recurring
Net gain from oil price derivatives (30,889) (14,242)
Impairment of assets 50,455 -
Non-recurring opex(1) 8,270 23,785
Net litigation income (3,005) -
Rig contract deferred costs 3,000 -
Gain on contingent considerations (359) (3,389)
Gain from termination of FSO lease (6,429) -
Others(2) 1,737 3,860
---------- ----------
22,780 10,014
---------- ----------
Adjusted EBITDAX 62,582 187,505
========== ==========
(1) Includes one-off major maintenance/well intervention
activities, in particular the workover campaigns at Skua 10 and H3
in 2020, and the riserless light well intervention in 2019, as well
as other non-recurring production expenditures such as the repair
and maintenance costs associated with weather downtime.
(2) 2020 includes Montara seismic acquisition costs associated
with areas outside the current license, Maari transition team
costs, Australian Government JobKeeper scheme and gain on
contingent considerations, while 2019 includes Montara transition
team costs and gain on contingent considerations.
Outstanding debt
Total borrowings, as recorded in the Group's consolidated
statement of financial position, represents the carrying amount of
interest bearing debt, measured at amortised cost pursuant to IFRS
9 Financial Instruments.
Outstanding debt is a non-IFRS measure which does not have a
standardised meaning prescribed by IFRS. Management uses this
measure to manage the capital structure, and make adjustments to
it, based on the funds available to the Group. Outstanding debt is
defined as long and short-term interest bearing debt, with
effective interest method financing costs added back (i.e.
excluded), and excluding derivatives.
As at 31 December 2020, the Group had outstanding debt of US$7.4
million, which was fully repaid at the end of the first quarter of
2021.
USD'000 2020 2019
---------------------------------------------- ------- --------
Long term borrowing - 7,328
Short term borrowing 7,296 41,795
Add back: effective interest method financing
costs 90 1,021
------- --------
Outstanding debt 7,386 50,144
======= ========
Net cash
Net cash is a non-IFRS measure which does not have a
standardised meaning prescribed by IFRS. Management uses this
measure to analyse the financial strength of the Group. The measure
is used to ensure capital is managed effectively in order to
support its ongoing operations, and to raise additional funds, if
required.
USD'000 2020 2019
-------------------------- --------- ----------
Outstanding debt (7,386) (50,144)
Cash and cash equivalents 81,996 75,934
Restricted cash 7,445 13,485
--------- ----------
Net cash 82,055 39,275
========= ==========
Net cash is defined as the sum of cash and cash equivalents,
which included the minimum working capital balance of US$15.0
million required under the Group's RBL, and restricted cash of
US$7.4 million in the RBL debt service reserve account (2019:
US$13.5 million), less outstanding debt. The restricted cash in
2020, as shown here, excludes the US$1.0 million cash
collateralised bank guarantee placed with the Indonesian regulator
with respect to a joint study agreement entered into by the Group
in Indonesia. The restricted cash in 2019 excludes the US$10.0
million deposited in support of a bank guarantee to a key supplier
in respect of the Stag FSO. This guarantee was wound-up by the
Group during the year as part of the move to the shuttle tanker
model.
2020 PRINCIPAL FINANCIAL RISKS AND UNCERTAINTIES
The Group manages principal risks and uncertainties via its risk
management framework. The Group is exposed to a variety of
political, technological, environmental, operational and financial
risks which are monitored and/or mitigated to acceptable
levels.
The risk management framework provides a systematic process for
the identification of the principal risks which have the
possibility of impacting the Group's strategic objectives. The
board regularly reviews the principal risks and defines corporate
targets based on acceptable levels of risk. The board assesses
material risks quarterly with a full review of the risk matrix at
least twice per year.
The principal risks are currently recognised and their
mitigating actions are detailed below.
Risk Group Risk Select mitigations
Business The Group is in a growth Opportunities are assessed
development phase. If there is a lack against a set of strict evaluation
opportunities of high-quality opportunities, criteria. Thorough and detailed
the anticipated growth due diligence analysis is
of the business may not performed, including the
be achieved. Poor due diligence use of third-party experts
or unfavorable transaction wherever applicable. Detailed
terms may add low quality transition plans are prepared
assets or unexpected material to ensure a seamless and
liabilities to the Group. successful asset transition.
------------------------------------------------- ------------------------------------------------
Capital The Group will at times The Group maintains a strong
funding require external funding balance sheet by maximizing
to finance organic growth net cash to ensure sufficient
and/or M&A opportunities. liquidity within the business,
A change in investor sentiment and minimizing interest bearing
towards funding of upstream debt.
oil & gas production and Cash forecasts are continually
development could impact monitored including considering
access to funds and increase multiple scenarios for base
debt margins. case, and low cases with
mitigations.
Disciplined allocation of
capital across the portfolio.
Strong long-term relationships
are sought and maintained
with major international
financial institutions.
------------------------------------------------- ------------------------------------------------
Climate In the face of growing The Group has a dedicated
change societal expectations and Climate Change Working Group
risks emerging policies including to drive Jadestone's climate
a tax or taxes on carbon, action agenda.
there are risks arising Climate action priority areas
from the Group's failure include:
to manage the impact of 1) Reducing GHG
climate change and to demonstrate 2) Increasing climate resiliency
climate action. 3) Supplying cleaner energy
The potential impacts alternatives
from emerging policy, regulation Sustainability measures are
and a shift to renewable to be disclosed and in alignment
energy could impact the with climate related financial
performance of the business disclosure recommendations.
and may increase costs, ESG performance is reflected
reduce value and restrict in executive KPIs and cascaded
future opportunities. throughout business. The
Group targets top-quartile
ESG performance among its
peer group.
------------------------------------------------- ------------------------------------------------
Commodity The Group's earnings are The Group maintains a continual
price risk dependent on commodity focus on its cost structure
prices which are influenced and continually seeks cost
by global events. A prolonged efficiency initiatives to
decline in oil prices will embed further cashflow resiliency.
have a negative impact The Company will use commodity
on revenues, margins, profitability price hedging to mitigate
and cashflows. the exposure to fluctuations
in oil prices during periods
of elevated capital expenditure
and/or debt incurrence.
The company seeks to diversify
its asset portfolio and reduce
exposure to commodity price
fluctuation through fixed
price gas contracts, including
the Nam Du/U Minh gas development
in Vietnam and the Lemang
gas and liquids project in
Indonesia.
------------------------------------------------- ------------------------------------------------
Health, HSE is a key priority for HSE committee oversees and
safety, the board and senior management sets standards for the Group.
and environment team. The group operates HSE performance target of
("HSE") in challenging locations zero lost time incidents.
risks and conditions both off Any lost time or near miss
and onshore. incidents are investigated
An unsafe working environment and lessons learnt implemented
and failure of HSE standards promptly, alongside active
could result in personal monitoring of HSE standards
injury, fatality and/or leading and lagging indicators.
reputational damage. The The Group is committed to
consequence of a failure maintaining robust health
to manage HSE risk could and safety procedures including
result in penalties, increased procedures in place to respond
costs and a potential loss to unexpected operational
of a license to operate. incidents.
HSE management system includes
environmental impact statements,
environmental plans, oil
spill response and other
emergency plans and operational
safety cases.
------------------------------------------------- ------------------------------------------------
IT resiliency The reliance on IT systems, Extensive data and server
& continuity networks and processes backups are performed regularly.
continues to evolve, and The Group's redundancy strategy
as the Group grows and is applied to critical systems
develops, the connectivity and network. The most up
of networks and systems to date security software
becomes more complex. The is maintained, and support
risk from cyber threats and training is provided
continue to escalate. to all staff to minimize
the exposure of security
threats. Network and critical
system penetration tests
are also performed to measure
and assure our level of protection.
------------------------------------------------- ------------------------------------------------
Operating The Group is The Group
performance focused on deploys a
producing assets midlife
and discovered field operating
resource able to philosophy,
be brought which closely
to production monitors
rapidly. reservoir,
In the case of well and plant
mid-life performance
and/or mature while
producing continuously
assets there is seeking
a risk out operating
that operational efficiencies
performance and
will decline reinvestment
through lower opportunities
production and to increase
increased recovery rates
costs. and the
production life
of
each field. In
2020 Jadestone
has implemented
a cost saving
and efficiency
project,
Project
Clover, to
further lower
the cost base
across all
operations and
offices.
------------------------------------------------- ------------------------------------------------
Pandemic During 2020, the Group The Group has assessed the
impacts has changed its working financial and operational
practices as offices adapted risks to the business and
to working from home and implemented multiple policies
offshore workers had to in response to the COVID-19
quarantine between shifts. pandemic. The Group implemented
While the disruptions have new procedures covering IT,
been managed in the short travel, supply chain and
term, any prolonged pandemic operations. The Group also
related restrictions could implemented recommended safe
impact business performance practices across its operations
through a decline in commodity and offices including remote
prices and additional expenditure working guidelines and established
to meet the new working pandemic response committees
arrangements. at each location to manage
local best practice.
------------------------------------------------- ------------------------------------------------
Project As part of the growth strategy, Regular liaison with national
execution the Group is dependent oil companies, regulators,
& economics on the successful execution and other government bodies
of strategic projects in to ensure acceptance and
Australia, New Zealand, approvals are obtained as
Vietnam and Indonesia. soon as possible.
Project failures could Projects are tailored to
negatively impact operational the local market conditions,
performance and economic including with regard to
outcomes. supply and price.
Project economics are assessed
with multiple sensitives
to identify critical challenges,
including contingency planning
for potential project failures.
------------------------------------------------- ------------------------------------------------
Regulatory The regulatory frameworks Policy and procedures are
infringement across the region within regularly updated to reflect
which the Group operates changes in each of the regulatory
are diverse and complex environments in which the
and include emission controls, Group operates.
operational efficiency, Government relations officers
legal and tax regulations, are employed in-country,
among others. A breach where it is deemed appropriate,
of any aspect could result to liaise with government
in loss of production, bodies to understand the
revenues, increased costs, potential impacts of likely
and/or reputational damage. regulatory changes on the
business.
Regular communications occur
with government and trade
bodies to understand potential
looming and actual changes
in the regulatory environment.
------------------------------------------------- ------------------------------------------------
Reserve The Group is currently The majority of the Group's
write-downs dependent on two producing reserves are in production.
assets and a reserve write Estimation is done based
down may impact long term on actual performance data,
business performance and reducing the uncertainty
corporate reputation. range and risk of a write
down. Internal technical
reserves reviews ensure a
high quality submission.
All assets are either audited
or reviewed on an annual
basis pursuant to the Group's
51-101 filing requirements.
------------------------------------------------- ------------------------------------------------
Sovereign The Group's key assets The Group maintains positive
/ political are located in politically relationships with governments
risk stable countries, but there and key stakeholders, and
is always the possibility actively monitors the political
of governmental or regulatory and regulatory environment
changes which could negatively within each of the countries
impact the business. and regions in which it operates.
Jadestone operates as a good
corporate citizen, including
in accordance with PSC and
tax regulations.
New assets are assessed for
political risk, and the potential
negative impacts that could
arise on the Group.
------------------------------------------------- ------------------------------------------------
GLOSSARY
reserves hydrocarbon resource that is anticipated to be commercially
recovered from known accumulations from a given
date forward
2P the sum of proved and probable reserves, reflecting
those reserves with 50% probability of quantities
actually recovered being equal or greater to the
sum of estimated proved plus probable reserves
--------------------------------------------------------------
2C best estimate contingent resource, being quantities
of hydrocarbons which are estimated, on a given
date, to be potentially recoverable from known accumulations
but which are not currently considered to be commercially
recoverable
--------------------------------------------------------------
bbl barrels
--------------------------------------------------------------
bbls/d barrels per day
--------------------------------------------------------------
boe barrels of oil equivalent
--------------------------------------------------------------
bscf billion standard cubic feet equivalent
--------------------------------------------------------------
capex capital expenditures
--------------------------------------------------------------
EBITDAX earnings before interest tax, depreciation, amortisation
and exploration
--------------------------------------------------------------
FSO floating storage and offloading
--------------------------------------------------------------
mm million
--------------------------------------------------------------
opex operating expenditures
--------------------------------------------------------------
PSC production sharing contract
--------------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER
2020
MANAGEMENT'S REPORT
The accompanying consolidated financial statements are the
responsibility of management. The consolidated financial statements
were prepared by management, in accordance with International
Financial Reporting Standards ("IFRS"), as issued by the
International Accounting Standards Board, and as outlined in the
notes to the consolidated financial statements.
Management maintains appropriate systems of internal controls.
Policies and procedures are designed to give reasonable assurance
that transactions are appropriately authorised, assets are
safeguarded, and financial records properly maintained, to provide
reliable information for the presentation of consolidated financial
statements.
Deloitte & Touche LLP, an independent firm of public
accountants and chartered accountants, was appointed by the
shareholders to audit the consolidated financial statements, and to
provide an independent audit opinion.
The Audit Committee reviewed the consolidated financial
statements with management. The Board of Directors has approved the
consolidated financial statements, on the recommendation of the
Audit Committee.
These financial statements were approved by the directors and
authorised for issue on 22 April 2021.
A. Paul Blakeley Daniel Young
Director Director
22 April 2021 22 April 2021
INDEPENT AUDITOR'S REPORT
TO THE SHAREHOLDERS OF JADESTONE ENERGY INC.
Opinion
We have audited the accompanying consolidated financial
statements of Jadestone Energy Inc. and its subsidiaries (the
"Group"), which comprise the consolidated statement of financial
position as at 31 December 2020, and the consolidated statement of
profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash
flows for the year ended 31 December 2020, and notes to the
consolidated financial statements, including a summary of
significant accounting policies.
In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of
Jadestone Energy Inc. as at 31 December 2020, and its financial
performance and its cash flows for the year ended 31 December 2020,
in accordance with International Financial Reporting Standards
("IFRS"), as issued by International Accountant Standards Board
("IASB").
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing ("ISAs"). Our responsibilities under those
standards are further described in the Auditor's Responsibilities
for the Audit of the Financial Statements section of our report. We
are independent of the Group in accordance with the International
Ethics Standards Board for Accountants' Code of Ethics for
Professional Accountants (IESBA Code) together with the ethical
requirements that are relevant to our audit of the financial
statements in Singapore, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
consolidated financial statements of the current year. These
matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
Key Audit Matters How the matter was addressed in
the audit
Impairment assessment of oil
and gas properties Our audit procedures focused on
As at 31 December 2020, the evaluating impairment indicators
Group recorded US$317.7 million in accordance with IAS 36 Impairment
of oil and gas properties, of assets, and challenging the
which approximate 52% of the judgements and key assumptions
Group's total assets. used by management in determining
the recoverable amount. Such procedures
Management performed an assessment included, amongst others:
of the internal and external
factors of the oil and gas * Reviewing the internal and external factors used by
properties' carrying values management to determine impairment indicators;
to determine whether there
is any indicator of impairment
and observed that oil prices * Checking the Group's budget to evaluate the plan for
decreased significantly in the assets, including the funding options for future
2020. capital expenditure to be able to realise the future
cash flows;
Hence, management assessed
the recoverability of its
oil and gas properties by * Assessing the objectivity, competency and experience
looking at future cash flows of the independent qualified person who prepared the
from the respective oil and reserve reports;
gas properties ("Financial
Model") at 31 December 2020
and its future plans for these * Challenging management's oil price assumptions
assets. The assessment requires against external data, to determine whether they
the exercise of significant indicate that there has been a significant change
judgement about and assumptions with an adverse effect on the recoverable amount;
on, amongst others, the discount
rate, oil reserves, expected
production volumes and future * Comparing field and plant production performance
oil prices. Accordingly, management during the year against budget, to determine whether
who is ultimately responsible they indicate that there has been a significant
for the third party estimates, change with an adverse effect on the recoverable
have also engaged an independent amount;
qualified person to estimate,
where appropriate, the proved,
probable and possible reserves * Challenging management's assumptions on key data used
for its oil and gas properties, in their computation of the discount rate; and
including the future net cash
flows arising from such.
* Checking the reserve reports prepared by the
The Group has made disclosures independent qualified person to determine that the
on the above judgement in reserve estimates and expected production volume used
Note 3. by management in its Financial Model is supported.
Based on our procedures, we noted
that the carrying amounts of oil
and gas properties are stated
appropriately.
We have assessed and validated
the adequacy and appropriateness
of the disclosures made in the
financial statements.
--------------------------------------------------------------
Key Audit Matters How the matter was addressed in
the audit
Impairment assessment of intangible
exploration assets
As at 31 December 2020, the Our audit procedures focused on
Group recorded US$100.7 million evaluating and challenging the
of intangible exploration judgements and key assumptions
assets, which approximate used by management in performing
17% of the Group's total assets. the impairment review under IFRS
6 Exploration for and evaluation
Management performed an assessment of mineral resources. Such procedures
of the internal and external included, amongst others:
factors of the intangible
exploration asset properties' * Reviewing the internal and external factors used by
carrying values to determine management to determine impairment indicators;
whether there is any indicator
of impairment.
* Checking the Group's budget to evaluate the plan for
Management also performed the assets, including the funding options for future
an assessment of the technical capital expenditure to be able to realise the future
feasibility and commercial cash flows;
viability of extracting a
mineral resource and whether
there is any adverse information * Reviewing the relinquishment notification submitted
that will affect the final to the relevant authority, where applicable;
investment decision to commercialise
the asset.
* Performing a retrospective review of prior year's
Management, who is ultimately work budget and current year's actual activity to
responsible for third party determine the reliability of management's plan and
estimates, have also engaged budget for the purpose of assessing impairment
an independent qualified person indicators;
to estimate, where appropriate,
the gross contingent resources
for all of the intangible * Assessing the objectivity, competency and experience
exploration assets in previous of the independent qualified person who prepared the
years and in the current year reserve reports; and
for the newly acquired Lemang
field (Note 15). Where management
has not obtained a revised * Checking the reserve reports prepared by the
reserve report, management independent qualified person relating to the Group's
has assessed that given that estimated reserves, and assessing based on current
these are exploration assets, year activity if there are any negative implications
there are no significant conditions on previously obtained reserve reports.
in the current year that will
negatively impact reserves.
Based on management's assessment, Based on our procedures, we noted
an impairment loss of US$50.5 that the carrying amounts of intangible
million was recorded for the exploration assets are stated
financial year ended 31 December appropriately.
2020 as detailed in Notes
9 and 16. Critical judgement We have assessed and validated
and estimates on the above the adequacy and appropriateness
are also disclosed in Note of the disclosures made in the
3. financial statements.
-------------------------------------------------------------
Other Information
Management is responsible for the other information. The other
information comprises the information, other than the financial
statements and our auditor's report thereon, in the Annual
Report.
Our opinion on the consolidated financial statements does not
cover the other information and we do not and will not express any
form of assurance conclusion thereon. In connection with our audit
of the consolidated financial statements, our responsibility is to
read the other information identified above and, in doing so,
consider whether the other information is materially inconsistent
with the consolidated financial statements, or our knowledge
obtained in the audit, or otherwise appears to be materially
misstated.
