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Annual Report 2014
Comet Ridge Limited
About Comet Ridge
Comet Ridge Limited is a coal
seam gas explorer with an
active exploration and appraisal
work program for CSG projects
in the Bowen and Galilee Basins
in Queensland, and in the
Gunnedah Basin, northern New
South Wales.
The Company also has CSG interests on the West
Coast (South Island) in New Zealand and oil and
gas interests in the United States through Comet
Ridge Resources LLC (CRR), a US company based
in Denver Colorado.
The Brisbane based company is listed on the
Australian Securities Exchange (code: COI) and has
a market capitalisation of approximately $70 million.
There are 1,894 shareholders and 458,748,746
shares on issue as at 16 October 2014.
The Company was formed in August 2003 as a new
energy company and was first listed on the ASX in
April 2004.
With increasing focus on gas as a fuel of choice in
power generation and energy markets, Comet Ridge
takes high equity positions in its large exploration
permits, including a 100 percent interest in both its
Galilee Basin, Queensland and New Zealand assets.
The Company has recently increased its equity
position in the ATP 337P Mahalo block in the Bowen
Basin to 40 percent (pending signing of assignment
documentation associated with the recent buy-back
of Stanwell's interests) and has equity of 22.5
percent, 50 percent and 60 percent respectively in
PEL 6, PEL 427 and PEL 428 in the Gunnedah Basin
in New South Wales.
The Board and Management are highly experienced
in establishing and developing energy projects.
Contents
Highlights
2
Chairman’s Letter
4
Managing Director’s Report
6
Overview of Activities
8
Corporate Governance Statement
22
Directors’ Report
33
40
Remuneration Report
Auditor’s Independence Declaration
47
Annual Financial Statements
49
Statement of Profit or Loss & Other Comprehensive Income
50
Statement of Financial Position
51
Statement of Changes in Equity
52
Statement of Cash Flows
53
Notes to the Financial Statements
54
Directors’ Declaration
98
Independent Auditor’s Report
99
Additional Shareholder Information
101
Corporate Directory
105
Comet Ridge Limited I Annual Report 2014
1
Galilee Basin
Mahalo Gas Project
2014 Highlights
2
Initial independent reserve statement at
Mahalo Gas Project
confirms
substantial reserve
upside potential as
project matures
COMMERCIALITY
of project
Material upgrade to contingent resources
at Mahalo underpins
34% GAS VOLUME
INCREASE IN TOTAL
Mahalo Block
equity interest
RESTORED TO
40%
COI share to
592PJ
* following buyback of
interests previously
sold to Stanwell Corporation
* Mahalo Stanwell transaction pending signing of assignment documents
2
INDEPENDENT
GAS
PILOT SCHEMES
RATES STEADILY
operating at the Mahalo
Gas Project with
PRODUCTION
INCREASING
Harrington-1
24km
demonstrates coal
continuity over
significant area
STEP OUT WELL
Comet Ridge Limited I Annual Report 2014
3
Highlights
For Comet Ridge this past year has had a
significantly different focus from previous years, in
that it has been particularly centred on pilot
production in the Mahalo Block. This has led to
Comet Ridge's maiden independently certified
reserves. It is very pleasing that as a
consequence, the volume of gas (net to Comet
Ridge) attributable to the Mahalo block has risen
by about 30%.
For shareholders, board and management it is an
understatement to say these reserves have been
a long
Dear Shareholder,
I am pleased to present Comet
Ridge Limited's (Comet Ridge or
the Company) Annual Report for
the year ended 30 June 2014.
Over the last 12 months, Comet Ridge has
continued to progress its coal seam gas interests
focusing on the Mahalo block in the Bowen
Basin. The announcement of maiden reserves in
August 2014 represents a significant milestone
for the Company, confirming our long held belief
in the project's commerciality. The initial reserve
booking is based on a small area of the tenement
adjacent to the Mahalo Field Pilot only. The
current operational focus is on building reserves
as further production data from both the Mahalo
and Mira Field Pilots is collected and additional
appraisal is undertaken.