The information, other than the financial statements and the
auditors' report thereon, in the Annual Report is expected to be
made available to us after the date of this auditor's report. If,
based on the work we will perform on this other information, we
conclude that there is a material misstatement of this other
information, we are required to report that fact to those charged
with governance.
Responsibilities of Management and Those Charged with Governance
for the Consolidated Financial Statements
Management is responsible for the preparation and fair
presentation of these consolidated financial statements in
accordance with IFRS, and for such internal control as management
determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, management is responsible
for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management
either intends to liquidate the Group or to cease operations, or
has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the
Group's financial reporting process.
Auditor's Responsibility for the Audit of the Financial
Statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISA will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISA, we exercise
professional judgement and maintain professional skepticism
throughout the audit. We also:
a) Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
b) Obtain an understanding of internal control relevant to the
audit 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 Group's internal control.
c) Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclosures
made by management.
d) Conclude on the appropriateness of management's use of the
going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group's
ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in
our auditor's report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor's report. However, future events or
conditions may cause the Group to cease to continue as a going
concern.
e) Evaluate the overall presentation, structure and content of
the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
f) Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and
performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the
current year and are therefore the key audit matters. We describe
these matters in our auditor's report, unless law or regulation
precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
The engagement partner on the audit resulting in this
independent auditor's report is Kanagasabai s/o Haridas.
Deloitte & Touche LLP
Public Accountants and
Chartered Accountants
Singapore
22 April 2021
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEARED 31 DECEMBER 2020
2020 2019
Reclassified*
Notes USD'000 USD'000
---------------------------------------------- ------- ----------- --------------
Consolidated statement of profit or
loss
Revenue 4 217,938 325,406
Production costs 5 (105,338) (119,898)
(90, 746
Depletion, depreciation and amortisation 6 (84,642) )
Staff costs 7 (21,903) (22,027)
Other expenses 8 (26,918) (9,379)
Impairment of assets 9 (50,455) -
Other income 10 26,376 2,979
Finance costs 11 (12,655) (16,443)
Other financial gains 12 359 3,389
----------- --------------
(Loss)/Profit before tax (57,238) 73,281
( 32 , 776
Income tax expense 13 (2,940) )
----------- --------------
(Loss)/Profit for the year (60,178) 40,505
=========== ==============
(Loss)/Earnings per ordinary share
Basic and diluted (US$) 14 (0.13) 0.09
=========== ==============
Consolidated statement of comprehensive
income
(Loss)/Profit for the year (60,178) 40,505
Other comprehensive loss
Items that may be reclassified subsequently
to profit or loss:
Gain/(Loss) on unrealised cash flow
hedges 27 26,093 (30,542)
Hedging gain reclassified to profit
or loss (31,364) (14,874)
----------- --------------
(5,271) (45,416)
Tax income relating to components of
other comprehensive
loss 13 1,583 13,624
----------- --------------
Other comprehensive loss (3,688) (31,792)
----------- --------------
Total comprehensive (loss)/income for
the year (63,866) 8,713
=========== ==============
*Certain 2019 comparative information has been reclassified
between line items. Please refer to Note 40.
All comprehensive (loss)/income is attributable to the equity
holders of the parent.
The accompanying notes are an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
2020
2020 2019
Reclassified*
Notes USD'000 USD'000
----------------------------------- ------- -------------------------- --------------
Assets
Non-current assets
Intangible exploration assets 16 100,670 117,440
Oil and gas properties 17 317,676 381,674
Plant and equipment 18 1,652 1,780
Right-of-use assets 19 23,673 59,787
Other receivables 23 4,404 -
Restricted cash 24 - 17,477
Deferred tax assets 21 19,727 16,012
-------------------------- --------------
Total non-current assets 467,802 594,170
========================== ==============
Current assets
Inventories 22 45,361 31,411
Trade and other receivables 23 7,110 42,283
Derivative financial instruments 34 - 5,275
Restricted cash 24 8,445 6,008
Cash and cash equivalents 24 80,996 75,934
-------------------------- --------------
Total current assets 141,912 160,911
-------------------------- --------------
Total assets 609,714 755,081
========================== ==============
Equity and liabilities
Equity
Capital and reserves
Share capital 25 466,979 466,573
Share-based payments reserve 28 24,985 23,857
Hedging reserves 27 - 3,688
Accumulated losses (331,322) (268,651)
-------------------------- --------------
Total equity 160,642 225,467
-------------------------- --------------
Non-current liabilities
Provisions 29 288,224 280,833
Borrowings 31 - 7,328
Lease liabilities 30 13,305 42,533
Tax liabilities 26,896 -
Deferred tax liabilities 21 58,229 64,825
-------------------------- --------------
Total non-current liabilities 386,654 395,519
========================== ==============
*Certain 2019 comparative information has been reclassified
between line items. Please refer to Note 40.
2020 2019
Reclassified*
Notes USD'000 USD'000
----------------------------------- ------- -------- --------------
Current liabilities
Borrowings 31 7,296 41,795
Lease liabilities 30 12,478 19,739
Trade and other payables 33 32,192 25,799
Provisions 29 4,558 2,107
Derivative financial instruments 34 471 -
Tax liabilities 5,423 44,655
-------- --------------
Total current liabilities 62,418 134,095
-------- --------------
Total liabilities
TOTAL EQUITY AND LIABILITIES 449,072 529,614
-------- --------------
Total equity and liabilities 609,714 755,081
======== ==============
*Certain 2019 comparative information has been reclassified
between line items. Please refer to Note 40.
The accompanying notes are an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31
DECEMEBER 2020
Share-based
payments
Share reserve Hedging Accumulated
capital USD'000 reserves losses Total
USD'000 USD'000 USD'000 USD'000
-------------------------- ---------- ------------ ----------- -------------- ----------
As at 1 January
2019 466,562 22,375 35,480 (309,156) 215,261
Profit for the
year - - - 40,505 40,505
Other comprehensive
loss for the year - - (31,792) - (31,792)
---------- ------------ ----------- -------------- ----------
Total comprehensive
income for the
year - - (31,792) 40,505 8,713
---------- ------------ ----------- -------------- ----------
Share-based compensation
(Note 7) - 1,482 - - 1,482
Shares issued,
net of
transaction costs
(Note 25) 11 - - - 11
---------- ------------ ----------- -------------- ----------
Total transactions
with
owners, recognised
directly in equity 11 1,482 - - 1,493
---------- ------------ ----------- -------------- ----------
As at 31 December
2019/
1 January 2020 466,573 23,857 3,688 (268,651) 225,467
Loss for the year - - - (60,178) (60,178)
Other comprehensive
loss for the year - - (3,688) - (3,688)
---------- ------------ ----------- -------------- ----------
Total comprehensive
loss for the year - - (3,688) (60,178) (63,866)
---------- ------------ ----------- -------------- ----------
Dividend paid (Note
26) - - - (2,493) (2,493)
Share-based compensation
(Note 7) - 1,128 - - 1,128
Shares issued,
net of
transaction costs
(Note 25) 406 - - - 406
---------- ------------ ----------- -------------- ----------
Total transactions
with
owners, recognised
directly in equity 406 1,128 - (2,493) (959)
---------- ------------ ----------- -------------- ----------
As at 31 December
2020 466,979 24,985 - (331,322) 160,642
========== ============ =========== ============== ==========
The accompanying notes are an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER
2020
2020 2019
Reclassified*
Notes USD'000 USD'000
------------------------------------------- -------- --------- ---------------
Operating activities
(Loss)/Profit before tax (57,238) 73,281
Adjustments for:
Depletion, depreciation and amortisation 6 68,414 75,870
Impairment of intangible exploration
assets 9 50,455 -
Depreciation of right-of-use assets 6 16,228 14,876
Other finance costs 11 10,289 10,376
Interest expense 11 2,366 6,067
Unrealised foreign exchange loss/(gain) 8 / 10 1,495 (8)
Share-based payments 7 1,128 1,482
Fair value loss on oil derivatives 8 471 -
Inventories written off 8 173 164
Provision of slow moving inventories 8 143 -
Loss on ineffective hedge recycled
to profit or loss 8 4 633
Change in Stag FSO provision 10 (5,047) (1,717)
Gain from termination of right-of-use
asset 10 (1,382) -
Change in fair value of contingent
payments 12 (359) (3,389)
Interest income 10 (257) (1,260)
Oil and gas properties written
off 8 - 533
Operating cash flows before movements
in working
capital 86,883 176,908
Decrease/(Increase) in trade and
other receivables 35,560 (10,183)
Increase in inventories (14,071) (7,510)
Increase/(Decrease) in trade and
other payables 3,736 (12,431)
Cash generated from operations 112,108 146,784
Interest paid (1,542) (4,698)
Tax (paid)/refunded (25,969) 2,551
--------- ---------------
Net cash generated from operating
activities 84,597 144,637
--------- ---------------
Investing activities
Net cash outflows on acquisition
of Lemang PSC 15 (11,959) -
Payment for oil and gas properties 17 (4,732) (43,817)
Payment for plant and equipment 18 (473) (502)
Proceeds from disposal of plant
and equipment - 4
Payment for intangible exploration
assets 16 (14,253) (12,933)
Transfer from debt service reserve
account 24 5,040 5,159
Interest received 10 257 1,260
--------- ---------------
Net cash used in investing activities (26,120) (50,829)
--------- ---------------
*Certain 2019 comparative information has been reclassified
between line items. Please refer to Note 40.
2020 2019
Notes Reclassified*
USD'000 USD'000
------------------------------------------- -------- --------- ---------------
Financing activities
Net proceeds from issuance of shares 25 406 11
Release of deposit for bank guarantee 24 10,000 -
Dividend paid 26 (2,493) -
Repayment of borrowings 32 (42,766) (54,203)
Repayment of lease liabilities 32 (18,562) (16,671)
Net cash used in financing activities (53,415) (70,863)
--------- ---------------
Net increase in cash and cash equivalents 5,062 22,945
Effect of translation on foreign
currency cash and
cash balances - 8
Cash and cash equivalents at beginning
of the year 75,934 52,981
--------- ---------------
Cash and cash equivalents at end
of the year 24 80,996 75,934
========= ===============
*Certain 2019 comparative information has been reclassified
between line items. Please refer to Note 40.
The accompanying notes are an integral part of the consolidated
financial statements.
SIGNIFICANT ACCOUNTING POLICIES AND EXPLANATION NOTES TO THE
FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2020
1. CORPORATE INFORMATION
Jadestone Energy Inc. (the "Company" or "Jadestone") is an oil
and gas company incorporated in Canada.
As first announced on 1 February 2021, Jadestone is pursuing an
internal reorganisation which will result in a new UK-based parent
company for the Group, Jadestone Energy plc. This reorganisation is
expected to be effective on 23 April 2021. The internal
reorganisation will not result in a change in control in the
ultimate holding company of the Jadestone group of companies and,
accordingly, will not result in a change in control in the ultimate
shareholding in any of the companies or assets of the Jadestone
group of companies. Further, the internal reorganisation will not
result in a change in the management of any of the companies or
assets of the Jadestone group of companies.
The Company's ordinary shares are listed on AIM, a market by the
London Stock Exchange. The Company was listed on the TSX-V
throughout 2019 but delisted on 25 March 2020. The Company trades
under the symbol "JSE".
The financial statements are expressed in United States Dollars
("US$" or "USD").
The Company and its subsidiaries (the "Group") are engaged in
production, development, exploration and appraisal activities in
Australia, Vietnam, Indonesia and the Philippines. The Group's
current producing assets are in the Carnarvon (Stag) and Vulcan
basins (Montara), offshore Western Australia. During the year, the
Group has submitted a notice to relinquish Service Contract 56
("SC56") in the Philippines. The effective date of relinquishment
was 21 December 2020.
On 29 June 2020, the Group executed an acquisition agreement
with Mandala Energy Lemang Pte Ltd ("Mandala Energy") to acquire an
operated 90% interest in the Lemang PSC, onshore Indonesia, for a
total cash consideration of US$12.0 million, plus closing statement
adjustments and subsequent contingent payments. The acquisition
closed on 11 December 2020 ("Closing Date"), following the
completion of various conditions precedent at the time of signing
the sale and purchase agreement ("SPA").
On 16 November 2019, the Group executed a SPA with OMV New
Zealand Limited ("OMV New Zealand") to acquire an operated 69%
controlling interest in the Maari project for a total consideration
of US$50.0 million, and subject to customary working capital
adjustments. The transaction is subject to regulatory approvals and
joint venture partners' acceptance. Following these approvals, the
transaction will close and control of the Maari project will
transfer to the Group. The economic benefits from 1 January 2019
until the closing date will be adjusted in the final consideration
price. On 22 March 2021, the Group and OMV New Zealand have agreed
to revise the long stop date under the SPA to 30 June 2021. Both
parties remain fully committed to the transaction and anticipate
completing the transaction prior to the expiration of the long stop
date.
The Company's head office is located at 3 Anson Road, #13-01
Springleaf Tower, Singapore 079909. The registered office of the
Company is 10(th) Floor, 595 Howe Street, Vancouver, British
Columbia V6C 2T5, Canada. The registered office of the expected new
UK-based parent company for the Group, Jadestone Energy plc, is
Suite 1, 3rd Floor 11-12 St James's Square, London SW1Y 4LB.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The financial statements have been prepared on a going concern
basis and in accordance with the historical cost convention basis,
except as disclosed in the accounting policies below, and are drawn
up in accordance with the provisions of International Financial
Reporting Standards ("IFRS"), as issued by the International
Accounting Standards Board ("IASB").
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
Fair value is the price that would be received from selling an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of
whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of an
asset or a liability, the Group takes into account the
characteristics of the asset or liability which market participants
would take into account when pricing the asset or liability at the
measurement date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements is determined
on such a basis, except for share-based payment transactions that
are within the scope of IFRS 2 Share-based Payment, leasing
transactions that are within the scope of IFRS 16 Leases, and
measurements that have some similarities to fair value but are not
fair value, such as net realisable value in IAS 2 Inventories, or
value in use in IAS 36 Impairment of Assets.
In addition, for financial reporting purposes, fair value
adjustments are categorised into level 1, 2 or 3, based on the
degree to which the inputs to the fair value adjustments are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the Group can
access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
Adoption of new and revised standards
New and amended IFRS standards that are effective for the
current year
Amendments to IFRS 3 Definition of a Business
The Group has adopted the amendments to IFRS 3 for the first
time in the current year. The amendments clarify that while
businesses usually have outputs, outputs are not required for an
integrated set of activities and assets to qualify as a business.
To be considered a business, an acquired set of activities and
assets must include, at a minimum, an input and a substantive
process that together significantly contribute to the ability to
create outputs.
The amendments remove the assessment of whether market
participants are capable of replacing any missing inputs or
processes and continuing to produce outputs. The amendments also
introduce additional guidance that helps to determine whether a
substantive process has been acquired.
The amendments introduce an optional concentration test that
permits a simplified assessment of whether an acquired set of
activities and assets is not a business. Under the optional
concentration test, the acquired set of activities and assets is
not a business if substantially all of the fair value of the gross
assets acquired is concentrated in a single identifiable asset or
group of similar assets. The amendments are applied prospectively
to all business combinations and asset acquisitions for which the
acquisition date is on or after 1 January 2020.
Amendments to IAS 1 and IAS 8 Definition of Material
The Group has adopted the amendments to IAS 1 and IAS 8 for the
first time in the current year. The amendments make the definition
of material in IAS 1 easier to understand and are not intended to
alter the underlying concept of materiality in IFRS Standards. The
concept of 'obscuring' material information with immaterial
information has been included as part of the new definition.
The threshold for materiality influencing users has been changed
from 'could influence' to 'could reasonably be expected to
influence'. The definition of material in IAS 8 has been replaced
by a reference to the definition of material in IAS 1. In addition,
the IASB amended other Standards and the Conceptual Framework that
contain a definition of 'material' or refer to the term 'material'
to ensure consistency.
The adoption of this amendment does not result in changes to the
Group's accounting policies and has no material effect on the
amounts reported for the current or prior years.
Amendments to References to the Conceptual Framework in IFRS
Standards
The Group has adopted the amendments included in Amendments to
References to the Conceptual Framework in IFRS Standards for the
first time in the current year. The amendments include
consequential amendments to affected Standards so that they refer
to the new Framework. Not all amendments, however, update those
pronouncements with regard to references to and quotes from the
Framework so that they refer to the revised Conceptual Framework.
Some pronouncements are only updated to indicate which version of
the Framework they are referencing to (the IASC Framework adopted
by the IASB in 2001, the IASB Framework of 2010, or the new revised
Framework of 2018) or to indicate that definitions in the Standard
have not been updated with the new definitions developed in the
revised Conceptual Framework.
The Standards which are amended are IFRS 2, IFRS 3, IFRS 6, IFRS
14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC
20, IFRIC 22, and SIC-32.
New and revised IFRSs in issue but not yet effective
At the date of authorisation of these financial statements, the
Group has not applied the following amendments to IFRS Standards
relevant to the Group that have been issued but are not yet
effective:
Amendments to IAS Classification of Current or Non-current
1(1)
Amendments to IFRS COVID-19-Related Rent Concessions
16(2)
Amendments to IAS Property, Plant and Equipment - Proceeds
16(3) before Intended Use
Amendments to IFRSs(3) Annual Improvements to IFRS Standards
2018 - 2020
All amendments are effective for annual periods beginning on or
after 1 January 2021 and generally require prospective
application.
(1) Effective from 1 January 2023.
(2) Effective for annual reporting periods beginning on or after
1 June 2020.
(3) Effective from 1 January 2022.
The Group is currently performing an assessment of the impact of
these amendments but does not expect material impact on the
financial statements of the Group in future periods, except as
noted below:
Amendments to IAS 1 Classification of Current or Non-current
The amendments to IAS 1 affect only the presentation of
liabilities as current or non-current in the statement of financial
position and not the amount or timing of recognition of any asset,
liability, income or expenses, or the information disclosed about
those items.
The amendments clarify that the classification of liabilities as
current or non-current is based on rights that are in existence at
the end of the reporting period, specify that classification is
unaffected by expectations about whether an entity will exercise
its right to defer settlement of a liability, explain that rights
are in existence if covenants are complied with at the end of the
reporting period, and introduce a definition of 'settlement' to
make clear that settlement refers to the transfer to the
counterparty of cash, equity instruments, other assets or
services.
The amendments are applied retrospectively for annual periods
beginning on or after 1 January 2023, with early application
permitted.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial
statements of the Company and enterprises controlled by the Company
and its subsidiaries. Control is achieved where the Company:
- Has power over the investee;
- Is exposed, or has rights, to variable returns from its
involvement with the investee; and
- Has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains
control over the subsidiary and ceases when the Company loses
control of the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated statement of profit or loss and other
comprehensive income from the date the Company gains control until
the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income
are attributed to the owners of the Company. Total comprehensive
income of subsidiaries is attributed to the owners of the Company
and to the non-controlling interests, even if this results in the
non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with
the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
BUSINESS COMBINATIONS
Acquisitions of businesses, including joint operations which are
assessed to be businesses, are accounted for using the acquisition
method. The consideration for each acquisition is measured as the
aggregate of the acquisition date fair values of assets given,
liabilities incurred by the Company to the former owners of the
acquiree, and equity interests issued by the Company in exchange
for control of the acquiree. Acquisition-related costs are
recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value, except
that:
- Deferred tax assets or liabilities, and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
- Liabilities or equity instruments related to share-based
payment transactions of the acquiree, or the replacement of an
acquiree's share-based payment awards transactions with share-based
payment awards transactions of the acquirer, in accordance with the
method in IFRS 2 Share-based Payment at the acquisition date;
and
- Assets, or disposal groups, that are classified as held for
sale in accordance with IFRS 5 Non-Current Assets Held for Sale and
Discontinued Operations are measured in accordance with that
Standard.
Where applicable, the consideration for the acquisition includes
any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value.
Subsequent changes in such fair values are adjusted against the
cost of acquisition where they qualify as measurement period
adjustments. Measurement period adjustments are adjustments that
arise from additional information obtained during the 'measurement
period' (which cannot exceed one year from the acquisition date)
about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the
contingent consideration, that do not qualify as measurement period
adjustments, depends on how the contingent consideration is
classified.
Contingent consideration that is classified as equity is not
re-measured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration
that is classified as a liability is re-measured at subsequent
reporting dates with the corresponding gain or loss being
recognised in profit or loss.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the
items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see below), or
additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as
of the acquisition date that, if known, would have affected the
amounts recognised as at that date.
The measurement period is the period from the date of
acquisition to the date the Group obtains complete information
about facts and circumstances that existed as at the acquisition
date and is subject to a maximum of one year from acquisition
date.
Where an interest in a production sharing contract ("PSC") is
acquired by way of a corporate acquisition, the interest in the PSC
is treated as an asset purchase unless the acquisition of the
corporate vehicle meets the requirements to be treated as a
business combination and definition of a business.
ACCOUNTING FOR TRANSACTION THAT IS NOT A BUSINESS
COMBINATION
When a transaction or other event does not meet the definition
of a business combination due to the asset or group of assets not
meeting the definition of a business, it is termed an 'asset
acquisition'. In such circumstances, the acquirer:
- identifies and recognises the individual identifiable assets
acquired (including those assets that meet the definition of, and
recognition criteria for, intangible assets in IAS 38 ) and
liabilities assumed; and
- allocates the cost of the group of assets and liabilities to
the individual identifiable assets and liabilities on the basis of
their relative fair values at the date of purchase.
Such a transaction or event does not give rise to goodwill or a
gain on a bargain purchase.
Transaction costs in an asset acquisition are generally
capitalised as part of the cost of the assets acquired in
accordance with applicable Standards.
FOREIGN CURRENCY TRANSACTIONS
The Group's consolidated financial statements are presented in
USD, which is the parent's functional currency and presentation
currency. The functional currencies of subsidiaries are determined
based on the economic environment in which they operate.
In preparing the financial statements of each individual Group
entity, transactions in currencies other than the entity's
functional currency are recorded at the rates of exchange
prevailing on the dates of the transactions. At the end of each
reporting period, monetary items denominated in foreign currencies
are retranslated at the rates prevailing at the end of the
reporting period. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates
prevailing on the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on retranslation of monetary items, are included in
profit or loss for the period.
Exchange differences arising on the retranslation of
non-monetary items carried at fair value are included in profit or
loss for the period, except for differences arising on the
retranslation of non-monetary items in respect of which gains or
losses are recognised in other comprehensive income. For such
non-monetary items, any exchange component of that gain or loss is
also recognised in other comprehensive income.
JOINT OPERATIONS
A joint operation is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the
arrangement. Joint control is the contractually agreed sharing of
control of an arrangement, which exists only when decisions about
the relevant activities require unanimous consent of the parties
sharing control.
When a Group entity undertakes its activities under joint
operations, the Group as a joint operator recognises in relation to
its interest in a joint operation:
- Its assets, including its share of any assets held jointly;
- Its liabilities, including its share of any liabilities incurred jointly;
- Its revenue from the sale of its share of the output arising
from the joint operation; and
- Its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenue and
expenses relating to its interest in a joint operation in
accordance with the IFRSs applicable to the particular assets,
liabilities, revenues and expenses.
When a Group entity transacts with a joint operation in which a
Group entity is a joint operator (such as a sale or contribution of
assets), the Group is considered to be conducting the transaction
with the other parties to the joint operation, and gains and losses
resulting from the transactions are recognised in the Group's
consolidated financial statements only to the extent of other
parties' interests in the joint operation.
When a Group entity transacts with a joint operation in which a
Group entity is a joint operator (such as a purchase of assets),
the Group does not recognise its share of the gains and losses
until it resells those assets to a third party.
Changes to the Group's interest in PSCs usually require the
approval of the appropriate regulatory authority. A change in
interest is recognised when:
- Approval is considered highly likely; and
- All affected parties are effectively operating under the revised arrangement.
Where this is not the case, no change in interest is recognised
and any funds received or paid are included in the statement of
financial position as contractual deposits.
PRE-LICENCE AWARD COSTS
Costs incurred prior to the effective award of oil and gas
licence, concessions and other exploration rights, are expensed in
profit or loss.
EXPLORATION AND EVALUATION COSTS
The costs of exploring for and evaluating oil and gas
properties, including the costs of acquiring rights to explore,
geological and geophysical studies, exploratory drilling and
directly related overheads such as directly attributable employee
remuneration, materials, fuel used, rig costs and payments made to
contractors are capitalised and classified as intangible
exploration assets ("E&E assets").
If no potentially commercial hydrocarbons are discovered, the
E&E assets are written off through profit or loss as a dry
hole. If extractable hydrocarbons are found and, subject to further
appraisal activity (e.g. the drilling of additional wells), it is
probable that they can be commercially developed, the costs
continue to be carried as intangible exploration costs, while
sufficient/continued progress is made in assessing the
commerciality of the hydrocarbons.
Costs directly associated with appraisal activity undertaken to
determine the size, characteristics and commercial potential of a
reservoir following the initial discovery of hydrocarbons,
including the costs of appraisal wells where hydrocarbons were not
found, are initially capitalised as E&E assets.
All such capitalised costs are subject to technical, commercial
and management review, as well as review for indicators of
impairment at the end of each reporting period. This is to confirm
the continued intent to develop or otherwise extract value from the
discovery. When such intent no longer exists, or if there is a
change in circumstances signifying an adverse change in initial
judgment, the costs are written off.
When commercial reserves of hydrocarbons are determined and
development is approved by management, the relevant expenditure is
transferred to oil and gas properties. The technical feasibility
and commercial viability of extracting a mineral resource is
considered to be determinable when proved or probable reserves are
determined to exist. The determination of proved or probable
reserves is dependent on reserve evaluations which are subject to
significant judgments and estimates.
Costs related to geological and geophysical studies that relate
to blocks that have not yet been acquired, and costs related to
blocks for which no commercially viable hydrocarbons are expected,
are taken direct to the profit or loss and have been disclosed as
exploration expenses.
FARM-OUTS IN THE EXPLORATION AND EVALUATION PHASE
The Group does not record any expenditure made by the farmee on
its account. It also does not recognise any gain or loss on its
exploration and evaluation farm-out arrangements, but re-designates
any costs previously capitalised in relation to the whole interest
as relating to the partial interest retained. Any cash
consideration received directly from the farmee is credited against
costs previously capitalised in relation to the whole interest,
with any excess accounted for by the farmor as a gain on
disposal.
OIL AND GAS PROPERTIES
Producing assets
The Group recognises oil and gas properties at cost less
accumulated depletion, depreciation and impairment losses. Directly
attributable costs incurred for the drilling of development wells
and for the construction of production facilities are capitalised,
together with the discounted value of estimated future costs of
decommissioning obligations. Workover expenses are recognised in
profit or loss in the period in which they are incurred, unless it
generates additional reserves or prolongs the economic life of the
well, in which case it is capitalised. When components of oil and
gas properties are replaced, disposed of, or no longer in use, they
are derecognised.
Depletion and amortisation expense
Depletion of oil and gas properties is calculated using the
units of production method for an asset or group of assets, from
the date in which they are available for use. The costs of those
assets are depleted based on proved and probable reserves.
Costs subject to depletion include expenditures to date,
together with approved estimated future expenditure to be incurred
in developing proved and probable reserves. Costs of major
development projects are excluded from the costs subject to
depletion until they are available for use.
The impact of changes in estimated reserves is dealt with
prospectively by depleting the remaining carrying value of the
asset over the remaining expected future production. If reserves
estimates are revised downwards, earnings could be affected by
higher depletion expense, or an immediate write-down of the
property's carrying value.
Asset restoration obligations
The Group estimates the future removal and restoration costs of
oil and gas production facilities, wells, pipelines and related
assets at the time of installation or acquisition of the assets,
and based on prevailing legal requirements and industry practice.
In most instances, the removal of these assets will occur many
years in the future. The estimates of future removal costs are made
considering relevant legislation and industry practice and require
management to make judgments regarding the removal date, the extent
of restoration activities required, and future removal
technologies.
Site restoration costs are capitalised within the cost of the
associated assets, and the provision is stated in the statement of
financial position at its total estimated present value. These
costs are based on judgements and assumptions regarding removal
dates, technologies, and industry practice. This estimate is
evaluated on a periodic basis and any adjustment to the estimate is
applied prospectively. Changes in the estimated liability resulting
from revisions to estimated timing, amount of cash flows, or
changes in the discount rate are recognised as a change in the
asset restoration liability and related capitalised asset
restoration cost within oil and gas properties.
The change in the net present value of future obligations, due
to the passage of time, is expensed as an accretion expense within
financing charges. Actual restoration obligations settled during
the period reduce the decommissioning liability.
The asset restoration costs are depleted using the units of
production method (see above accounting policy).
BORROWING COSTS
Finance costs of borrowing are allocated to periods over the
term of the related debt, at a constant rate on the carrying
amount. Borrowing as shown on the consolidated statement of
financial position, are net of arrangement fees and issue costs,
and the borrowing costs are amortised through to the statement of
profit or loss and other comprehensive income as finance costs over
the term of the debt.
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale.
All other borrowing costs are recognised in the profit or loss
in the period in which they are incurred.
Investment income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation. All
other borrowing costs are recognised in the statement of profit or
loss in the period in which they are incurred and this includes
borrowing costs in relation to exploration activities which are
capitalised in intangible exploration assets, as management is of
the view that these do not meet the definition of a qualifying
asset.
GOVERNMENT GRANTS
Government grants are not recognised until there is reasonable
assurance that the Group will comply with the conditions attached
to them and that the grants will be received.
The government grants received during the year relates to the
Australian Government's JobKeeper Scheme for the Australian
offshore and onshore personnel, as part of the Australian
Government initiative to provide immediate financial support as a
result of COVID-19 pandemic. There are no future related costs in
respect of these grants which were received solely as compensation
for costs incurred in the year. There are no unfulfilled conditions
and other contingencies in relation to the grants.
Government grants are recognised in profit or loss on a
systematic basis over the periods in which the Group recognises as
expenses the related costs for which the grants are intended to
compensate.
Government grants are presented on a net basis in profit or
loss, where grant income are offset against the related costs, in
either "production costs" (Note 5) or "staff costs" (Note 7).
PLANT AND EQUIPMENT
Plant and equipment is stated at cost less accumulated
depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost of assets
evenly over their estimated useful lives, on the following:
- Computer equipment: 3 years; and
- Fixtures and equipment: 3 years.
The estimated useful lives, residual values and depreciation
method are reviewed at each year end, with the effect of any
changes in estimate accounted for on a prospective basis.
Right-of-use assets are depreciated over the shorter period of
the lease term and the useful life of the underlying asset. If the
ownership of the underlying asset in a lease is transferred, or the
cost of the right-of-use asset reflects that the Group expects to
exercise a purchase option, the related right-of-use asset is
depreciated over the useful life of the underlying asset.
An item of plant and equipment is derecognised upon disposal or
when no future economic benefits are expected to arise from the
continued use of asset. Any gain or loss arising on the disposal or
retirement of an item of plant and equipment is determined as the
difference between the sales proceeds and the carrying amount of
the asset and is recognised in profit or loss.
IMPAIRMENT OF ASSETS
At the end of each reporting period, the Group reviews the
carrying amounts of its assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss
(if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. When
a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use, are tested for impairment
annually, and whenever there is an indication that the asset may be
impaired.
Recoverable amount is the higher of fair value less costs of
disposal ("FVLCOD") and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset for which estimates of future cash flows have not been
adjusted. FVLCOD will be assessed where there is no readily
available market price for the asset or where there are no recent
market transactions. Assumptions relating to forecast capital
expenditures that enhance the productive capacity can be included
in the discounted cash flows model, but only to the extent that a
typical market participant would take a consistent view. The
post-tax discounted cash flows are compared against the carrying
amount of the asset on an after-tax basis; that is, after deducting
deferred tax liabilities relating to the asset or group of
assets.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit or
loss.
INVENTORIES
Inventories are valued at the lower of cost and net realisable
value. Cost is determined as follows:
- Petroleum products, comprising primarily of extracted crude
oil stored in tanks, pipeline systems and aboard vessels, and
natural gas, are valued using weighted average costing, inclusive
of depletion expense; and
- Materials, which include drilling and maintenance stocks, are
valued at the weighted average cost of
acquisition.
Net realisable value represents the estimated selling price less
applicable selling expenses. If the carrying value exceeds net
realisable value, a write-down is recognised. The write-down may be
reversed in a subsequent period if the inventory is still on hand,
but the circumstances which caused the write-down no longer
exist.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised in the
Group's consolidated statement of financial position when the Group
becomes a party to the contractual provisions of the
instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of the financial assets
and financial liabilities (other than financial assets and
financial liabilities measured at fair value through the profit or
loss) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial
recognition.
Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities measured at fair value
through profit or loss are recognised immediately in profit or
loss.
Financial assets
All financial assets are recognised and derecognised on a trade
date basis, where the purchases or sales of financial assets is
under a contract whose terms require delivery of assets within the
time frame established by the market concerned.
All recognised financial assets are measured subsequently in
their entirety, at either amortised cost or fair value, depending
on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are measured
subsequently at amortised cost:
- The financial asset is held within a business model whose
objective is to hold financial assets in order to collect
contractual cash flows; and
- The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are
subsequently measured at fair value through other comprehensive
income ("FVTOCI"):
- the financial asset is held within a business model whose
objective is achieved by both collecting contractual cash flows and
selling the financial assets; and
- the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
By default, all other financial assets are subsequently measured
at fair value through profit or loss ("FVTPL").
Amortised cost and effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial asset and of allocating interest
income over the relevant period.
For financial assets, the effective interest rate is the rate
that exactly discounts estimated future cash receipts (including
all fees and points paid or received that form an integral part of
the effective interest rate, transaction costs and other premiums
or discounts ) excluding expected credit losses, through the
expected life of the financial asset, or, where appropriate, a
shorter period, to the gross carrying amount of the financial
instrument on initial recognition.
The amortised cost of a financial asset is the amount at which
the financial asset is measured at initial recognition minus the
principal repayments, plus the cumulative amortisation using the
effective interest method of any difference between that initial
amount and the maturity amount, adjusted for any loss allowance.
The gross carrying amount of a financial asset is the amortised
cost of a financial asset before adjusting for any loss
allowance.
Interest income is recognised using the effective interest
method for financial assets measured subsequently at amortised cost
and at fair value through other comprehensive income. For financial
assets other than purchased or originated credit impaired financial
assets, interest income is calculated by applying the effective
interest rate to the gross carrying amount of a financial asset,
except for financial assets that have subsequently become credit
impaired. For financial assets that have subsequently become credit
impaired, interest income is recognised by applying the effective
interest rate to the amortised cost of the financial asset. If, in
subsequent reporting periods, the credit risk on the credit
impaired financial instrument improves so that the financial asset
is no longer credit impaired, interest income is recognised by
applying the effective interest rate to the gross carrying amount
of the financial asset.
Interest income is recognised in profit or loss and is included
in "other income" (Note 10) line item.
Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in
a foreign currency is determined in that foreign currency and
translated at the spot rate at the end of each reporting
period.
All financial assets measured at amortised cost that are not
part of a designated hedging relationship, exchange differences are
recognised in profit or loss in either "other income" (Note 10) or
"other expenses" (Note 8) line item.
Impairment of financial assets
The Group's financial assets that are subject to the expected
credit loss model comprise trade and other receivables. While cash
and bank balances are also subject to the impairment requirements
of IFRS 9 Financial Instruments, the expected credit loss
allowances are not expected to be significant.
The Group's trade and other receivables are primarily with (i)
counterparties to oil and gas sales and (ii) governments for
recoverable amounts of value added taxes.
The concentration of credit risk relates to the main
counterparty to oil and gas sales in Australia, where the sole
customer has an A1 credit rating (Moody's). All trade receivables
are generally settled 30 days after the sale date. In the event
that an invoice is issued on a provisional basis then the final
reconciliation is paid within 3 days of the issuance of the final
invoice, largely mitigating any credit risk.
The Group recognises lifetime expected credit loss ("ECL") for
trade receivables. The expected credit losses on these financial
assets are estimated based on days past due, applying expected
non-recoveries for each group of receivables.
The Group measures the loss allowance for other receivables at
an amount equal to 12-months ECL, as there is no significant
increase in credit risk since initial recognition.
Significant increase in credit risk
In assessing whether the credit risk on a financial instrument
has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial
instrument as at the reporting date with the risk of a default
occurring on the financial instrument as at the date of initial
recognition. In making this assessment, the Group considers both
quantitative and qualitative information that is reasonable and
supportable, including historical experience and forward-looking
information that is available without undue cost or effort.
Forward-looking information considered includes the future
prospects of the industries in which the Group's debtors operate,
based on consideration of various external sources of actual and
forecast economic information that relate to the Group's core
operations.
In particular, the following information is taken into account
when assessing whether credit risk has increased significantly
since initial recognition:
- an actual or expected significant deterioration in the
financial instrument's external (if available), or internal credit
rating;
- significant deterioration in external market indicators of
credit risk for a particular financial instrument, e.g. a
significant increase in the credit spread, the credit default swap
prices for the debtor, or the length of time or the extent to which
the fair value of a financial asset has been less than its
amortised cost;
- existing or forecast adverse changes in business, financial or
economic conditions that are expected to cause a significant
decrease in the debtor's ability to meet its debt obligations;
- an actual or expected significant deterioration in the operating results of the debtor;
- significant increases in credit risk on other financial
instruments of the same debtor; and
- an actual or expected significant adverse change in the
regulatory, economic, or technological environment of the debtor
that results in a significant decrease in the debtor's ability to
meet its debt obligations.
Despite the foregoing, the Group assumes that the credit risk on
a financial instrument has not increased significantly since
initial recognition if the financial instrument is determined to
have low credit risk at the reporting date. A financial instrument
is determined to have low credit risk if i) the financial
instrument has a low risk of default, ii) the borrower has a strong
capacity to meet its contractual cash flow obligations in the near
term and iii) adverse changes in economic and business conditions
in the longer term may, but will not necessarily, reduce the
ability of the borrower to fulfil its contractual cash flow
obligations.