While the establishment of reserves has taken
longer than originally anticipated we continue to
believe in the fundamentals of the project,
demonstrated by our recent buy-back of interests
in the Mahalo block, previously sold to Stanwell
Corporation Limited (Stanwell). We were pleased
to have been able to reach agreement with
Stanwell to increase our equity in the project,
deferring consideration (either in the form of gas
sales or a cash payment) until the final
investment decision for the project is made.
4
Chairman’s Letter
The 2015 financial year will be a game changer
for the CSG-LNG industry with the first shipment
of LNG from Curtis Island anticipated around the
end of 2014 from the QCLNG Project. Eastern
Australia has long had a large gas reserve base
with a relatively small gas market. This has
caused our natural gas prices to be relatively low
over the past four decades, in comparison to
many places around the world. This is now
rapidly changing. Exposing domestic gas
producers to export markets has caused a step
change in eastern Australian gas demand, and
gas prices have risen accordingly from only a
couple of dollars per gigajoule only a few short
years ago, to almost ten dollars per gigajoule as
the inclusion of oil price linkage and LNG netback in gas sales contracts has become
standard. Market analysts are forecasting gas
supply disruptions as soon as 12 to 24 months
from now when all 6 Gladstone LNG trains are
expected to be operational. This supports Comet
Ridge's strategy to focus on establishing a
significant reserves base at Mahalo and in our
other eastern Australian assets.
Mahalo is located just 11 kilometres from an
infrastructure connection to the Gladstone LNG
market. Uncommitted gas reserves in eastern
Australia are becoming increasingly scarce so we
are pleased to have a material volume of 3P
reserves to work into the 2P category and a very
large contingent resource base to work into
reserves.
In recent times, there has been a significant
amount of media coverage on the subject of
looming domestic gas shortages. The start-up of
Gladstone LNG will place additional pressure on
domestic gas markets, and hopefully additional
pressure on governments, in particular in NSW, to
evaluate the merits of onshore natural gas based
on fact and scientific evidence rather than fiction
and anti-fossil fuel scare-mongering. Comet
Ridge is very supportive of the industry and
government bodies that are bringing science and
fact into the gas conversation in this country –
this includes APPEA, CSIRO, the University of
Queensland, the Energy Resource Information
Centre (ERIC), and others. Comet Ridge has
considerable interests in NSW which I believe
could significantly contribute to the energy
equation, and, notwithstanding the support from
the national government, has been frustrated by
the lack of progress at a state level. In my view,
this can and must change.
Queensland is strong, not surprisingly given the
dramatic increase in economic activity and the
injection of vibrancy that comes into rural areas
with exploration and production of gas. Of
course, Queensland's history with onshore gas
production stretches back some 45 years, so
although parts of the media try to present our
industry as brand new, that is not the case. What
is new is simply the scale at which the industry
now operates.
Comet Ridge has maintained its commitment to
community consultation and environmental
management and has demonstrated how the
CSG and agricultural industries can and do coexist. The extreme view that gas and agriculture
“can't co-exist” is fundamentally wrong – they
have been co-existing for such a long time.
We continue to view our Galilee Basin interests as
having significant potential, with the next step
being a full scale pilot program to convert the
project's large Contingent Resource base to
commercial reserves, and further appraisal of our
deeper sandstone gas potential, which is
something we are currently in discussions with a
number of parties about.
On behalf of the Board I would like to take this
opportunity to thank all of our shareholders for
their continued support and loyalty. I would also
like to take the opportunity to thank my fellow
Board members and Comet Ridge's
management team led by Tor McCaul for their
hard work over the past year. While we
acknowledge that our progress has been slower
than we would have liked, we are expecting a
busy 2015 as we build reserves at Mahalo and
focus on the plan to bring this gas into a rapidly
changing east coast gas market.
Yours faithfully
James McKay
Non-executive Chairman
In the Galilee Basin, Comet Ridge continues to
be very pleased by the way local councils,
development groups and the landowners in our
tenement areas have engaged with the CSG
industry. Support for the CSG industry in
Comet Ridge Limited I Annual Report 2014
5
Managing Director’s Report
For Comet Ridge this past year has had a
significantly different focus from previous years, in
that it has been particularly centred on pilot
production in the Mahalo Block. This has led to
Comet Ridge's maiden independently certified
reserves. It is very pleasing that as a
consequence, the volume of gas (net to Comet
Ridge) attributable to the Mahalo block has risen
by over 30%.