The Group regularly monitors the effectiveness of the criteria
used to identify whether there has been a significant increase in
credit risk and revises them as appropriate to ensure that the
criteria are capable of identifying a significant increase in
credit risk before the amount becomes past due.
Definition of default
The Group considers the following as constituting an event of
default, for internal credit risk management purposes, as
historical experience indicates that receivables that meet either
of the following criteria are generally not recoverable:
- when there is a breach of financial covenants by the counterparty; or
- information developed internally or obtained from external
sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any
collaterals held by the Group).
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events
that have a detrimental impact on the estimated future cash flows
of that financial asset have occurred. Evidence that a financial
asset is credit-impaired includes observable data about the
following events:
- significant financial difficulty of the issuer or the borrower;
- a breach of contract, such as a default or past due event;
- the lender(s) of the borrower, for economic or contractual
reasons relating to the borrower's financial difficulty, having
granted to the borrower a concession(s) that the lender(s) would
not otherwise consider;
- it is becoming probable that the borrower will enter
bankruptcy or other financial reorganisation; or
- the disappearance of an active market for that financial asset
because of financial difficulties.
Write-off policy
The Group writes off a financial asset when there is information
indicating that the counterparty is in severe financial difficulty
and there is no realistic prospect of recovery, e.g. when the
counterparty has been placed under liquidation or has entered into
bankruptcy proceedings, or in the case of trade receivables, when
the amounts are over one year past due, whichever occurs sooner.
Financial assets written off may still be subject to enforcement
activities under the Group's recovery procedures, taking into
account legal advice where appropriate. Any recoveries made are
recognised in profit or loss.
Measurement and recognition of expected credit losses
The measurement of ECL is a function of the probability of
default, loss given default (i.e. the magnitude of the loss if
there is a default), and the exposure at default. The assessment of
the probability of default, and loss given default, is based on
historical data adjusted by forward looking information as
described above.
As for the exposure at default, for financial assets, this is
represented by the assets' gross carrying amount at the reporting
date, together with any additional amounts expected to be drawn
down in the future by the default date determined based on
historical trend, the Group's understanding of the specific future
financing needs of the debtors, and other relevant forward looking
information.
For financial assets, the expected credit loss is estimated as
the difference between all contractual cash flows that are due to
the Group in accordance with the contract, and all the cash flows
that the Group expects to receive, discounted at the original
effective interest rate.
If the Group has measured the loss allowance for a financial
instrument at an amount equal to lifetime ECL in the previous
reporting period, but determines at the current reporting date that
the conditions for lifetime ECL are no longer met, the Group
measures the loss allowance at an amount equal to 12-month ECL at
the current reporting date, except for assets for which the
simplified approach was used.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity. If the
Group neither transfers nor retains substantially all the risks and
rewards of ownership, and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
Group retains substantially all of the risks and rewards of
ownership of a transferred financial asset, the Group continues to
recognise the financial asset and also recognises a collaterialised
borrowing for the proceeds received.
On derecognition of a financial asset measured at amortised
cost, the difference between the asset's carrying amount and the
sum of the consideration received and receivables, is recognised in
the profit or loss.
Financial liabilities
All financial liabilities are measured subsequently at amortised
cost, using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a
financial asset does not qualify for derecognition or when the
continuing involvement approach applies, are measured in accordance
with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the
financial liability is (i) contingent consideration of an acquirer
in a business combination, (ii) held for trading or (iii)
designated as at FVTPL.
A financial liability other than a contingent consideration of
an acquirer in a business combination may be designated as at FVTPL
upon initial recognition if:
- such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise
arise; or
- the financial liability forms part of a group of financial
assets or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with
the Group's documented risk management or investment strategy, and
information about the grouping is provided internally on that
basis; or
- it forms part of a contract containing one or more embedded
derivatives, and IFRS 9 permits the entire combined contract to be
designated as at FVTPL.
Financial liabilities classified as at FVTPL are measured at
fair value, with any gains or losses arising on changes in fair
value recognised in profit or loss to the extent that they are not
part of a designated hedging relationship (see hedge accounting
policy). The net gain or loss recognised in profit or loss
incorporates any interest paid on the financial liability and is
included in either "other financial gains" (Note 12) or "finance
costs" (Note 11) line item in profit or loss.
Financial liabilities measured subsequently at amortised
cost
Other financial liabilities are measured subsequently at
amortised cost, using the effective interest method.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
financial liability, or (where appropriate) a shorter period, to
the amortised cost of a financial liability.
Foreign exchange gains or losses
For financial liabilities that are denominated in a foreign
currency and are measured at amortised cost at the end of each
reporting period, the foreign exchange gains and losses are
determined based on the amortised cost of the instruments. These
foreign exchange gains and losses are recognised in the "other
income" (Note 10) or "other expenses" (Note 8) line items in profit
or loss for financial liabilities that are not part of a designated
hedging relationship. For those which are designated as a hedging
instrument for a hedge of foreign currency risk, foreign exchange
gains and losses are recognised in other comprehensive income and
accumulated in a separate component of equity.
Equity instruments
Equity instruments issued by the Group are recorded at the fair
value of the proceeds received, net of direct issue costs, except
where the accounting treatment is defined by a separate accounting
standard, as in the case of share-based payments.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire. The difference between the carrying amount of the financial
liability decognised, and the consideration paid and payable, is
recognised in profit or loss.
Derivative financial instruments
The Group enters into a variety of derivative financial
instruments to manage its exposure to commodity price and foreign
exchange risks.
Derivatives are initially recognised at fair value on the date
the contract is entered into, and is subsequently remeasured to
fair value as at each reporting date. The resulting gain or loss is
recognised in profit or loss immediately unless the derivative is
designated and effective as a hedging instrument, in which case the
timing of the recognition in profit or loss depends on the nature
of the hedge relationship.
A derivative with a positive fair value is recognised as a
financial asset whereas a derivative with a negative fair value is
recognised as a financial liability. Derivatives are not offset in
the financial statements unless the Group has both a legally
enforceable right and intention to offset. A derivative is
presented as a non-current asset or a non-current liability if the
remaining maturity of the instrument is more than 12 months and it
is not due to be realised or settled within 12 months. Other
derivatives are presented as current assets or current
liabilities.
Hedge accounting
All hedges are classified as cash flow hedges, which hedges
exposure to the variability in cash flows that is either
attributable to a particular risk associated with a recognised
asset or liability, or a component of a recognised asset or
liability, or a highly probable forecasted transaction.
At the inception of the hedge relationship, the Group documents
the relationship between the hedging instrument and the hedged
item, along with its risk management objectives and its strategy
for undertaking various hedge transactions. Furthermore, at the
inception of the hedge and on an ongoing basis, the Group documents
whether the hedging instrument is effective in offsetting changes
in fair values or cash flows of the hedged item attributable to the
hedged risk, which is when the hedging relationships meet all of
the following hedge effectiveness requirements:
- there is an economic relationship between the hedged item and the hedging instrument;
- the effect of credit risk does not dominate the value changes
that result from that economic relationship; and
- the hedge ratio of the hedging relationship is the same as
that resulting from the quantity of the hedged item that the Group
actually hedges and the quantity of the hedging instrument that the
Group actually uses to hedge that quantity of hedged item.
If a hedging relationship ceases to meet the hedge effectiveness
requirement relating to the hedge ratio, but the risk management
objective for that designated hedging relationship remains the
same, the Group adjusts the hedge ratio of the hedging relationship
(i.e. rebalances the hedge), so that it meets the qualifying
criteria again.
The Group designates the full change in the fair value of a
forward contract (i.e. including the forward elements) as the
hedging instrument, for all of its hedging relationships involving
forward contracts. The Group designates only the intrinsic value of
option contracts as a hedged item, i.e. excluding the time value of
the option. The changes in the fair value of the aligned time value
of the option are recognised in other comprehensive income and
accumulated in the cost of hedging reserve. If the hedged item is
transaction--related, the time value is reclassified to profit or
loss when the hedged item affects profit or loss. If the hedged
item is time--period related, then the amount accumulated in the
cost of hedging reserve is reclassified to profit or loss on a
rational basis; the Group applies straight--line amortisation.
Those reclassified amounts are recognised in profit or loss in the
same line as the hedged item. If the hedged item is a
non--financial item, then the amount accumulated in the cost of
hedging reserve is removed directly from equity and included in the
initial carrying amount of the recognised non--financial item.
Furthermore, if the Group expects that some or all of the loss
accumulated in cost of hedging reserve will not be recovered in the
future, that amount is immediately reclassified to profit or
loss.
Note 34 sets out details of the fair values of the derivative
instruments used for hedging purposes.
Movements in the hedging reserve in equity are detailed in Note
27.
Cash flow hedges
The effective portion of changes in the fair value of
derivatives and other qualifying hedging instruments that are
designated and qualify as cash flow hedges is recognised in other
comprehensive income and accumulated under the heading of cash flow
hedging reserve, limited to the cumulative change in fair value of
the hedged item from inception of the hedge. The gain or loss
relating to the ineffective portion is recognised immediately in
profit or loss in either "other financial gains" (Note 12) or
"finance costs"
(Note 11) line item.
Amounts previously recognised in other comprehensive income and
accumulated in equity are reclassified to profit or loss in the
periods when the hedged item affects profit or loss, in the same
line as the recognised hedged item. If the Group expects that some
or all of the loss accumulated in the cash flow hedging reserve
will not be recovered in the future, that amount is immediately
reclassified to profit or loss.
The Group discontinues hedge accounting only when the hedging
relationship (or a part thereof) ceases to meet the qualifying
criteria (after rebalancing, if applicable). This includes
instances when the hedging instrument expires or is sold,
terminated or exercised. The discontinuation is accounted for
prospectively. Any gain or loss recognised in other comprehensive
income and accumulated in cash flow hedge reserve, at that time,
remains in equity and is reclassified to profit or loss when the
forecast transaction occurs. When a forecast transaction is no
longer expected to occur, the gain or loss accumulated in cash flow
hedge reserve is reclassified immediately to profit or loss.
FAIR VALUE ESTIMATION OF FINANCIAL ASSETS AND LIABILITIES
The fair value of current financial assets and liabilities
carried at amortised cost, approximate their carrying amounts, as
the effect of discounting is immaterial.
EQUITY INSTRUMENTS
Ordinary shares are classified as equity and recorded at the
value of consideration received. The cost of issuing shares is
shown in share capital as a deduction, net of tax, from the
proceeds.
SHARE-BASED PAYMENTS
Share-based incentive arrangements are provided to employees,
allowing them to acquire shares of the Company.
The fair value of options granted is recognised as an employee
expense, with a corresponding increase in equity.
Share options are valued at the date of grant using the
Black-Scholes pricing model, and are charged to operating costs
over the vesting period of the award. The charge is modified to
take account of options granted to employees who leave the Group
during the vesting period and forfeit their rights to the share
options, and in the case of non-market related performance
conditions, where it becomes unlikely they will vest. At the end of
the reporting period, the Group revises its estimates of the number
of equity instruments expected to vest. The impact of the revision
of the original estimates, if any, is recognised in profit or loss
such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to the share options reserve.
Equity-settled share-based payment transactions with parties
other than employees are measured at the fair value of goods or
services received, except where that fair value cannot be estimated
reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date at which the
entity obtains the goods or the counterparty renders the
service.
LEASES
The Group as lessee
The Group assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as personal computers, small
items of office furniture and telephones). For these leases, the
Group recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease, unless another
systematic basis is more representative of the time pattern in
which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the lessee uses its incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise fixed lease payments (including in-substance
fixed payments) .
The lease liability is presented as a separate line in the
consolidated statement of financial position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease
liability (using the effective interest method), and by reducing
the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
- The lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a
revised discount rate;
- The lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual value,
in which case the lease liability is remeasured by discounting the
revised lease payments using an unchanged discount rate (unless the
lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used); or
- A lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease
liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised
discount rate at the effective date of the modification.
During the year, the Group has revalued certain lease
liabilities to nil followed by the termination of leases.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day, less any lease incentives received and any
initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle
and remove a leased asset, restore the site on which it is located,
or restore the underlying asset to the condition required by the
terms and conditions of the lease, a provision is recognised and
measured under IAS 37. To the extent that the costs relate to a
right-of-use asset, the costs are included in the related
right-of-use asset, unless those costs are incurred to produce
inventories.
Right-of-use assets are depreciated over the shorter period of
the lease term and the useful life of the underlying asset. If a
lease transfers ownership of the underlying asset, or the cost of
the right-of-use asset reflects that the Group expects to exercise
a purchase option, the related right-of-use asset is depreciated
over the useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.
The right-of-use assets are presented as a separate line in the
consolidated statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use
asset is impaired and accounts for any identified impairment loss
as described in the "Impairment of Assets" policy.
As a practical expedient, IFRS 16 permits a lessee not to
separate non-lease components, and instead account for any lease
and associated non-lease components as a single arrangement. The
Group has not used this practical expedient. For contracts that
contain a lease component and one or more additional lease or
non-lease components, the Group allocates the consideration in the
contract to each lease component on the basis of the relative
stand-alone price of the lease component and the aggregate
stand-alone price of the non-lease components.
PROVISIONS
Provisions are recognised when the Group has a present
obligation, legal or constructive, as a result of a past event, and
it is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of
the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows, and where the effect of the time value of money is
material.
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
RETIREMENT BENEFIT OBLIGATIONS
Payments to defined contribution retirement benefit plans are
charged as an expense as and when employees have tendered the
services entitling them to the contributions. Payments made to
state-managed retirement benefit schemes, such as Malaysia's
Employees Provident Fund, are dealt with as payments to defined
contribution plans where the Group's obligations under the plans
are equivalent to those arising in a defined contribution
retirement benefit plan. The Group does not have any defined
benefit plans.
REVENUE
Revenue from contracts with customers is recognised in the
profit or loss when performance obligations are considered met,
which is when control of the hydrocarbons are transferred to the
customer.
Revenue from the production of oil and gas, in which the Group
has an interest with other producers, is recognised based on the
Group's working interest and the terms of the relevant production
sharing contracts.
Production revenue (liquids revenue) is recognised when the
Group gives up control of the unit of production at the delivery
point agreed under the terms of the contract. This generally occurs
when the product is physically transferred into a vessel, pipe or
other delivery mechanism. The amount of production revenue
recognised is based on the agreed transaction price and volumes
delivered. In line with the aforementioned, revenue is recognised
at a point in time when deliveries of the liquids are transferred
to customers.
A receivable is recognised once transfer has occurred, as this
represents the point in time at which the right to consideration
becomes unconditional, and only the passage of time is required
before the payment is due.
INCOME TAX
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
statement of profit or loss and other comprehensive income, because
it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are
not taxable or tax deductible. The Group's liability for current
tax is calculated using tax rates (and tax laws) that have been
enacted or substantively enacted, in countries where the Company
and its subsidiaries operate, by the end of the reporting
period.
Petroleum resource rent tax (PRRT)
PRRT incurred in Australia is considered for accounting purposes
to be a tax based on income. Accordingly, current and deferred PRRT
expense is measured and disclosed on the same basis as income
tax.
PRRT is calculated at the rate of 40% of sales revenues less
certain permitted deductions and is tax deductible for income tax
purposes. Deferred tax in relation to PRRT is calculated at a rate
of 28%.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the financial
statements, and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that
taxable profits will be available, against which deductible
temporary differences can be utilised. Such deferred tax assets and
liabilities are not utilised if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary
differences associated with such investments and interests, are
only recognised to the extent that it is probable that there will
be sufficient taxable profits against which to utilise the benefits
of the temporary differences, and they are expected to reverse in
the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled, or the asset
realised, based on the tax rates (and tax laws) that have been
enacted or substantively enacted, by the end of the reporting
period. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in
which the Group expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Other taxes
Revenue, expenses, assets, and liabilities are recognised net of
the amount of Goods and Services Tax ("GST") except:
- when the GST incurred on a purchase of goods and services is
not recoverable from the taxation authority, in which case the GST
is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
- receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the consolidated statement of financial position.
Current and deferred tax for the year
Current and deferred tax are recognised as an expense or income
in profit or loss, except when they relate to items credited or
debited outside profit or loss (either in other comprehensive
income or directly in equity), in which case the tax is also
recognised outside profit or loss (either in other comprehensive
income or directly in equity, respectively).
CASH AND BANK BALANCES
Cash and bank balances comprise cash in hand and at bank, and
other short-term deposits held by the Group with maturities of less
than three months.
3. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies,
management is required to make judgments, estimates and assumptions
about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised, if the revision
affects only that period, or in the period of the revision and
future periods, if the revision affects both current and future
periods.
The following are the critical judgements, apart from those
involving estimates (see below), that management has made on the
process of applying the Group's accounting policies that have the
most significant effect on the amounts recognised in the financial
statements.
a) Acquisitions, divestitures, farm-in arrangements and/or assignment of interests
The Group accounts for acquisitions, divestitures, and farm-in
arrangements by considering if the acquired or transferred interest
relates to that of an asset, or of a business as defined in IFRS 3
Business Combinations. Accordingly, the Group considers if there is
the existence of business elements (e.g., inputs and substantive
processes), or a group of assets that includes inputs and
substantial processes that together significantly contribute to the
ability to create outputs and providing a return to investors or
other economic benefits.
The Group considers farm-in arrangements that pertain to
exploration interests, with no production license, and no proved
reserves, to be assets, rather than a business, and would account
for such farm-ins based on the consideration paid, which would be
capitalised as an intangible exploration asset and subject to
impairment reviews.
b) Liquidity and going concern
Despite the lower realised prices during 2020, arising from the
impact of the COVID-19 pandemic on benchmark crude oil prices, and
the resultant impact on revenue, the Group was able to generate
positive organic free cashflow in 2020. The Group manages it
liquidity risk by optimising the positive free cash flow from its
producing assets, and in 2020 implemented an aggressive and
on-going business performance and efficiency programme named
Project Clover. Project Clover aims to identify potential savings
as well as area to further improve operational efficiency within
the Group's operations, to reinforce its resiliency through the
pandemic. Where possible, the savings achieved under Project Clover
will be embedded as structural changes in the Group's future cost
base. In addition, several significant capital expenditure
programmes were also deferred, to preserve the Group's cash balance
during the low oil price environment.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the end of the reporting period, that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year, are discussed below.
a) Contingent consideration
The determination of the contingent liability components within
purchase agreements requires significant management judgement and
assumptions. The contingent payments are based on multiple future
triggering events that may or may not occur. The Group assesses
these factors independently, taking into account probabilities and
future circumstances. Where management deems necessary, independent
valuation models and advisors will be requested to determine the
fair value of such commitments. The contingent consideration
payments for the Lemang PSC are set out in Note 15.
b) Depletion of oil and gas properties
Oil and gas properties are depleted using the units of
production method.
Estimates of the Group's oil and gas reserves are inherently
uncertain. Proved plus probable reserves are the estimated volumes
of crude oil and natural gas which geological and engineering data
demonstrate are most likely to be economically producible, from
known reservoirs under existing economic conditions and operating
methods. Changes in proved plus probable oil and gas reserves, and
the associated expected development capital, will affect units of
production depletion in the Group's consolidated financial
statements for oil and gas properties. Proved plus probable oil and
gas reserves are subject to revision, based on new information,
such as from development drilling and production activities, or
from changes in economic factors, including product prices,
contract terms, evolution of technology or development plans,
etc.
The carrying amount and depletion amount of oil and gas
properties are disclosed in Notes 17
and 6, respectively.
c) Deferred taxes
The Group recognises the net future economic benefit of deferred
tax assets to the extent that it is probable that the deductible
temporary differences will reverse in the foreseeable future and
the carry forward of unutilised tax credits and unutilised tax
losses can be utilised accordingly. Assessing the recoverability of
deferred income tax and PRRT assets requires the Group to make
significant estimates related to expectations of future taxable
income. Estimates of future taxable income are based on forecast
cash flows from operations and the application of existing tax laws
in each jurisdiction. To the extent that future cash flows and
taxable income differ significantly from estimates, the ability of
the Group to realise the net deferred tax assets as recorded in the
statement of financial position, could be impacted. The carrying
amounts of the Group's deferred tax assets are disclosed in Note 21
to the financial statements.
d) Reserves estimates
The estimated reserves are management assessments, and take into
consideration reviews by an independent third party, under the
Group's reserves audit programme, as well as other assumptions,
interpretations and assessments. These include assumptions
regarding commodity prices, exchange rates, discount rates, future
production and transportation costs, and interpretations of
geological and geophysical models to make assessments of the
quality of reservoirs and the anticipated recoveries. Changes in
reported reserves can impact asset carrying values, the provision
for restoration and the recognition of deferred tax assets, due to
changes in expected future cash flows. Reserves are integral to the
amount of depreciation, depletion and amortisation charged to the
statement of profit or loss and other comprehensive income, and the
calculation of inventory.
e) Impairment of assets
The Group undertakes a regular review of asset carrying values
to determine whether there is any indication of impairment. In the
impairment assessment of intangible exploration assets, the Group
takes into consideration the technical feasibility and commercial
viability of extracting a mineral resource and whether there is any
adverse information that will affect the final investment
decision.
For oil and gas properties, management assessed its recoverable
amount using the value in use approach. The post-tax estimated
future cash flows are prepared based on estimated reserves, future
production profiles, future oil prices assumptions and costs. In
view of the low oil price environment arising from the impacts of
COVID-19 pandemic, management has revised downward its future oil
prices assumptions, compared to assumptions used in prior year. The
future oil price assumptions used are highly judgemental and may be
subject to increased uncertainty given the climate change, the
global energy transition and the COVID-19 impacts. There is a risk
that management do not forecast reasonable "best estimate" oil
prices for the purpose of impairment assessment.
For right-of-use assets, the Group applies IAS 36 to determine
whether a right-of-use asset is impaired and accounts for any
identified impairment loss as described in the 'Impairment of
Assets' policy.
The carrying amounts of intangible exploration assets, oil and
gas properties and right-of-use assets are disclosed in Notes 16,
17 and 19, respectively.
f) Asset restoration obligations
The Group estimates the future removal and restoration costs of
oil and gas production facilities, wells, pipelines and related
assets at the time of installation of the assets and reviewed
subsequently at the end of each reporting period. In most instances
the removal of these assets will occur many years in the
future.
The estimate of future removal costs is made considering
relevant legislation and industry practice and requires management
to make judgments regarding the removal date, the extent of
restoration activities required and future costs and removal
technologies. The carrying amounts of the Group's asset restoration
obligations is disclosed in Note 29 to the financial
statements.
g) Lemang PSC asset acquisition
Management has reviewed and assessed that the acquisition of the
Lemang PSC does not meet the definition of a business combination
according to IFRS 3 Business Combinations. Accordingly, it is
classified as an asset acquisition. Management identified and
recognised the individual identifiable assets acquired and
liabilities assumed and allocated the cost of the group of assets
and liabilities to the individual identifiable assets and
liabilities on the basis of their relative fair values at the date
of acquisition. The Group assessed the fair values based on the
estimated future economic benefits and costs associated with these
assets and liabilities, as at the date of acquisition. The fair
value of identifiable assets and liabilities are set out in Note
15.
4. REVENUE
The Group presently derives its revenue from contracts with
customers for the sale of oil products.
In line with the revenue accounting policies set out in Note 2,
all revenue is recognised at a point in time.
2020 2019
USD'000 USD'000
-------------------------------- --------- ---------
Liquids revenue, after hedging 217,938 325,406
========= =========
5. PRODUCTION COSTS
2020 2019
USD'000 USD'000
------------------------- --------- ---------
Operating costs 49,675 52,527
Workovers 21,686 30,331
Logistics 14,333 20,635
Repairs and maintenance 22,450 23,742
Movement in inventories (2,806) (7,337)
--------- ---------
105,338 119,898
========= =========
Operating costs in 2020 are net of US$0.6 million received
during the year from the Australian Government's JobKeeper scheme
in respect of the Group's Australian offshore personnel.
6. DEPLETION, DEPRECIATION AND AMORTISATION ("DD&A")
2020 2019
USD'000 USD'000
--------------------------------------- -------- ---------
Depletion and amortisation (Note 17): 68,005 83,686
Depreciation of:
Plant and equipment (Note 18) 601 427
Right-of-use assets (Note 19) 16,228 14,876
Movement in inventories (192) (8,243)
-------- ---------
84,642 90,746
======== =========
7. STAFF COSTS
2020 2019
Reclassified
USD'000 USD'000
-------------------------- -------- -------------
Wages, salaries and fees 16,721 16,077
Staff benefits in kind 4,054 4,468
Share-based compensation 1,128 1,482
-------- -------------
21,903 22,027
======== =============
The above staff cost includes all directors' salaries and
fees.
Wages, salaries and fees in 2020 are net of US$0.5 million
received during the year from the Australian Government's JobKeeper
scheme in respect of the Group's Australian onshore personnel.
8. OTHER EXPENSES
2020 2019
Reclassified
USD'000 USD'000
--------------------------------------- -------- -------------
Corporate costs 19,265 7,398
Rig contract deferral costs 3,000 -
Exploration expenses 972 -
Loss on valuation of oil derivatives 475 633
Assets written off 173 697
Provision for slow moving inventories 143 -
Other expenses 2,890 651
-------- -------------
26,918 9,379
======== =============
The increase in corporate costs during the year is predominately
due to the litigation costs incurred in relation to the SC56 and
05-1 PSC arbitrations of US$9.1 million, and project transition
costs of US$1.0 million.
Rig contract deferral costs in Australia of US$3.0 million arose
from the decision to defer the Australian 2020 drilling campaign in
response to the impact of COVID-19.
9. IMPAIRMENT OF ASSETS
2020 2019
USD'000 USD'000
-------------------------------------------- -------- --------
Impairment of intangible exploration assets 50,455 -
(Note 16)
======== ========
The impairment expense of US$50.5 million relates to
management's decision to voluntarily relinquish SC56. During the
year Total, the operator of SC56, notified the Group of its
intention to withdraw from the block at the end of the current
exploration phase. Having reviewed its options, the Group decided
to relinquish its interest in the block with Total, and return the
exploration license to the Philippines Department of Energy
("DOE"). The relinquishment notification was submitted on 18
November 2020. The effective date of relinquishment was 21 December
2020.
10. OTHER INCOME
2020 2019
USD'000 USD'000
------------------------------------------------- -------- --------
Interest income 257 1,260
Litigation income 11,075 -
Fair value gain on foreign exchange derivatives 3,784 -
Reversal/Change in Stag FSO provision 5,047 1,717
Gain from termination of right-of-use 1,382 -
asset
Net foreign exchange gain 48 2
Other income 4,783 -
-------- --------
26,376 2,979
======== ========
Litigation income represents the arbitration award granted in
January 2020, in response to a breach of the SC56 farm out
agreement by Total E&P Philippines BV. The breach of the SC56
farm out agreement arose in 2017, at which point the Group
commenced arbitration proceedings against Total with the Singapore
International Arbitration Centre, claiming failure by Total to
drill a commitment well and resultant damages. On 24 March 2020,
the court issued the final award in favour of Jadestone.
Other income includes the settlement sum of US$1.0 million
agreed by the Group with Teikoku Oil (Con Son) Co. Ltd ("Teikoku"),
a subsidiary of Inpex Corporation, in November 2020 to resolve the
dispute between both parties in relation to the arbitration
proceedings commenced by the Group against Teikoku in July 2020
over Block 05-1 PSC. Other income also includes US$3.6 million of
rental income from a helicopter rental contract (a right-of-use
asset) to a third party.
11. FINANCE COSTS
2020 2019
USD'000 USD'000
------------------------------------------ -------- --------
Interest expense 2,366 6,067
Accretion expense for asset retirement
obligations (Note 29) 6,312 5,842
Interest expense on lease liabilities 3,341 4,280
Accretion expense for Stag FSO provision 51 110
Other finance costs 585 144
-------- --------
12,655 16,443
======== ========
Interest expense refers to the effective interest charge on the
reserve based lending facility.
12. OTHER FINANCIAL GAINS
2020 2019
USD'000 USD'000
------------------------------------------- -------- --------
Change in provisions - Montara contingent
payments 359 3,389
======== ========
The change in provisions represents the reduction in the fair
value of the Montara contingent payments. The Group has
derecognised the 2020 contingent payment as the trigger event to
crystallise this payment did not arise. The fair values of the
remaining contingent payments have been valued as US$ Nil, as the
possibility of realisation is remote.
13. INCOME TAX EXPENSE
2020 2019
USD'000 USD'000
---------------------------------------- ---------- ----------
Current tax
Corporate tax (11,020) (43,370)
Petroleum resource rent tax ("PRRT") (1,678) 1,850
Overprovision in prior year 1,030 -
========== ==========
(11,668) (41,520)
---------- ----------
Deferred tax
Tax depreciation 4,026 20,285
Tax losses - (5,257)
PRRT 4,702 (6,284)
========== ==========
8,728 8,744
---------- ----------
(2,940) (32,776)
========== ==========
The Australian corporate income tax rate is applied at 30% of
Australian corporate taxable income. PRRT is calculated at 40% of
sales revenue less certain permitted deductions and is tax
deductible for Australian corporate income tax purposes.
During the year, Stag recorded a net PRRT credit of US$3.0
million and gained PRRT carried forward credits of US$4.7 million
during the year. In 2019, Stag incurred a net expense of US$4.4
million, after utilised PRRT carried forward credits of US$1.1
million.
Montara has utilised PRRT carried forward credits of US$6.4
million during the year with no PRRT expense incurred. As at year
end, Montara has US$3.3 billion (2019: US$3.1 billion) of
unutilised PRRT carried forward credits. Based on management's
latest forecasts, the augmentation on historic accumulated PRRT net
losses will more than offset PRRT that would otherwise arise on
future PRRT taxable profits. Accordingly, Montara is not
anticipated to incur any PRRT expense.
The Company was a resident in the Province of British Columbia
and paid no Canadian tax; the Group has no operating business in
Canada. Subsidiaries are resident for tax purposes in the
territories in which they operate.
As first announced on 1 February 2021, the Company is pursuing
an internal reorganisation which will result in a new UK-based
parent company for the Group, Jadestone Energy plc. This
reorganisation is expected to be effective on 23 April 2021. The
internal reorganisation will not result in a change in control in
the ultimate holding company of the Jadestone group of companies
and, accordingly, will not result in a change in control in the
ultimate shareholding in any of the companies or assets of the
Jadestone group of companies. Further, the internal reorganisation
will not result in a change in the management of any of the
companies or assets of the Jadestone group of companies. Jadestone
Energy plc is in the process of applying to the UK and Singapore
tax authorities to confirm its tax domicile to be Singapore.
The tax expense on Group's (loss)/profit differs from the amount
that would arise using the standard rate of income tax applicable
in the countries of operation as explained below:
2020 2019
USD'000 USD'000
------------------------------------------ ---------- ------------
(Loss)/Profit before tax (57,238) 73,281
========== ============
Tax calculated at the domestic tax rates
applicable to the profit/loss
in the respective countries (Australia
30%, New Zealand 28%,
Canada 27% and Singapore 17%) 9,198 (23,190)
Effects of non-deductible expenses (16,192) (5,152)
Effect of PRRT tax (expense)/benefit (1,678) 1,850
Deferred PRRT tax credit/(expense) 4,702 (6,284)
Overprovision in prior year 1,030 -
---------- ------------
Tax expense for the year (2,940) (32,776)
========== ============
In addition to the amount charged to the profit or loss, the
following amounts relating to tax have been recognised in other
comprehensive income.
2020 2019
USD'000 USD'000
----------------------------------------- --------- ----------
Other comprehensive loss - deferred tax
Income tax credit related to carrying
amount of hedged item (1,583) (13,624)
========= ==========
14. (LOSS)/EARNINGS PER ORDINARY SHARE
The calculation of the basic and diluted (loss)/profit per share
is based on the following data:
2020 2019
USD'000 USD'000
-------------------------------------------------- ------------- -------------
(Loss)/Profit for the purposes of basic
and diluted per share, being
the net (loss)/profit for the year attributable
to equity holders of
the Company (60,178) 40,505
============= =============
2020 2019
Number Number
-------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares
for the purposes of
basic EPS 463,553,521 461,040,802
Effect of diluted potential ordinary
shares - share options - 2,512,719
------------- -------------
Weighted average number of ordinary shares
for the purposes of
dilutive EPS 463,553,521 463,553,521
============= =============
In 2020, 4,679,402 of potential ordinary shares associated with
share options are anti-dilutive.
The calculation of diluted EPS for 2019 includes 2,512,719 of
weighted average dilutive ordinary shares available for exercise
from in-the-money vested options. Additionally, 590,902 of weighted
average potential ordinary shares available for exercise in 2020
are excluded, as they are out-of-the-money (2019: 607,821).
(Loss)/Earnings per share (US$) 2020 2019
--------------------------------- -------- ------
* Basic and diluted (0.13) 0.09
======== ======
15. ACQUISITION OF LEMANG PSC
15.1 Acquisition date
On 29 June 2020, the Group executed an acquisition agreement
with Mandala Energy Lemang Pte Ltd ("Mandala Energy") to acquire an
operated 90% interest in the Lemang PSC, for a total cash
consideration of US$12.0 million, including closing statement
adjustments and subsequent contingent payments. The acquisition
closed on 11 December 2020 ("Closing Date"), following the
completion of various conditions precedent at the time of signing
the acquisition agreement. These included the receipt of
governmental approval of the assignment of the interest and of the
Group's appointment as operator, and other consents required under
the Lemang PSC joint operating agreement.
15.2 Asset acquisition
Management has concluded that the acquisition of the Lemang PSC
is an asset acquisition as the Lemang PSC does not come with an
organised workforce, and the Group does not take over any process
in the form of a system, protocol or standards to contribute to the
creation of outputs. Hence, the acquisition does not fall within
the definition of a business acquisition under IFRS 3 Business
Combinations. Therefore, the assets acquired and liabilities
assumed in the acquisition of the Lemang PSC, and the consideration
transferred have been measured at fair value, in accordance to the
definition of fair value under IFRS 13 Fair Value Measurement.
15.3 Fair value of consideration transferred
The fair value consideration of the Lemang PSC reflected a net
cash outflows of US$12.0 million, as set out below:
USD'000
--------------------------------------- --------
Asset purchase price 12,000
Closing statement adjustments 55
--------
Cash payment on acquisition date 12,055
Less: cash and bank balances acquired (96)
--------
Net cash outflows on acquisition 11,959
========
The total net cash outlfows on acquisition reflects the net
receipts arising from the working capital adjustments at the
Closing Date.
There are additional potential deferred contingent payments,
dependent on the future outcome of a number of trigger events.
Please refer to Note 15.5 for the full disclosure of all the
contingent payments along with the management's assessment.
Management has reviewed all the contingent payments, and at the
date of acquisition recorded an amount of US$4.4 million at fair
value for the following two contingent events:
- First gas date : US$5.0 million; and
- The accumulated receipts of VAT reimbursements received which
are attributable to the Lemang Block as at the Closing Date,
exceeding an aggregate amount of US$6.7 million on a gross basis :
US$0.7 million.
Management has assessed the fair value of the above contingent
consideration based on the estimated timing of first gas date, and
the estimated receipts from the VAT receivables. This implies the
fair value of the contingent considerations to be US$3.9 million
and US$0.5 million, respectively, totalling US$4.4 million as at
Closing Date. This reflects a discount of 23% and 20% for the
respective contingent consideration payments arising from the time
value of money and the likelihood of the trigger event
occurring.
Fair value of purchase consideration USD'000
-------------------------------------- --------
Asset purchase price 12,000
Closing statement adjustment 55
--------
Cash payment on acquisition date 12,055
Deferred contingent consideration 4,436
--------
Total 16,491
========
The Group considers that the purchase consideration and the
transaction terms to be reflective of fair value for the following
reasons:
- Open and unrestricted market: there were no restrictions in
place preventing other potential buyers from negotiating with
Mandala Energy during the sales process period and there a number
of other interested parties in the formal sale process;
- Knowledgeable, willing but not anxious parties: both the Group
and Mandala Energy are experienced oil and gas operators under no
duress. The process was conducted over several months which gave
both parties sufficient time to conduct due diligence and prepare
analysis to support the transaction; and
- Arm's length nature: the Group is not a related party to
Mandala Energy. Both parties had engaged their own professional
advisors so there is no reason to conclude that the transaction was
not transacted at arm's length.
15.4 Assets acquired and liabilities assumed at the date of
acquisition
The fair value of the identifiable assets and liabilities of the
Lemang PSC, acquired and assumed as at the date of acquisition,
were:
Total
USD'000
-------------------------------------------------- --------
Asset
Non-current assets
Intangible exploration assets (Note 16) 14,825
VAT receivables 4,393
Current assets
Trade and other receivables 398
Inventories 3
Cash and bank balances 96
--------
19,715
--------
Total
USD'000
-------------------------------------------------- --------
Liabilities
Non-current liabilities
Provision for asset retirement obligations (Note
29) 2,741
Current liabilities
Trade and other payables 483
--------
3,224
--------
Net identifiable assets acquired 16,491
========
The provision for asset restoration obligations assumed by the
Group is associated with the oil production by Mandala Energy that
has ceased at the Lemang PSC prior to the acquisition. This
liability is assumed by the Group following the acquisition. The
decommissioning expenditure is expected to be incurred from 2034,
at the end of the life of the gas asset.
15.5 Deferred contingent consideration
No. Trigger event Consideration Management's rationale
--- ------------------------------ ---------------- -------------------------------------
1. First gas date US$5.0 million Please refer to 15.3 above.
2. The accumulated VAT US$0.7 million Please refer to 15.3 above.
receivables reimbursements
which are attributable
to the unbilled VAT
in the Lemang Block
as at the Closing
Date, exceeding an
aggregate amount
of US$6.7 million
on a gross basis
3. First gas date on US$3.0 million It is unlikely that the
or before 31 March first gas date will be
2023 on or before 31 March 2023.