For shareholders, board and management it is an
understatement to say these reserves have been
a long time coming!
Our confidence in the Mahalo block potential saw
us successfully modify the agreement that we
had put in place with Stanwell in late 2011. This
2011 agreement had provided significant funding
to Comet Ridge to progress the Mahalo Block to
this very important pilot stage and first reserves.
The new agreement with Stanwell, which was
concluded in March 2014, sees Comet Ridge
return to 40% equity in the Mahalo Block in
exchange for Stanwell taking an option for either a
gas sales agreement or a cash payment in the
future. This option for Stanwell will be decided at
the time of final investment decision for the
Mahalo block. This transaction is described in
more detail in the Operations report in the
following section.
From an operational perspective, progress on the
Mahalo Pilots has been both slow and frustrating.
Soon after the financial year commenced, a plan
was put in place with the Mahalo Joint Venture to
stimulate two of the Mahalo pilot wells. The
purpose of this stimulation work was to materially
increase pilot production. This work was initially
scheduled to occur in the August to September
2013 period. For a variety of operational reasons
beyond the control of Comet Ridge, this timing
slipped, and in December as the work
commenced the Operator (Santos QNT Pty Ltd)
suffered a lost time incident on the rig. A detailed
investigation into the incident followed, which
resulted in modifications to work procedures. As
a consequence the stimulation work in the field
did not recommence until early January 2014.
The Mahalo stimulation work was concluded in
February, and the wells were put back on-line to
produce gas in March. Comet Ridge has been
pleased with the steady increase we have seen in
Mahalo gas production which has continued right
through to when the independently certified
reserves and resources were announced in
August.
6
In the Galilee Basin the Harrington 1 well, drilled
by Comet Ridge as Operator in mid-2014, was a
bold step out, targeting the coals approximately
24 km northeast of our very successful extended
production test at the Gunn 2 well. Coring
showed that the targeted coals extend to the
north as expected. In addition to the CSG
potential in our Galilee Basin acreage technical
work continues to indicate that gas from
conventional sandstone reservoirs in the eastern
part of the Galilee Basin could hold significant
value for the company. Old wells drilled in our
permit area, confirm the presence of both oil and
gas, with minor gas flows recorded to surface on
three different wells over a distance of 120 km.
Drilling and evaluation technology that we have
available to us today, was not applied on these
wells, leading in our view to suboptimal evaluation
of the true gas potential of the sandstone intervals
that were intersected. We have identified that
some hydrocarbon bearing intervals were not
tested on these wells because there was a belief
at the time that they were more likely gas bearing
and unlikely to contain oil, which was the target of
this exploration. At that time, gas in the
Queensland market was being sold at a very low
price.
It is our intention that as our technical work
progresses it will lead to drilling of one or more of
these conventional sandstone gas targets.
In NSW, the industry has continued to move
sideways and NSW industrial and retail
customers are now one year closer to the point
where gas supply will be restricted in times of
peak demand. There have already been
instances of retail customers seeing significant
increases in gas prices and we expect this to
continue. Conversely Queensland continues to
power ahead with onshore gas driving growth in
many rural communities. Gas production has now
been ongoing in Queensland for nearly five
decades.
Comet Ridge has a large acreage position in
NSW, totalling approximately 18,000 km2 and we
have a strong contingent and prospective gas
resource base. We believe that the Gunnedah
Basin can provide significant assistance towards
NSW gas self-sufficiency and that ultimately
significant gas production will occur from the
Gunnedah Basin.
As we look into the fourth quarter of 2014 and into
2015, the gas market in eastern Australia will
change significantly as LNG cargoes start flowing
out of Queensland and into Asia.
Whilst predicting the exact gas price in this
rapidly changing market will be an imprecise
science, it is clear that the market is short of gas.
It is our assessment that there is little
uncommitted gas reserve in Queensland and
NSW at the moment and this is unlikely to change
in the short to medium term.
Comet Ridge's focus continues to be in
progressing our large gas resource base in
eastern Australia into gas reserves. This has
commenced at Mahalo with the recent initial
reserve certification. Our ongoing focus is on
moving contingent resources into the reserves
category, and on moving 3P reserves into 2P
reserves as quickly and as efficiently as we can.
If we are able to do this then we are confident
there will be significant value upside for the
Company.
Tor McCaul
Managing Director
Comet Ridge Limited I Annual Report 2014
7
Overview of Activities
One appraisal well was drilled in the Galilee Basin
in the northern part of ATP 1015 during the year.
Harrington 1 was a 24km step out to the NE of
Gunn 2 well where a successful Extended
Production Test was carried out in 2013. The well
intersected 19m of net coal and demonstrated
that coals extend consistently over a wide part of
the eastern basin.
8
Mahalo
Gladstone (LNG)
QLD
Brisbane
Gunnedah
Basin
N.S.W.
Sydney
New Zealand
L
A
N
D
Auckland
Greymouth
A
In March 2014 Comet Ridge announced that it
had concluded a revised agreement with Stanwell
Corporation Limited (Stanwell) in relation to the
Mahalo Gas Project (MGP). Stanwell is a
government corporation and the biggest power
producer in Queensland. The 2014 Agreement
supersedes the Sale & Purchase Option
Agreement entered into by the parties in
September 2011.
Galilee Basin
E
Comet Ridge has had a busy year, following on
from the year earlier where the pilot production
wells and facilities were installed in the Mahalo
block in ATP 337P, executed largely by its joint
venture partner APLNG (the Origin, Conoco,
Sinopec company). During the year, dewatering
operations were undertaken at Mahalo and
following workovers at two of the Mahalo wells,
increasing gas rates have been observed.
Indeed, the Mahalo field pilot has shown weekly
improvement in gas rates since March this year.
The production performance at the Mahalo field
pilot has led to the independent certification of
maiden reserves for the Company, in the Mahalo
Block, and this has been touched on by both our
Chairman in his letter and our Managing Director,
in his report to shareholders.
Australia
Z
Comet Ridge Limited has
maintained its focus on the
exploration and appraisal for gas
resources and reserves in
eastern Australia. The company
also has CSG interests in New
Zealand and oil and gas interests
in the United States through
Comet Ridge Resources LLC
(CRR), a US company based in
Denver, Colorado.
Wellington
Christchurch
N
E
W
Activities in Australia
Comet Ridge has interests in four
coal seam gas assets in the
Bowen and Galilee Basins in
Queensland, and three in the
Gunnedah Basin in New
South Wales.
The focus for the past 12 months has been
largely on the Mahalo Gas Project and after two
workovers early in calendar 2014, gas production
has been steadily increasing. This steady
improvement in gas production at Mahalo, along
with other data obtained from core hole step out
drilling, proved sufficient to receive an initial
Independent Reserve Certification from MHA
Petroleum Consultants of Denver, USA as
announced on 28 August 2014. In conjunction
with the initial Independent Reserve Certification,
MHA has also upgraded Contingent Resources
for the Mahalo block, now allocating over
30% more gas into the block than previously
certified.
Area (km2)
Comet Ridge Permits
Basin
State
ATP 743P
Galilee
QLD
100%
4,314
ATP 744P
Galilee
QLD
100%
4.296
ATP 1015P Farm-in Area
Galilee
QLD
20%
873
ATP 337P Mahalo
CSG Interest
Bowen
QLD
40%*
911
PEL 6
Gunnedah
NSW
22.5%
5,162
PEL 427
Gunnedah
NSW
50%
5,764
PEL 428
Gunnedah
NSW
60%
6,018
*40% net equity share subject to joint venture consent to the assignment of Stanwell Corporation’s 5% equity interest in Mahalo to
COI in connection with the buy-back announced to ASX on 19 March 2014. Comet Ridges’ legal interest in Mahalo is currently 35%.
Comet Ridge Limited I Annual Report 2014
9
Comet Ridge had stated in last year’s Annual
Report that the focus was on maturing Contingent
Resources into Certified Reserves so we are very
pleased with this milestone. Comet Ridge
presents its net Gas Reserves and Resources for
each of its tenements (updated for the current
Mahalo block Gas Reserve and Resource
Certification by MHA) in the table below.