4. Total actual Akatara US$3.0 million The Akatara Gas Project
Gas Project "close has not been sanctioned
out" costs set out as at year end due to ongoing
in the AFE(s) approved preparation of project
pursuant to a joint approval documentation.
audit by SKK MIGAS It is unknown if the future
and BPKP is less close out costs will be
than, or within 2% less than or within 2%
of the "close out" of the budgeted amount
development costs and it is unable to be
set out in the approved reliably measured as at
revised plan of development year end.
for the Akatara Gas
Project
No. Trigger event Consideration Management's rationale
--- ------------------------------ ---------------- -------------------------------------
5. The average Saudi US$3.0 million Saudi CP is not expected
CP in the first year to be above US$620/MT throughout
of operation is higher the PSC term to 2037.
than US$620/MT
6. The average Saudi US$2.0 million Saudi CP is not expected
CP in the second to be above US$620/MT throughout
year of operation the PSC term to 2037.
is higher than US$620/MT
7. The average Dated US$2.5 million The Dated Brent price is
Brent price in the not expected to be above
first year of operation US$80/bbl throughout the
is higher than US$80/bbl PSC term to 2037.
8. The average Dated US$1.5 million The Dated Brent price is
Brent price in the not expected to be above
second year of operation US$80/bbl throughout the
is higher than US$80/bbl PSC term to 2037.
9. A plan of development US$3.0 million There are no prospects
for the development or leads presently selected
of a new discovery for the exploration well
made, as a result commitment. As at year
of the remaining end, it is not probable
exploration well that this contingent consideration
commitment under trigger will be met.
the PSC, is approved
by the relevant government
entity.
10. The plan of development US$8.0 million There are no prospects
described in item or leads presently selected
9 above is approved for the exploration well
by the relevant government commitment. As at year
entity and is based end, it is not probable
on reserves of no that this contingent consideration
less than 8.4mm barrels trigger will be met.
(on a gross basis).
16. INTANGIBLE EXPLORATION ASSETS
Total
USD'000
------------------------------------------------------ ---------
Cost
As at 1 January 2019 95,607
Additions 21,833
---------
As at 31 December 2019/1 January 2020 (Reclassified) 117,440
Acquisition of Lemang PSC (Note 15) 14,825
Additions 18,860
---------
As at 31 December 2020 151,125
=========
Total
USD'000
------------------------------------------------------ ---------
Impairments
As at 1 January 2019/31 December 2019/1 January -
2020
Additions (Note 9) 50,455
As at 31 December 2020 50,455
=========
Net book value
As at 31 December 2019 (Reclassified) 117,440
As at 31 December 2020 100,670
=========
For the purpose of the consolidated statement of cash flows,
current year expenditure on intangible exploration assets of US$4.6
million remained unpaid as at 31 December 2020 (2019: US$8.9
million).
17. OIL AND GAS PROPERTIES
Total
USD'000
------------------------------------------------------ ---------
Cost
As at 1 January 2019 457,818
Changes in asset restoration obligations (Note 29) (8,117)
Additions 43,817
Written off (533)
---------
As at 31 December 2019/1 January 2020 (Reclassified) 492,985
Changes in asset restoration obligations (Note 29) (725)
Additions 4,732
As at 31 December 2020 496,992
=========
Accumulated depletion and amortisation
As at 1 January 2019 27,625
Charge for the year 83,686
As at 31 December 2019/1 January 2020 111,311
Charge for the year 68,005
As at 31 December 2020 179,316
=========
Net book value
As at 31 December 2019 (Reclassified) 381,674
As at 31 December 2020 317,676
=========
18. PLANT AND EQUIPMENT
Computer equipment Fixtures and fittings Total
USD'000 USD'000 USD'000
-------------------------------------- ------------------ ---------------------- ---------
Cost
As at 1 January 2019 2,372 1,269 3,641
Additions 452 50 502
Disposal - (4) (4)
------------------ ---------------------- ---------
As at 31 December 2019/1 January 2020 2,824 1,315 4,139
Additions 280 193 473
As at 31 December 2020 3,104 1,508 4,612
================== ====================== =========
Accumulated depreciation
As at 1 January 2019 975 957 1,932
Charge for the year 359 68 427
Disposal - -* -*
------------------ ---------------------- ---------
As at 31 December 2019/1 January 2020 1,334 1,025 2,359
Charge for the year 323 278 601
As at 31 December 2020 1,657 1,303 2,960
================== ====================== =========
Net book value
As at 31 December 2019 1,490 290 1,780
================== ====================== =========
As at 31 December 2020 1,447 205 1,652
================== ====================== =========
*Due to figures rounded to nearest thousand.
19. RIGHT-OF-USE ASSETS
Production assets Transportation and logistics Buildings Total
USD'000 USD'000 USD'000 USD'000
Cost
As at 1 January 2019 29,339 3,507 3,004 35,850
Additions - 38,813 - 38,813
----------------- ----------------------------- ---------- ---------
As at 31 December 2019/
1 January 2020 29,339 42,320 3,004 74,663
Additions - 419 472 891
Termination (29,339) - (307) (29,646)
Adjustment - (394) - (394)
----------------- ----------------------------- ---------- ---------
As at 31 December 2020 - 42,345 3,169 45,514
================= ============================= ========== =========
Accumulated depreciation
As at 1 January 2019 - - - -
Charge for the year 5,334 8,519 1,023 14,876
----------------- ----------------------------- ---------- ---------
As at 31 December 2019/
1 January 2020 5,334 8,519 1,023 14,876
Charge for the year 3,837 11,419 972 16,228
Termination (9,171) - (92) (9,263)
----------------- ----------------------------- ---------- ---------
As at 31 December 2020 - 19,938 1,903 21,841
================= ============================= ========== =========
Net book value
As at 31 December 2019 24,005 33,801 1,981 59,787
================= ============================= ========== =========
As at 31 December 2020 - 22,407 1,266 23,673
================= ============================= ========== =========
The decrease in production assets arose from the termination of
the Stag FSO lease in September 2020, due to the retirement of the
FSO by its owner, and the Group's move to the shuttle tank
model.
The Group leases several assets including helicopters, a supply
boat, logistic facilities for the Montara field, and buildings. The
average lease term is 3 years.
The maturity analysis of lease liabilities is presented in Note
30.
2020 2019
USD'000 USD'000
----------------------------------------- -------- --------
Amount recognised in profit or loss
Depreciation expense on right-of-use
assets 16,228 14,876
Interest expense on lease liabilities 3,341 4,280
Expenses relating to short-term leases 3,065 11,748
Expense relating to leases of low value
assets 30 15
======== ========
20. INVESTMENTS IN SUBSIDIARIES AND INTERESTS IN JOINT
OPERATIONS
The succeeding sections of this Note present the details of the
principal subsidiaries and joint operations of the Group.
Details of the investments in which the Group holds 20% or more
of the nominal value of any class of share capital are as
follows:
% voting rights and % voting
shares held 2020 rights and shares held
2019
Name of the company Place of incorporation Nature of business
Jadestone Energy Production oil &
(Eagle) Pty Ltd Australia 100 100 gas
Jadestone Energy
(Australia Investment
Holdings) Pty Ltd Australia 100 100 holdings
Jadestone Energy Production oil &
(Australia) Pty Ltd Australia 100 100 gas
Jadestone Energy (New
Zealand Investment
Holdings) Ltd New Zealand 100 100 holdings
Jadestone Energy (New
Zealand) Production oil &
Ltd New Zealand 100 100 gas
Jadestone Energy Singapore 100 -* Exploration
(Lemang) Pte Ltd
Jadestone Energy Investment
(Singapore) Pte Ltd Singapore 100 100 holdings
Jadestone Energy
International Investment
Holdings Inc. Canada 100 100 holdings
Investment
Jadestone Energy Ltd Bermuda 100 100 holdings
Jadestone Energy Sdn
Bhd Malaysia 100 100 Administration
Mitra Energy
(Philippines SC- 56)
Ltd Bermuda 100 100 Exploration
Mitra Energy
(Philippines SC- 57)
Ltd BVI 100 100 Exploration
Mitra Energy (Vietnam
05-1) Pte Ltd Singapore 100 100 Exploration
Mitra Energy (Vietnam
Nam Du) Pte
Ltd Singapore 100 100 Exploration
Mitra Energy (Vietnam
Tho Chu) Pte
Ltd Singapore 100 100 Exploration
* Jadestone Energy (Lemang) Pte Ltd was incorporated on 19 June
2020 as part of the Lemang PSC acquisition.
Details of the operations, of which all are in exploration stage
except for Stag and Montara which are in the production stage, are
as follows:
Group effective working interest % as
at 31 December
Contract Area Date of expiry Held by Place of operations 2020 2019
--------------- ---------------- -------------------- ------------------- ------------------- -------------------
Montara Jadestone Energy
Oilfield Indefinite (Eagle) Pty Ltd Australia 100 100
Jadestone Energy
Stag Oilfield 25 Aug 2039 (Australia) Pty Ltd Australia 100 100
Mitra Energy
(Vietnam Nam Du)
Pte
46/07 29 Jun 2035 Ltd Vietnam 100 100
Mitra Energy
(Vietnam Tho Chu)
Pte
51 10 Jun 2040 Ltd Vietnam 100 100
Lemang 17 Jan 2037 Jadestone Energy Indonesia 90 -
(Lemang) Pte Ltd
Mitra Energy
(Philippines SC-57)
SC57 14 Sept 2055 Ltd Philippines 21 21
Mitra Energy
(Philippines SC-56)
SC56 4 Aug 2055 Ltd Philippines - 25
21. DEFERRED TAX
The following are the deferred tax liabilities and assets
recognised by the Group and movements thereon.
Derivatives financial
instruments
Australian PRRT Tax depreciation USD'000 Tax losses Total
USD'000 USD'000 USD'000 USD'000
As at 1 January 2019 19,499 (80,730) (15,207) 5,257 (71,181)
(Charged)/Credited to
profit or loss (6,284) 20,285 - (5,257) 8,744
Credited to OCI - - 13,624 - 13,624
--------------- ----------------- -------------------------- ---------- ----------
As at 31 December
2019/1 January 2020 13,215 (60,445) (1,583) - (48,813)
Credited to profit or
loss 4,702 4,026 - - 8,728
Credited to OCI - - 1,583 - 1,583
--------------- ----------------- -------------------------- ---------- ----------
As at 31 December
2020 17,917 (56,419) - - (38,502)
=============== ================= ========================== ========== ==========
The following is the analysis of the deferred tax balances
(after offset) for financial reporting purposes:
2020 2019
USD'000 USD'000
-------------------------- ---------- ----------
Deferred tax liabilities (58,229) (64,825)
Deferred tax assets 19,727 16,012
---------- ----------
(38,502) (48,813)
========== ==========
The Group has unutilised PRRT credits of approximately US$3.3
billion (2019: US$3.1 billion) available for offset against future
PRRT taxable profits in respect of the Montara field. No deferred
tax asset has been recognised in respect of these PRRT credits, due
to management's projections that there will continue to be current
augmentation of PRRT credits that are more than sufficient to
offset any PRRT tax to be paid. As PRRT credits are utilised based
on a last-in-first-out basis, the unutilised PRRT credits of
approximately US$3.3 billion (2019: US$3.1 billion) will not be
utilised given the forecasted augmentation, and are therefore not
recognised as a deferred tax asset.
22. INVENTORIES
2020 2019
USD'000 USD'000
--------------------------------------- -------- --------
Materials and spares 20,059 8,964
Less: provision for slow moving (Note (143) -
8)
-------- --------
19,916 8,964
-------- --------
Crude oil inventories 25,445 22,447
-------- --------
45,361 31,411
======== ========
The cost of inventories recognised as an expense during the year
for lifted volumes, comprising production costs excluding
workovers, plus depletion expense of oil & gas properties, and
plus depreciation of right-of-use assets deployed for operational
use, is US$166.9 million (2019: US$187.1 million).
23. TRADE AND OTHER RECEIVABLES
2020 2019
USD'000 USD'000
--------------------------------- -------- --------
Current assets
Trade receivables 106 34,007
Prepayments 2,012 4,754
Other receivables and deposits 4,273 2,311
GST/VAT receivables 719 1,211
-------- --------
7,110 42,283
Non-current asset
VAT receivables 4,404 -
-------- --------
11,514 42,283
======== ========
Trade receivables arise from revenues generated in Australia.
The average credit period is 30 days (2019: 30 days). All
outstanding receivables as at 31 December 2020 and 2019 have been
fully recovered in 2021 and 2020, respectively.
The non-current VAT receivables of US$4.4 million are associated
with the Lemang PSC. It is classified as a non-current asset as the
recovery of the VAT receivables is dependent on the share of
revenue entitlement by the Indonesian government after the
commencement of gas production, which is estimated to occur after
2021.
No interest is charged on outstanding receivables. There are no
trade receivables older than 30 days.
24. CASH AND BANK BALANCES
2020 2019
USD'000 USD'000
----------------------------------------------- ---------- ----------
Current assets
Cash and bank balances 89,441 81,942
Less: restricted cash (8,445) (6,008)
========== ==========
Cash and cash equivalents 80,996 75,934
Non-current assets
Cash and bank balances - 17,477
Less: restricted cash - (17,477)
========== ==========
Cash and cash equivalents - -
---------- ----------
Cash and cash equivalents in the consolidated
statement of cash
flows 80,996 75,934
========== ==========
As part of the reserve based lending agreement (Note 31), the
Group had to retain an aggregate amount of principal, interest,
fees and costs payable at each quarter-end in a debt service
reserve account ("DSRA"). An amount of US$7.4 million (2019:
US$13.5 million) is deposited in the DSRA as at 31 December 2020.
In addition, the Group is required to maintain a minimum cash
balance in the Montara cash operating account of US$15.0 million
(2019: US$15.0 million). The DSRA has been classified as restricted
cash, given certain restrictions under the loan agreement to
withdraw amounts from the DSRA. The DSRA was released on 31 March
2021, upon the repayment of the final balance outstanding on the
loan, and is hence classified as a current asset as at 31 December
2020.
On 24 July 2020, the Group entered into a joint study agreement
("JSA") in Indonesia to assess an area in advance of applying for a
new PSC. The JSA required a US$1.0 million performance bank
guarantee to be placed with the Indonesian regulator. It is kept in
a specific bank account that has in place restrictions and does not
allow for the cash to be used for normal operations. The bank
guarantee will be released to the Group at the completion of the
JSA, which is anticipated in Q3 2021.
The restricted cash of US$10.0 million held by the Group in
2019, in support of a bank guarantee to a key supplier in respect
of Stag's FSO vessel, has been released to the Group upon the
termination of the FSO vessel lease agreement during the year.
25. SHARE CAPITAL
Authorised ordinary shares
Unlimited number of ordinary voting shares with no par
value.
No. of shares USD'000
--------------------------------------- ------------- ---------
Issued and fully paid
As at 1 January 2019 461,009,478 466,562
Issued during the year 33,333 11
------------- ---------
As at 31 December 2019/1 January 2020 461,042,811 466,573
Issued during the year 800,000 406
------------- ---------
As at 31 December 2020 461,842,811 466,979
============= =========
During the year, employee share options of 800,000 were
exercised and issued at an average price of GBGBP 0.33 per share
(2019: 33,333; CAD0.47 per share).
The Company has one class of ordinary share. Fully paid ordinary
shares carry one vote per share without restriction, and carry a
right to dividends as and when declared by the Company.
26. DIVIDS
An interim dividend of 0.54 US cents/share was declared on 10
September 2020 (0.42 GB pence/share, based on the spot exchange
rate of 0.7708 on 9 September 2020) and paid on 30 October 2020,
equivalent to a total distribution of US$2.5 million (2019 interim
dividend: nil).
27. HEDGING RESERVES
2020 2019
USD'000 USD'000
---------------------------------------------- ---------- ----------
At beginning of the year (3,688) (35,480)
(Gain)/Loss arising on changes in fair
value of hedging instruments
during the year (26,093) 30,542
Income tax related to gain/(loss) recognised
in other comprehensive
income 7,828 (9,162)
Net gain reclassified to profit or loss 31,364 14,874
Income tax related to amounts reclassified
to profit or loss (9,411) (4,462)
---------- ----------
At end of the year - (3,688)
========== ==========
The hedging reserve represents the cumulative amount of gains
and losses on hedging instruments deemed effective in cash flow
hedges. The cumulative deferred gain or loss on the hedging
instrument is recognised in profit or loss only when the hedged
transaction impacts the profit or loss. The Group's oil price
capped swap expired on 30 September 2020 and accordingly, all
cumulative deferred gains were recognised in the profit or
loss.
28. SHARE-BASED PAYMENTS RESERVE
The total expense arising from share-based payments recognised
for the year ended 31 December 2020 was US$1.1 million (2019:
US$1.5 million) (Note 7).
On 15 May 2019, the Company adopted, as approved by
shareholders, the amended and restated stock option plan, the
performance share plan, and the restricted share plan (together,
the "LTI Plans"), which establishes a rolling number of shares
issuable under the LTI Plans up to a maximum of 10% of the
Company's issued and outstanding Common Shares at any given time.
Options under the stock option plan will be exercisable over
periods of up to 10 years as determined by the Board.