Location
Project
Bowen Basin, Mahalo Gas Project
QLD 3
(ATP 337P)
Galilee Basin, Gunn Project Area
(ATP 744P)
QLD 2
PEL 6
Gunnedah
PEL
427
4
Basin, NSW
PEL 428
West Coast,
PMP 50100
NZ 2
Total
COI
Interest
Gas Reserve
(PJ)
Gas Contingent Resource
(PJ)
Gas
Prospective
Resource (PJ)
1P
2P
3P
1C
2C
3C
40%
-
22
124
208
328
468
-
100%
-
-
-
-
67
1,870
597
-
-
-
-
-
474
2,101
-
-
-
45
89
169
-
-
22
124
253
484
2,981
2,698
22.5%
50%
60%
100%
1
1. ASX Listing Rule 5.28.2 Statement: The estimated quantities of petroleum that may potentially be recovered by the application of a future
development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of
development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable
hydrocarbons.
2. The contingent resource estimates for ATP 774P and PMP 50100 provided in this statement are based on and fairly represent, information and
supporting documentation determined by Mr John Hattner of Netherland, Sewell and Associates Inc, Dallas, Texas, USA, in accordance with
Petroleum Resource Management System guidelines. Mr Hattner is a full-time employee of NSAI, and is considered to be a qualified person as
defined under the ASX Listing Rule 5.42 and has given his consent to the use of the resource figures in the form and context in which they
appear in this presentation.
The contingent gas resource estimates for ATP 744 provided in this statement were originally released to the Market in the Company’s
announcement of 25 November 2010 and were estimated using the deterministic method with the estimate of contingent resources for ATP 744
not having been adjusted for commercial risk. The contingent gas resource estimates for PMP 50100 provided in this statement were originally
released to the Market in the Company’s announcement of 26 September 2011 and were estimated using a combination of the deterministic
and probabilistic methods with the estimate of contingent resources for PMP 50100 not having been adjusted for commercial risk.
3. The estimate of Reserves and Contingent Resources for Mahalo, as part of ATP 337P provided in this announcement, were originally released
to the Market in the Company’s announcement of 28 August 2014 and are based on, and fairly represents, information and supporting
documentation determined by Mr Timothy L. Hower of MHA Petroleum Consultants LLC Inc in accordance with Petroleum Resource
Management System guidelines. Mr Hower is a full-time employee of MHA, and is a qualified person as defined under the ASX Listing Rule
5.42. Mr Hower is a Licensed Professional Engineer in the States of Colorado and Wyoming as well as being a member of The Society of
Petroleum Engineers. Mr Hower has given his consent to the use of the Reserves and Contingent Resources figures in the form and context in
which they appear in this presentation.
The gas reserves and contingent gas resource estimates for ATP 337P provided in this statement were originally released to the Market in the
Company’s announcement of 28 August 2014 and were estimated using the deterministic method with the estimate of contingent resources for
ATP 337P not having been adjusted for commercial risk.
Comet Ridge Limited confirms that it is not aware of any new information or data that materially affects the information included in the three
announcements referred and that all of the material assumptions and technical parameters underpinning the estimates in the announcements
continue to apply and have not materially changed.
4. The contingent resource estimates for PEL 6, PEL 427 and PEL 428 referred to in this presentation were determined by Mr Timothy L. Hower of
MHA Petroleum Consultants LLC in accordance with Petroleum Resource Management System guidelines. Mr Hower is a full-time employee of
MHA, and is a qualified person as defined under the ASX Listing Rule 5.42. Mr Hower consented to the publication of the resource figures
which appeared in the announcement of 7 March 2011 made by Eastern Star Gas Limited (ASX:ESG) and any reference and reliance on the
resource figures for PEL 6, PEL 427 & PEL 428 in this presentation is only a restatement of the information contained in the ESG announcement.
The contingent resource estimates for PEL 6, PEL 427 and PEL 428 were estimated using the deterministic method with the estimate of
contingent resources for PEL 6, PEL 427 and PEL 428 not having been adjusted for commercial risk.
Comet Ridge Limited confirms that it is not aware of any new information or data that materially affects the information included in the ESG
announcement of 7 March 2011 and that all of the material assumptions and technical parameters underpinning the estimates in the
announcements continue to apply and have not materially changed.
10
ATP 337P Mahalo Project
Comet Ridge Achieves Initial
Independent Reserve
Certification at Mahalo Gas
Project
Comet Ridge’s ATP 337P Mahalo
asset is located in the Denison
Trough area of Queensland’s
Bowen Basin near Rolleston, and
covers an area of 911 km2.
Comet Ridge has a 35% interest
in ATP 337P Mahalo. The
conclusion of the Stanwell
transaction which is expected in
October, will see this equity
increase to 40%.
On 28 August 2014 Comet Ridge announced an
Initial Independently certified Reserve Statement
from the Mahalo block and material upgrade to
Contingent Resources.
The assessment of Proven, Probable and
Possible (3P) Reserves relates only to an area
across the northern part of the block representing
slightly less than 25% of the total tenement area.
As such, significant upside exists to add
incremental reserves as the tenement area is
further appraised and developed.
Following the commissioning of both the Mahalo
Field and Mira Field pilot schemes, the Joint
Venture focus was on dewatering the coals to
enable gas to flow. It was established that the
Mahalo Pilot required some remedial work to
improve well productivity and this was carried out
in early 2014 with Mahalo 3 and Mahalo 5 both
stimulated via under-reaming and jet washing. In
line with current practice in other parts of
Queensland, the wells were brought on at a low
pump rate with the plan to steadily increase
pumping speeds over time which is designed to
protect the reservoir from shock or damage. Gas
production has been rising in the Mahalo Pilot
since early March when the wells were brought
back online following the stimulation. Steady
increases in gas production have been observed
each week.
The assessment of Proven and Probable (2P)
Reserves for the Mahalo block applies only to a
small area around the Mahalo Pilot Scheme,
which represents slightly less than 5% of the
tenement area. There is near term upside to add
incremental 2P Reserves based on progress at
the Mira Field Pilot, at which three wells
recommenced dewatering in mid-May 2014.
This reserve certification demonstrates the
commerciality of the Mahalo block. The project is
located just 11 kilometres from an infrastructure
connection to the Gladstone LNG market with
significant gas supply requirements and rising
prices. While we are pleased to have achieved
this significant milestone, we view this as an
important first step. Our plan is to continue to
build reserves and upgrade the category of these
reserves as further production data from the
Mahalo block is collected and additional
appraisal is undertaken. Uncommitted gas
reserves in eastern Australia are becoming
increasingly scarce so we are pleased to have a
material volume of 3P reserves to work into the
2P category and a very large contingent resource
base to work towards reserves.
At the Mira Pilot Scheme, approximately 13km
southeast of the Mahalo Pilot, a series of
pressure build up surveys were completed in the
middle of May with three of the wells
recommencing dewatering. One well (Mira 2) is
being used as a pressure observation well, whilst
the Mira 3, 4 and 5 wells are being produced to
dewater the reservoir and allow gas to flow. As
with Mahalo, the Mira Pilot wells have been
brought online slowly with pump speeds being
closely controlled to limit excessive pressure
drawdown.
COI Net Equity Share
Category
Gas Reserve (PJ)
2P
3P
1P
Gas Contingent Reserve (PJ)
2C
3C
1C
28 August 2014 certification
-
22
124
208
32.8
468
25 October 2010 certification
-
-
-
83
221
442
Increase
-
22
124
125
107
26
Comet Ridge Limited I Annual Report 2014
11
Revised Agreement with
Stanwell
On 19 March 2014 Comet Ridge announced that
it had executed a revised agreement (2014
Agreement) with Stanwell Corporation Limited in
relation to the Mahalo block. The 2014
Agreement supersedes the Sale & Purchase
Option Agreement entered into by the parties in
September 2011. The Key points of the 2014
Agreement are set out below:
!
2014 Agreement executed with Stanwell
replaces original Sale & Purchase Option
Agreement signed in September 2011.
!
Provides for the transfer by Stanwell to Comet
Ridge of its current 5% interest in the Mahalo
block and the relinquishment of its option to
acquire up to a further 35% interest in the
Mahalo block in exchange for (at Stanwell’s
election exercisable at Final Investment
Decision (FID)) either:
! Stanwell and Comet Ridge entering into
a 20 PJ to 40 PJ gas sales agreement; or
! Stanwell receiving a cash payment of
$20 million (escalated at CPI).
!