The Black-Scholes option-pricing model, with the following
assumptions, was used to estimate the fair value of the options at
the date of grant:
Options granted on
27 April 2020 3 December 2019 28 March 2019
------------------- ---------------- ----------------- -----------------
Risk-free rate 1.41% to 1.56% 1.46% to 1.47% 1.46% to 1.47%
Expected life 5.5 to 6.5 years 5.5 to 6.5 years 5.5 to 6.5 years
Expected volatility 42.7% to 43.9% 40.1% to 42.8% 39.9% to 42.3%
Share price GBGBP 0.44 C$1.17 C$0.85
Exercise price GBGBP 0.44 C$1.17 C$0.85
Expected dividends 2.9% Nil Nil
The following table summarises the share options outstanding and
exercisable as at 31 December 2020:
Share Options
Weighted average Weighted
exercise average Number
price C$ remaining of options exercisable
Number of options contract life
-------------------------- ------------------- ----------------- -------------- ------------------------
As at 1 January 2019 12,132,842 0.56 8.50 3,232,830
New share options issued 8,075,000 0.85 9.25 75,000
Vested during the year - 0.50 7.63 3,858,316
Exercised during the year (33,333) 0.47 - (33,333)
Cancelled during the year (306,667) 0.48 - (113,333)
------------------- ----------------- -------------- ------------------------
As at 31 December 2019 19,867,842 0.68 8.21 7,019,480
=================== ================= ============== ========================
Share Options
Weighted average Weighted
exercise average Number
price GBGBP remaining of options exercisable
Number of options contract life
-------------------------- ------------------- ----------------- -------------- ------------------------
As at 1 January 2020 19,867,842 0.39 8.21 7,019,480
New share options issued 6,525,000 0.44 9.83 -
Vested during the year - 0.38 7.20 6,193,347
Exercised during the year (800,000) 0.33 - (800,000)
Cancelled during the year (400,000) 0.73 - (200,000)
------------------- ----------------- -------------- ------------------------
As at 31 December 2020 25,192,842 0.40 7.91 12,212,827
=================== ================= ============== ========================
29. PROVISIONS
Asset
restoration Contingent Employees Incentive
obligations Stag payment benefit scheme
(a) FSO (c) (d) (e) Others Total
USD'000 (b) USD'000 USD'000 USD'000 USD'000 USD'000
USD'000
---------------- ----------- ----------- ----------- ---------- ---------- --------- -----------
As at 1 January
2019 277,697 6,603 3,748 762 828 - 289,638
Additions - - - 89 800 - 889
Accretion
expense
(Note 11) 5,842 110 - - - - 5,952
Changes in
discount
rate
assumptions
and estimates
(Note 17/
Note 10) (8,117) (1,717) - - - - (9,834)
Fair value
adjustment
(Note 12) - - (3,389) - - - (3,389)
Reversal - - - - (316) - (316)
----------- ----------- ----------
As at
31 December
2019/ 1
January
2020
(Reclassified) 275,422 4,996 359 851 1,312 - 282,940
Additions - - - 67 1,304 1,905 3,276
Acquisition
of
Lemang PSC
(Note 15) 2,741 - 4,436 - - - 7,177
Accretion
expense
(Note 11) 6,312 51 - - - - 6,363
Changes in
discount
rate
assumptions
(Note 17) (725) - - - - - (725)
Utilised - - - (22) (821) - (843)
Fair value
adjustment
(Note 12) - - (359) - - - (359)
Reversal
(Note 10) - (5,047) - - - - (5,047)
----------- ----------- ----------- ---------- ---------- --------- -----------
As at
31 December
2020 283,750 - 4,436 896 1,795 1,905 292,782
=========== =========== =========== ========== ========== ========= ===========
Asset
restoration Contingent Employees Incentive
obligations Stag payment benefit scheme
(a) FSO (c) (d) (e) Others Total
USD'000 (b) USD'000 USD'000 USD'000 USD'000 USD'000
USD'000
------------------ ----- ----------- ---- -------- ---- ----------- ---- ---------- ---- ---------- ---- -------- ---- ---------
As at
31 December
2019
(Reclassified)
Current - - - 795 1,312 - 2,107
Non-current 275,422 4,996 359 56 - - 280,833
----------- -------- ----------- ---------- ---------- -------- ---------
275,422 4,996 359 851 1,312 - 282,940
=========== ======== =========== ========== ========== ======== =========
As at
31 December
2020
Current - - - 858 1,795 1,905 4,558
Non-current 283,750 - 4,436 38 - - 288,224
----------- -------- ----------- ---------- ---------- -------- ---------
283,750 - 4,436 896 1,795 1,905 292,782
=========== ======== =========== ========== ========== ======== =========
(a) The Group's asset restoration obligations ("ARO") comprise
the future estimated costs to decommission each of the Montara,
Stag and Lemang assets.
The carrying value of the provision represents the discounted
present value of the estimated future costs. Current estimated
costs of the ARO for each of the Montara, Stag and Lemang assets
have been escalated to the estimated date at which the expenditure
would be incurred, at an assumed blended inflation rate of 1.52%,
1.48% and 2.54% respectively (2019: Montara - 2.10%; Stag - 2.06%).
The estimates for Montara and Stag are a blend of assumed US and
Australian inflation rates to reflect the underlying mix of US
dollar and Australian dollar denominated expenditures. The
estimates for Lemang are a blend of assumed US and Indonesian
inflation rates to reflect the underlying mix of US dollar and
Indonesian Rupiah denominated expenditures. The present value of
the future estimated ARO for each of the Montara, Stag and Lemang
assets has then been calculated based on blended risk-free rates of
1.72%, 1.78% and 5.86% respectively (2019: Montara: 2.31%; Stag -
2.24%). The base estimate ARO for Montara and Stag remains largely
unchanged from 2019. The Lemang asset ARO was assessed in 2020,
based on the existing oil infrastructure assets acquired and
required to be decommissioned at the end of field life.
Management expects decommissioning expenditures to be incurred
from 2031, 2035 and 2034 onwards for Montara, Stag and Lemang,
respectively.
In 2019, Jadestone Energy (Eagle) Pty Ltd, a wholly owned
subsidiary of the Company entered into a deed poll with the
Australian Government with regard to the requirements of
maintaining sufficient financial capacity to ensure Montara's asset
restoration obligations can be met when due. The deed states that
the Group is required to provide a financial security in favour of
the Australian Government when the aggregate remaining net after
tax cash flow of the Group is 1.25 times or below the Group's
estimated future decommissioning costs.
(b) The provision for Stag FSO in 2019 represented the fair
value of amounts payable to the crew of the FSO on termination of
the lease. The provision has been reversed due to the September
2020 termination of the FSO vessel lease.
(c) The contingent payment of US$0.4 million in 2019 represented
the fair value of 2020 contingent payments to PTTEP for the Montara
acquisition. The 2020 contingent payment has been derecognised
during the year as the liability has failed to materialise. The
Group has not recognised other contingent payments as the
management considers the probability of outflow is remote.
During the year, the Group has recognised contingent
consideration payments of US$4.4 million, representing the fair
value of contingent payments to Mandala Energy Lemang Pte Ltd for
the acquisition of the Lemang PSC (see Note 15.5).
(d) Included in the provision for employee benefits is provision
for long service leave which is payable to employees on a pro-rata
basis after 7 years of employment and is due in full after 10 years
of employment.
(e) The Group's performance pay incentive scheme is based on the
Group's and employees' performance, and is payable annually to the
employees at variable percentages of their annual wage.
30. LEASE LIABILITIES
2020 2019
USD'000 USD'000
Presented as:
Non-current 13,305 42,533
Current 12,478 19,739
--------- ---------
25,783 62,272
========= =========
Maturity analysis of lease liabilities
based on undiscounted gross cash
flows:
Year 1 13,448 20,228
Year 2 11,239 19,881
Year 3 2,803 17,934
Year 4 - 9,547
Year 5 - 3,145
Future interest charge (1,707) (8,463)
--------- ---------
25,783 62,272
========= =========
The decrease in lease liabilities is predominately due to the
termination of the Stag FSO lease in September 2020, due to the
retirement of the FSO by its owner, and the resultant move to the
shuttle tanker model.
The Group does not face a significant liquidity risk with
regards to its lease liabilities. Lease liabilities are monitored
within the Group's treasury function.
31. BORROWINGS
2020 2019
USD'000 USD'000
--------------------------------- -------- --------
Non-current secured borrowings
Reserve based lending facility - 7,328
Current secured borrowings
Reserve based lending facility 7,296 41,795
7,296 49,123
======== ========
During the year, the Group made principal repayment and interest
service costs of US$42.8 million and US$1.4 million (2019: US$52.9
million; US$4.5 million) respectively, leaving an outstanding
balance of US$7.3 million (2019: US$49.1 million) as at year end,
which was repaid in full on 31 March 2021.
The loan incurred interest at LIBOR plus 3% (2019: LIBOR plus
3%).
32. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING
ACTIVITIES
The table below details changes in the Group's liabilities
arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those
for which cash flows were, or future cash flows will be, classified
in the Group's consolidated statement of cash flows, as cash flows
from financing activities.
The cash flows represent the repayment of borrowings and lease
liabilities, in the consolidated statement of cash flows.
Reserved Based Lending Facility
USD'000 Lease Liabilities Other Borrowings
USD'000 USD'000
-------------------------------------- ------------------------------- -------------------- ------------------
As at 1 January 2019 100,534 - 1,279
Adoption of IFRS 16 - 35,850 -
Financing cash flows (52,924) (16,671) (1,279)
New lease liabilities - 38,813 -
Interest expense (4,519) - -
Non-cash changes - other changes 6,032 4,280 -
------------------------------- -------------------- ------------------
As at 31 December 2019/1 January 2020 49,123 62,272 -
Financing cash flows (42,766) (18,562) -
New lease liabilities - 891 -
Termination of leases - (20,777)
Interest expense (1,427) - -
Non-cash changes - other changes 2,366 1,959 -
------------------------------- -------------------- ------------------
As at 31 December 2020 7,296 25,783 -
=============================== ==================== ==================
33. TRADE AND OTHER PAYABLES
2020 2019
(Reclassified)
USD'000 USD'000
------------------ --- -------- ---------------
Trade payables 10,131 9,192
Other payables 2,004 156
Accruals 20,047 16,347
GST/VAT payables 10 104
-------- ---------------
32,192 25,799
======== ===============
Trade and other payables and accruals principally comprise
amounts outstanding for trade and non-trade purchases and ongoing
costs. The average credit period taken for purchases is less than
30 days. For most suppliers, no interest is charged on the payables
in the first 30 days from the date of invoice. Thereafter, interest
may be charged on outstanding balances at varying rates of
interest. The Group has financial risk management policies in place
to ensure that all payables are settled within the pre-agreed
credit terms.
The Group believes that the carrying amount of trade and other
payables approximates their fair value.
34. DERIVATIVE FINANCIAL INSTRUMENTS
The Group uses derivatives to manage its exposure to oil price
fluctuations. Oil hedges are undertaken using swaps and, and in
some cases, call options. All contracts are referenced to Dated
Brent oil prices. During the year, the Group entered into commodity
swaps that are carried at fair value through profit or loss
("FVTPL").
2020 2019
USD'000 USD'000
---------------------------------- --------- --------
Derivative financial assets
Designated as cash flow hedges
Commodity capped swap - 5,275
========== ========
Derivative financial liabilities
Carried at FVTPL
Commodity swap (471) -
========== ========
The following is a summary of the Group 's outstanding
derivative contracts:
Fair value Fair value
asset at 31 asset at 31
December 2020 December 2019
Contract Type of Hedge USD'000 USD'000
quantity contracts Terms Contract classification
price
---------------- -------------- --------------- -------------- ----------------- -------------- --------------
Contracts designated as cash flow hedges
US$78.26/bbl
for Q4 2018,
US$71.72/bbl
for 2019 and
US$68.45/bbl
27% (2019: 32%) Commodity for the nine
of Group's capped swap: months to 30
actual 2PD swap Oct 2018 - September
production component Sep 2020 2020 Cash flow - 5,203
67% of swapped
barrels in 2019 Commodity
and in the nine capped swap: US$80.00/bbl for the nine months
months to 30 call Jan 2019 - to 30 September 2019, then
September 2020 component Sep 2020 US$85.00/bbl to September 2020 - 72
Contracts that are not designated in hedge accounting relationships
31% of Group's Commodity swap Jan - March US$49.00/bbl FVTPL (471) -
anticipated 2021
planned 2P
production from
January to
March 2021
The Group's October 2018 to September 2020 capped swap programme
was designated as a cash flow hedge. Critical terms of the capped
swap (i.e., the notional amount, life and underlying oil price
benchmark) and the corresponding Montara hedged sales are highly
similar. The Group performed a qualitative assessment of the
effectiveness of the capped swap contracts and concluded that the
value of the capped swap and the value of the corresponding hedged
items will systematically change in opposite directions in response
to movements in the underlying commodity prices.
There is however, a source of ineffectiveness in the capped swap
arrangement, arising from the slight difference in the timing of
Montara's production and the settlement of the capped swap
arrangement versus the crude sales. The overall change in value in
the capped swap transaction arising from the hedge ineffectiveness
amounted to a net loss of approximately US$4,000 in 2020 (2019:
US$0.6 million), and has been included in the statement of profit
or loss within "other expenses" (Note 8).
The following tables detail the commodity swap contracts
outstanding at the end of the year, as well as information
regarding their related hedged items. Commodity swap contract
assets are included in the "derivative financial instruments" line
item in the consolidated statement of financial position.
Hedging instruments - outstanding contracts
Change in fair value used for calculating
hedge ineffectiveness
USD'000
Oil volumes Notional value Fair value
bbls USD'000 USD'000
------------------------- ------------- ----------------- ------------------------------------------- ------------
2019
Cash flow hedges
Commodity swap component 1,136,940 77,829 633 5,203
Commodity call component 568,470 48,320 - 72
------------------------------------------- ------------
633 5,275
=========================================== ============
Hedged items
Balance in cash flow hedge
reserve arising from hedging
Change in value used for relationships for which hedge
calculating hedge Balance in cash flow hedge accounting
ineffectiveness reserve for continuing hedges is no longer applied
USD'000 USD'000 USD'000
----------------- -------------------------------- -------------------------------- -------------------------------
2020
Cash flow hedges
Forecast sales 4 - -
================================ ================================ ===============================
2019
Cash flow hedges
Forecast sales 633 3,688 -
================================ ================================ ===============================
The following table details the effectiveness of the hedging
relationships and the amounts reclassified from hedging reserve to
profit or loss:
Amount
reclassified to Line item in
Amount of hedge Line item in profit profit or loss due profit or loss in
Current period ineffectiveness or loss in which to hedged item which
hedging gain/(loss) recognised in hedge affecting profit reclassification
recognised in OCI profit or loss ineffectiveness is or loss adjustment is
USD'000 USD'000 included USD'000 included
2020
Cash flow hedges
Forecast sales 18,265 4 Other expenses 31,360 Revenue
2019
Cash flow hedges
Forecast sales (21,380) 633 Other expenses 14,241 Revenue
35. FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL
MANAGEMENT
Financial assets and liabilities
Current assets and liabilities
Management considers that due to the short-term nature of the
Group's current assets and liabilities, the carrying values equate
to their fair value.
Non-current assets and liabilities
All non-current assets and liabilities are reflected at fair
value.
2020 2019
USD'000 USD'000
----------------------------------------------- --------- ---------
Financial assets
At amortised cost 93,820 135,737
Derivative instruments designated in hedge
accounting relationships - 5,275
--------- ---------
93,820 141,012
========= =========
Financial liabilities
At amortised cost 353,607 419,671
Contingent consideration for Montara business
acquisition - 359
Contingent consideration for Lemang PSC 4,436 -
acquisition
Derivative instruments carried at FVTPL 471 -
--------- ---------
358,514 420,030
========= =========
Fair values are based on management's best estimates, after
consideration of current market conditions. The estimates are
subjective and involve judgment, and as such are not necessarily
indicative of the amount that the Group may incur in actual market
transactions.
Commodity price risk
The Group's earnings are affected by changes in oil prices. The
Group manages this risk by monitoring oil prices and entering into
commodity hedges against fluctuations in oil prices if considered
appropriate.
Montara
The Group hedged 50% of its planned production volumes for the
24 months to 30 September 2020. The hedge was a capped swap,
providing downside price protection via swaps, while allowing for
participation in higher commodity prices via purchased call
options. The call strike was set at US$80/bbl for the nine months
to 30 September 2019 and US$85/bbl for the twelve months to
September 2020. The swap price was set at US$78.26/bbl for Q4 2018,
US$71.72/bbl for 2019 and US$68.45/bbl for the nine months to
September 2020. Approximately two thirds of the swapped barrels in
2019 and 2020 have upside price participation via purchased calls.
The effective date of the hedge contracts was 1 October 2018.
In December 2020, the Group entered into a commodity swap
arrangement to cover 31% of its planned production volumes from
January to March 2021, to provide downside price protection. The
swap price was set at US$49/bbl.
Commodity price sensitivity
The results of operations and cash flows from oil and gas
production can vary significantly with fluctuations in the market
prices of oil and/or natural gas. These are affected by factors
outside the Group's control, including the market forces of supply
and demand, regulatory and political actions of governments, and
attempts of international cartels to control or influence prices,
among a range of other factors.
The table below summarises the impact on profit/(loss) before
tax, and on equity, from changes in commodity prices on the fair
value of derivative financial instruments. The analysis is based on
the assumption that the crude oil price moves 10%, with all other
variables held constant. Reasonably possible movements in commodity
prices were determined based on a review of recent historical
prices and current economic forecasters' estimates.
Effect on Effect on Effect on the Effect on other
the other result comprehensive
result comprehensive before tax income before
before tax income before for the tax
for the tax year ended for the year
Gain or loss year ended for the year 31 December ended
31 December ended 2019 31 December
2020 31 December USD'000 2019
USD'000 2020 USD'000
USD'000
Increase by
10% (1,348) - - (7,266)
Decrease by
10% 1,348 - - 7,266
Foreign currency risk
Foreign currency risk is the risk that a variation in exchange
rates between United States Dollars ("US Dollar") and foreign
currencies will affect the fair value or future cash flows of the
Group's financial assets or liabilities presented in the
consolidated statement of financial position as at year end.
Cash and bank balances are generally held in the currency of
likely future expenditures to minimise the impact of currency
fluctuations. It is the Group's normal practice to hold the
majority of funds in US Dollars, in order to match the Group's
revenue and expenditures. The Group's US$120.0 million reserve
based loan facility was a US Dollar denominated instrument.
In April 2020, the Group entered into a series of forward
exchange contracts under which it contracted to purchase AU$10.0
million per month, from May to November 2020, at a fixed forward
AU$/US$ exchange rate of 0.6344.
In addition to US Dollar, the Group transacts in various
currencies, including Australian Dollar, Singapore Dollar,
Vietnamese Dong, Malaysian Ringgit, Indonesian Rupiah, New Zealand
Dollar, British Pound Sterling and Canadian Dollar.
Foreign currency sensitivity
Material foreign denominated balances were as follows:
2020 2019
USD'000 USD'000
--------
Cash and bank balances
Australian Dollars 8,043 7,088
Trade and other receivables
Australian Dollars 1,547 5,853
Trade and other payables
Australian Dollars 21,233 16,236
Provisions
Australian Dollars 2,692 7,158
A strengthening/weakening of the Australian dollar by 10%,
versus the functional currency of the Group, is estimated to result
in the net carrying amount of Group's financial assets and
financial liabilities as at year end decreasing/increasing by
approximately US$1.4 million (2019: US$1.0 million), and which
would be charged/credited to the consolidated statement of profit
or loss.
Interest rate risk
The Group's interest rate exposure arises from some of its cash
and bank balances and borrowings. The Group's other financial
instruments are non-interest bearing or fixed rate, and are
therefore not subject to interest rate risk.
Jadestone holds some of its cash in interest bearing accounts
and short-term deposits. Interest rates currently received are
relatively low levels historically. Accordingly, a downward
interest rate movement would not cause significant exposure to the
Group.
On 2 August 2018, the Group entered into a reserve based lending
agreement with the Commonwealth Bank of Australia and Société
Générale to borrow US$120.0 million, repayable quarterly to 31
March 2021. The loan was fully drawn down on 28 September 2018 and
incurred interest at LIBOR plus 3%. The loan incurred establishment
and other costs of US$3.2 million, which were offset against the
proceeds received.
Based on the carrying value of the reserve based loan as at 31
December 2020, if interest rates had increased or decreased by 1%
and all other variables remained constant, the impact on the
Group's quarterly net income/(loss) before tax would be immaterial
(2019: US$0.1 million). The loan was fully repaid on 31 March
2021.
Credit risk
Credit risk represents the financial loss that the Group would
suffer if a counterparty in a transaction fails to meet its
obligations in accordance with the agreed terms.
The Group actively manages its exposure to credit risk, granting
credit limits consistent with the financial strength of the Group's
counterparties and customers, requiring financial assurances as
deemed necessary, reducing the amount and duration of credit
exposures, and close monitoring of relevant accounts.
The Group trades only with recognised, creditworthy third
parties.