Key Benefits of
2014 Agreement
to Comet Ridge
Restores Comet Ridge’s equity interest in
the MGP to 40% (subject to joint venture
consent).
! Restores Comet Ridge’s interest in the MGP to
40% with consideration in the form of a GSA or
cash payment deferred until FID for the MGP;
! Comet Ridge retains optionality to maximise
value achieved for its equity gas (in addition to
the 20 PJ to 40 PJ available to Stanwell under
the GSA Election);
! Provides Comet Ridge with exposure to
increased gas prices from gas production or
reserves from the MGP in a tightening East
Australian gas market; and
! Delivers value to Comet Ridge with no cash
consideration prior to FID.
12
Galilee Basin Permits
Comet Ridge has a 100 percent
interest in two adjacent permits
on the eastern flank of
Queensland’s Galilee Basin, ATP
743P and ATP 744P, with a
combined area of 8,610 km2.
The area remains only lightly
explored to date. In addition, the
company has a 20% equity in the
ATP 1015 Farm-in area located
adjacent to the Company’s 100%
held Gunn Project Area in ATP
744P. The Farm-in Area consists
of two separate blocks totalling
approximately 870 km2.
In September 2013, ATP 743P reached the end of
the first four years of the 12 year permit term.
Consistent with normal exploration practice, the
least prospective one-third of the block area was
relinquished back to the Queensland
Government. This leaves a remaining permit area
2
of 4,314 km for the next four year term of the
licence. In late October 2013, ATP 744P similarly
reached the end of its first four year term. Again,
one third of the least prospective area was
relinquished back to the Queensland
Government, leaving a remaining permit area of
4,296 km2.
Early in July 2014, Comet Ridge was granted an
extension of two years to the second term on ATP
744P, consistent with new legislation introduced
recently by the Queensland government. This
provides for a second term of six years to carry
out the Later Work Program which is welcome. A
two year extension to the first four year term was
also granted for ATP 1015, taking that permit’s
first term through to November 2016.
Underground Water Impact
Report approved by
Department of Environment
and Heritage Protection.
The highly successful Gunn 2 Extended
Production Test (EPT), which flowed at 400 bwpd
(barrels of water per day) led to the submission of
a formal Underground Water Impact Report
(UWIR) to the Department of Environment and
Heritage Protection, as required by legislation
under the Water Act 2000 (Qld).
This report was concluded during the December
quarter and released for public review and
comment in early January 2014. The report
concluded that the Betts Creek Coal reservoir is
isolated from shallow aquifers that are used for
local stock watering, and due to the impermeable
nature of the 300 m thick Rewan Formation
between the shallow aquifers and the Betts Creek
Coals, no impact will be seen in the shallow
aquifer units. The Water Act requires that if there
were any impacts, the Company would need to
“make good” any impact on local farmers
through drilling of new water bores, provision of
CSG produced water, or other means.
LEGEND
ATP 743P
Comet Ridge Tenement
ATP 1015P
ATP 1015P - COI 20% interest
Gunn Project Area
Comet Ridge well
Gas Pipeline
Gas Pipeline (proposed)
Mackay
ATP 744P
GA
LI
LE
Moranbah
E
ATP 1015P
Clermont
Gunn Project Area
100km
Rockhampton
Comet Ridge Limited I Annual Report 2014
13
All landowners in the project area were formally
notified by letter, and notices placed in a local
newspaper, as required by law. In addition, a
series of one-on-one meetings were conducted
between the Company and landowners to explain
the formal process required by law, and to run
through the conclusions of the study that was
conducted and the content of the UWIR.
Harrington 1
Comet Ridge commenced the drilling of the
Harrington 1 appraisal well in May 2014 in the
northern part of the ATP 1015 farm-in area. The
Harrington 1 well reached a total depth (TD) of
1042 m and was cored through the entire Betts
Creek section, intersecting approximately 19 m of
net coal across the targeted coal seams. Gas
was observed bubbling from the core as it was
brought to surface and detailed laboratory
analysis of the core is continuing to determine
the key coal parameters.
Net coal thicknesses from wells drilled by Comet
Ridge in this area of the Galilee Basin have
ranged between 16 m and 24 m, so the
Harrington 1 well continues to demonstrate that
coals extend consistently over a wide part of the
eastern Galilee Basin.