The Group's current credit risk grading framework comprises the
following categories:
Basis for recognising
expected credit losses
Category Description ("ECL")
Performing The counterparty has a low 12-month ECL
risk of default and does not
have any past-due amounts.
Doubtful Amount is > 30 days past due Lifetime ECL - not credit-impaired
or there has been a significant
increase in credit risk since
initial recognition.
In default Amount is > 90 days past due Lifetime ECL - credit-impaired
or there is evidence indicating
the asset is credit-impaired.
Write-off There is evidence indicating Amount is written off
that the debtor is in severe
financial difficulty and the
Group has no realistic prospect
of recovery.
The table below details the credit quality of the Group's
financial assets and other items, as well as maximum exposure to
credit risk by credit risk rating grades:
Gross
12-month carrying
External Internal ("12m") amount Loss Net carrying
credit credit or (i) allowance amount
Note rating rating lifetime USD'000 USD'000 USD'000
ECL
2020
Cash and bank
balances 24 n.a Performing 12m ECL 89,441 - 89,441
Lifetime
Trade receivables 23 n.a (i) ECL 106 - 106
Other receivables 23 n.a Performing 12m ECL 4,273 - 4,273
2019
Cash and bank
balances 24 n.a Performing 12m ECL 99,419 - 99,419
Lifetime
Trade receivables 23 n.a (i) ECL 34,007 - 34,007
Other receivables 23 n.a Performing 12m ECL 2,311 - 2,311
(i) For trade receivables, the Group has applied the simplified
approach in IFRS 9 to measure the loss allowance at lifetime ECL.
The Group determines the expected credit losses on these items by
using specific identification, estimated based on historical credit
loss experience based on the past due status of the debtors,
adjusted as appropriate to reflect current conditions and estimates
of future economic conditions. Accordingly, the credit risk profile
of these assets is presented based on their past due status in
terms of specific identification.
As at 31 December 2020, total trade receivables amounted to
US$0.1 million (2019: US$34.0 million). The balance in 2020 and
2019 had been fully recovered in 2021 and 2020, respectively.
The concentration of credit risk relates to the main
counterparty to oil sales in Australia, where the sole customer has
an A1 credit rating (Moody's). All trade receivables are generally
settled 30 days after sale date. In the event that an invoice is
issued on a provisional basis, the final reconciliation is paid
within three days of the issuance of the final invoice, largely
mitigating any credit risk.
The Group recognises lifetime ECL for trade receivables. The ECL
on these financial assets are estimated based on days past due, by
applying a percentage of expected non-recoveries for each group of
receivables. As at year end, ECL from trade and other receivables
are expected to be insignificant.
Cash and bank balances are placed with reputable banks and
financial institutions, which are regulated, and with no history of
default.
The maximum credit risk exposure relating to financial assets is
represented by their carrying value as at the reporting date.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet all of its financial obligations as they become due. This
includes the risk that the Group cannot generate sufficient cash
flow from producing assets, or is unable to raise further capital
in order to meet its obligations.
The Group manages it liquidity risk by optimising the positive
free cash flow from its producing assets, on-going cost reduction
initiatives, merger and acquisition strategies, and bank balances
on hand.
The Group's net loss after tax for the year was US$60.2 million
(2019: profit after tax of US$40.5 million), and inclusive of the
non-cash SC56 impairment of US$50.4 million (2019: nil). Operating
cash flows before movements in working capital and net cash
generated from operating activities for the year ended 31 December
2020 was US$86.9 million and US$84.6 million (2019: US$176.7
million and US$144.6 million) respectively. The Group's net current
assets remained positive at US$79.5 million as at 31 December 2020
(2019: US$26.8 million).
The Group's reserve based loan was sized on a borrowing base
drawn from projected cash flows from the Montara assets, and based
on proved and probable producing reserves but including certain
infill wells. This borrowing base was subject to scheduled
semi-annual redeterminations and as such, and in the event of a
significant reduction in the borrowing base, there was a risk that
scheduled repayments might increase to offset any such borrowing
base deficiency. The existing borrowing base, as assessed by the
lenders as at 31 December 2020, was significantly above aggregate
commitments, and was fully repaid on 31 March 2021. During the life
of the loan, no semi-annual redetermination resulted in an increase
in scheduled repayments, or the determination of any borrowing base
deficiency.
The Group believes it has sufficient liquidity to meet all
reasonable scenarios of operating and financial performance for the
next 18 months.
Non-derivative financial liabilities
The following table details the expected contractual maturity
for non-derivative financial liabilities with agreed repayment
periods. The table below has been drawn up based on the
undiscounted contractual maturities of the financial liabilities,
including interest, that will be paid on those liabilities, except
where the Group anticipates that the cash flow will occur in a
different period. The adjustment column represents the estimated
future cash flows attributable to the instrument included in the
maturity analysis, which are not included in the carrying amount of
the financial liabilities on the consolidated statement of
financial position, namely interest expense and ARO accretion
expense.
Weighted average
effective On demand or within Within 2 to 5 More than
interest rate 1 year years 5 years Adjustments Total
% USD'000 USD'000 USD'000 USD'000 USD'000
2020
Non-interest
bearing - 36,740 38 352,771 (69,021)(1) 320,528
Fixed interest
rate
instruments 6.049 13,448 14,042 - (1,707) 25,783
Variable interest
rate
instruments 7.570 7,445 - - (149) 7,296
57,633 14,080 352,771 (70,877) 353,607
2019
Non-interest
bearing - 27,802 5,052 377,882 (102,460)(1) 308,276
Fixed interest
rate
instruments 7.317 20,228 50,507 - (8,463) 62,272
Variable interest
rate
instruments 7.735 44,425 7,477 - (2,779) 49,123
92,455 63,036 377,882 (113,702) 419,671
(1) Relates to ARO accretion expense.
Non-derivative financial assets
The following table details the expected maturity for
non-derivative financial assets. The inclusion of information on
non-derivative financial assets is necessary in order to understand
the Group's liquidity risk management, as the Group's liquidity
risk is managed on a net asset and liability basis. The table has
been drawn up based on the undiscounted contractual maturities of
the financial assets, including interest that will be earned on
those assets, except where the Group anticipates that the cash flow
will occur in a different period. The adjustment column represents
the estimated future cash flows attributable to the instrument
included in the maturity analysis, which are not included in the
carrying amount of the financial assets on the consolidated
statement of financial position, namely interest income.
Weighted
average On demand Within
effective or within 2 to 5
interest rate 1 year years Adjustments Total
% USD'000 USD'000 USD'000 USD'000
2020
Non-interest bearing - 4,379 - - 4,379
Variable interest rate
instruments -* 89,441 - -* 89,441
93,820 - -* 93,820
2019
Non-interest bearing - 36,318 - - 36,318
Variable interest rate
instruments -* 89,419 10,000 -* 99,419
125,737 10,000 * 135,737
*The effect of interest is not material.
Capital management
The Group manages its capital structure and makes adjustments to
it, based on the funds available to the Group, in order to support
the acquisition, exploration and development of resource properties
and the ongoing operations of its producing assets. Given the
nature of the Group's activities, the Board of Directors works with
management to ensure that capital is managed effectively, and the
business has a sustainable future.
To carry-out planned asset acquisitions, exploration and
development, and to pay for administrative costs, the Group may
utilise excess cash generated from its ongoing operations and may
utilise its existing working capital, and will work to raise
additional funds should that be necessary.
Management reviews its capital management approach on an ongoing
basis and believes that this approach, given the relative size of
the Group, is reasonable. There were no changes in the Group's
approach to capital management during the year ended 31 December
2020. The Group is not subject to externally imposed capital
requirements.
2020 2019
USD'000 USD'000
Gearing ratio
Debt (7,296) (49,123)
Cash and cash equivalents 81,996 75,934
Restricted cash 7,445 13,485
Cash less borrowings 82,145 40,296
Borrowings comprise long and short-term borrowings,
incorporating effective interest method financing costs, and
excludes derivatives, as detailed in Note 31. Cash and cash
equivalents include the Montara assets' minimum working capital
cash balance of US$15.0 million required under the RBL, while
restricted cash comprises the US$7.4 million in the RBL debt
service reserve account (2019: US$13.5 million). The restricted
cash in 2020 excludes the US$1.0 million cash collateralised bank
guarantee placed with the Indonesian regulator in respect of the
JSA entered by the Group in Indonesia. The restricted cash in 2019
excludes the US$10.0 million deposited in support of a bank
guarantee to a key supplier in respect of the Stag FSO. Equity
includes all capital and reserves of the Group that are managed as
capital.
The Group's overall strategy remains unchanged from 2019.
Fair value measurements
The Group discloses fair value measurements by level of the
following fair value measurement hierarchy:
i. Quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1);
ii. Inputs, other than quoted prices included within Level 1,
that are observable for the asset or liability, either directly or
indirectly (Level 2); and
iii. Inputs for the asset or liability that are not based on
observable market data (unobservable inputs) (Level 3).
Relationship
of
Fair value (USD'000) as at Fair Valuation Significant unobservable
2020 2019
Financial technique(s)
assets/financial value and key unobservable inputs to
liabilities Assets Liabilities Assets Liabilities hierarchy input(s) input(s) fair value
Derivative financial instruments
T hird party
val uations
based on
1) Oil price market
swaps and calls comparable
(Note 34) - 471 5,275 - Level 2 information. n.a. n.a.
Others - contingent consideration from Montara business
acquisition
2) Contingent - - - 359 Level 3 Based on the Expected A slight
consideration nature and future oil increase in
(Note 29) the price Dated Brent
likelihood of volatility of oil prices
occurrence of 25% is would
the trigger based on result in a
event. Fair an analysis significant
value is of Dated increase in
estimated Brent oil the fair
using future price value and
Dated Brent movements vice versa.
oil prior to the
price acquisition
forecasts date.
at the end of
the reporting
period,
taking
into account
the time
value
of money and
volatility of
oil
prices.
Relationship
of
Fair value (USD'000) as at Fair Valuation Significant unobservable
2020 2019
Financial technique(s)
assets/financial value and key unobservable inputs to
liabilities Assets Liabilities Assets Liabilities hierarchy input(s) input(s) fair value
Others - contingent consideration from Lemang PSC acquisition
Based on the
nature and
the
likelihood
of the
occurrence of
the trigger
events. Fair
value is Gas
estimated, production
taking into schedule
consideration could
the estimated be changed
future gas depending on
production future gas
schedule, contract
forecasted negotiations. A change in
Dated Brent gas
oil prices Expected production
and future oil schedule or
Saudi CP price significant
prices and volatility increase in
respective is based on Dated Brent
price an analysis oil prices
volatility of and Saudi CP
at the end of Dated Brent prices
the reporting oil price and would result
period, as Saudi CP in a
well price significant
3) Contingent as the effect movements increase in
consideration of time value as at Closing the fair
(Note 15) - 4,436 - - Level 3 of money. Date. value.
36. SEGMENT INFORMATION
Information reported to the Group's Chief Executive Officer (the
chief operating decision maker) for the purposes of resource
allocation is focused on two reportable/business segments driven by
different types of activities within the upstream oil and gas value
chain, namely producing assets and secondly development and
exploration assets. The geographic focus of the business is on
Southeast Asia ("SEA") and Australia.
Revenue and non-current assets information based on the
geographical location of assets respectively are as follows:
Producing Exploration/
assets development
Australia SEA Corporate Total
USD'000 USD'000 USD'000 USD'000
2020
Revenue
Liquids revenue 217,938 - - 217,938
Production cost (105,338) - - (105,338)
DD&A (84,024) (110) (508) (84,642)
Staff costs (10,029) (2,228) (9,646) (21,903)
Other expenses (15,068) (9,690) (2,160) (26,918)
Impairment of assets - (50,455) - (50,455)
Other income 14,292 1 12,083 26,376
Finance costs (12,625) (29) (1) (12,655)
Other financial gains 359 - - 359
Profit/(Loss) before tax 5,505 (62,511) (232) (57,238)
Additions to non-current
assets 11,162 27,706 914 39,782
Non-current assets 349,292 97,838 945 448,075
2019
Revenue
Liquids revenue 325,406 - - 325,406
Production cost (119,898) - - (119,898)
DD&A (90,277) (113) (356) (90,746)
Staff costs (9,595) (3,543) (8,889) (22,027)
Other expenses (4,699) (278) (4,402) (9,379)
Other income 2,971 2 6 2,979
Finance costs (16,387) (7) (49) (16,443)
Other financial gains 3,389 - - 3,389
Profit/(Loss) before tax 90,910 (3,939) (13,690) 73,281
Additions to non-current
assets 84,444 20,456 65 104,965
Non-current assets 461,053 116,162 943 578,158
Non-current assets as shown here comprises oil and gas
properties, intangible exploration assets, right-of-use assets,
other receivables, restricted cash and plant and equipment used in
corporate offices. Deferred tax assets of US$19.7 million (2019:
US$16.0 million) are excluded from the segmental note but included
in the Group's consolidated statement of financial position.
Revenues arising from producing assets in 2020 of approximately
US$217.9million (2019: US$325.4 million) primarily arose from sales
to the Group's largest customer.
37. FINANCIAL CAPITAL COMMITMENTS
Certain PSC's and service concessions' have firm capital
commitments. The Group has the following outstanding minimum
exploration commitments:
SEA portfolio PSC operational commitments
2020 2019
USD'000 USD'000
Not later than one year 10,000 10,000
More than 5 years 7,284 -
17,284 10,000
The SEA portfolio PSC operational commitments as at 31 December
2020 amounted to US$17.3 million (2019: US$ 10.0 million), and
relates to the minimum work commitment outstanding for the Block
46/07 PSC and the Lemang PSC (2019: Block 46/07 PSC).
Under the terms of the Block 46/07 PSC, Jadestone is committed
to drill one more appraisal well on the block. The Company plans to
drill an appraisal well on the Nam Du field to facilitate
transition of 3C resource to 2C status. This well would be retained
for future use as a Nam Du gas producer. Following the Group's
announcement on 19 March 2020 to delay the project, the Group is
seeking Vietnam Government approval for a further extension in
order to align drilling of the appraisal well with development of
Nam Du/U Minh. The request of extension was submitted in December
2020. The Group is committed to the project and expects to receive
approval for the extension request in due course.
Under the terms of the Lemang PSC, Jadestone has inherited an
operational commitment of US$7.3 million consisting of one
exploration well and a 3D seismic acquisition program. The
commitment was carried over from the previous exploration period
and is expected to be fulfilled during the future gas production
period.
Capital commitments
The Group has the following capital commitments for expenditure
that were contracted for at the end of the reporting year but not
recognised as liabilities for Montara:
2020 2019
USD'000 USD'000
------------------------- -------- --------
Not later than one year 8,977 19,441
========
38. E VENTS AFTER THE OF THE REPORTING PERIOD
Corporate reorganisation
The Company in undertaking an internal reorganisation to effect
a re-domicile of the ultimate holding company to the United
Kingdom. A newly incorporated English company, Jadestone Energy plc
has been established for this exercise. Following the approval from
shareholders and required court approvals, the shares of the
Company will be replaced on a one-for-one basis with shares in
Jadestone Energy plc. The estimated effective date for the internal
organisation is on 23 April 2021. Jadestone Energy plc is
anticipated to be admitted to AIM for trading on 26 April 2021.
The internal reorganisation will not result in a change in
control in the ultimate holding company of the Jadestone group of
companies and, accordingly, will not result in a change in control
in the ultimate shareholding in any of the companies or assets of
the Jadestone group of companies. Further, the internal
reorganisation will not result in a change in the management of any
of the companies or assets of the Jadestone group of companies.
Oil price commodity contracts
On 16 February 2021, the Group entered into commodity swap
contracts to hedge 31% of its planned production volumes from April
to June 2021 to provide downside price protection. The swap price,
referenced to Dated Brent, was set at US$61.40/bbl.
39. RELATED PARTY TRANSACTIONS
During the year, the Group did not enter into any transactions
with related parties other than the following:
Compensation of key management personnel
2020 2019
USD'000 USD'000
-------- --------
Short-term benefits 6,284 6,746
Other benefits 1,006 1,052
Share-based payments 816 1,038
--------
8,106 8,836
======== ========
The total remuneration of key management members in 2020
(including salaries and benefits) was US$8.1 million (2019: US$8.8
million) and recognised as part of the Group's staff costs as
disclosed in Note 7.
Compensation of directors
Short-term Other benefits(a) Share-based Total compensation
benefits(a) payments
USD'000 USD'000 USD'000 USD'000
2020
A. Paul Blakeley 991 324 186 1,501
Daniel Young 696 189 114 999
Dennis McShane 119 - 16 135
Iain McLaren 79 - 10 89
Robert Lambert 70 - 10 80
Cedric Fontenit 66 - 9 75
David Neuhauser 57 - 10 67
Lisa Stewart 74 - 11 85
2,152 513 366 3,031
2019
A. Paul Blakeley 1,302 350 233 1,885
Daniel Young 707 174 139 1,020
Dennis McShane 130 - 21 151
Iain McLaren 81 - 13 94
Eric Schwitzer 68 - 25 93
Robert Lambert 69 - 13 82
Cedric Fontenit 66 - 9 75
David Neuhauser 56 - 12 68
Lisa Stewart 6 - - 6
2,485 524 465 3,474
(a) S hort-term benefits comprise salary, director fee as
applicable, performance pay, pension and other allowances. Other
benefits comprise benefits-in-kind.
40. RECLASSIFICATION OF COMPARATIVE FIGURES
Certain comparative figures in the consolidated financial
statements of the Group have been reclassified to conform to the
presentation in the current period and to better reflect the nature
of the respective items in the Group's consolidated financial
statements.
The reclassification made in the consolidated statement of
profit or loss is related to third party contractor costs, which
are now included within staff costs. The reclassifications made in
the consolidated statement of financial position are the Australia
seismic costs, which are now included within intangible exploration
assets. Additionally, provisions have been reclassified from trade
and other payables, and are now presented separately in the face of
the consolidated statement of financial position.
In the consolidated statement of cash flows, the write-off of
inventories has been reclassified from inventories movement to
non-cash adjustment items, and the collection of PRRT receivables
has been reclassified from trade and other receivables movement to
tax refunded under operating activities.
The reclassifications impact the following items:
As previously
reported Reclassification As reclassified
USD'000 USD'000 USD'000
-------------
Consolidated statement of profit
or loss and other
comprehensive income for the
year ended
31 December 2019
Staff costs (19,714) (2,313) (22,027)
Other expenses (11,692) 2,313 (9,379)
Consolidated statement of financial
position as at
31 December 2019
Intangible exploration assets 116,096 1,344 117,440
Oil and gas properties 383,018 (1,344) 381,674
Provisions - non-current (280,418) (415) (280,833)
Other payables - non-current (359) 359 -
Trade and other payables - current (27,962) 2,163 (25,799)
Provisions - current - (2,107) (2,107)
Consolidated statement of cash
flows for the year
ended 31 December 2019
Inventories written off - 164 164
Increase in trade and other
receivables (9,483) (700) (10,183)
Increase in inventories (7,346) (164) (7,510)
Tax refunded 1,851 700 2,551
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FR ITMATMTJTMPB
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April 22, 2021 02:00 ET (06:00 GMT)
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