Comet Ridge holds 20% equity in the permit, with
the remaining equity being held by QER CSG Pty
Ltd. Comet Ridge has now drilled three wells in
ATP 1015P.
Equity Partner for a Gunn
Project Area Pilot or Pre-Sale
of Gas
During the year the company turned its focus
towards evaluating options for funding the
ongoing development of the Gunn Project Area.
With the market for gas in eastern Australia
tightening significantly, several parties have
expressed an interest in participating in Comet
Ridge’s Gunn Project. This is largely driven by the
project’s significant 3C Contingent Resource
base and the positive results from the Gunn 2
Extended Production Test. A full scale pilot
programme is required to move the project’s
large Contingent Resource base to commercial
reserves.
14
Several commercial options exist for
development of gas from the eastern Galilee
Basin.
The company is pleased that two of the Galilee
Basin proposed large scale coal mines continue
to receive regulatory sign-offs as they move
through the project approval process. These coal
mines will bring infrastructure and a large power
market into the eastern part of the basin, very
close to Comet Ridge’s contingent gas resource
base.
Conventional Petroleum
Potential
A significant amount of technical work was
carried out during the year with a particular focus
on the shale and conventional petroleum
potential in the Company’s Galilee Basin blocks.
Significant gas potential outside of coal seams
exists within the deeper section, yet to be drilled
and tested by Comet Ridge. Three historic
petroleum wells within ATP 743P and ATP 744P
recovered oil and/or gas from Lake Galilee
Sandstone at the base of the Galilee Basin
section.
Carmichael 1, drilled in 1995 flowed gas to
surface on three tests from deeper sandstone
intervals (2600m) using sub-optimal drilling
practices and an additional thick section of
sandstone with strong hydrocarbon indications
was not tested. This well is close to the Gunn
Project Area and demonstrates further
prospectivity in the eastern part of the Galilee
Basin. Comet Ridge is currently assessing
potential farm-out opportunities to drill and test
the Carmichael structure with the latest drilling
technology and practices.
Significant gas potential outside of
coal seams exists within the deeper
section, yet to be drilled and tested
by Comet Ridge.
Comet Ridge Limited I Annual Report 2014
15
New South Wales Projects
Comet Ridge’s three contiguous
licences (PEL 427, PEL 428 and
PEL 6) are located in the northern
Gunnedah Basin, immediately
north and west of Santos’
Narrabri CSG Project in the
Bohena Trough, and cover a total
area of approximately 18,000 km2.
Comet Ridge currently holds between 22.5% and
60% CSG interest across these licences and
between 97.5% and 100% conventional oil and
gas equity and is the conventional Operator.
Santos operates the CSG interest. The permits
are strategically located as this area has the
potential to mature into a major CSG producing
province, with gas to flow south to Newcastle and
Sydney to meet an important part of NSW’s gas
needs.
PEL 427
During the year, Comet Ridge continued to work
with Joint Venture partner and CSG Operator
Santos, to renew the Joint Venture’s Gunnedah
Basin permits and plan the future work
programme to evaluate a number of Permianaged troughs that have been identified through
the large acreage position in the northern part of
the Gunnedah Basin. Several of these troughs
may contain large volumes of recoverable gas, in
similar fashion to the Bohena Trough just to the
south of PEL 427. To date, PEL 427 has been
extended through to May 2016 and extensions
continue to be processed for PEL 428 and PEL 6.
Extensions are expected to be finalised in the
near future.
It has been widely documented that a gas supply
shortage is looming in NSW. Retail and industrial
customers will suffer because of minority
ideological interests that are opposed to fossil
fuels, who continue to spread fear and mistruths
in the NSW media. The Gunnedah Basin has a
large volume of existing proven and probable gas
reserves in the Santos and Energy Australia’s
Narrabri Gas Project, and also large potential for
future gas reserves further north and west in
Comet Ridge held acreage.
Comet Ridge is currently carrying
out desktop studies of existing
data to better understand the
conventional petroleum
prospectivity of the three permits
in which Comet Ridge controls
nearly 100% of the equity. While
the study is not complete, work
carried out to date has
generated some potential leads
which will require more work in
the coming year.
Goondiwindi
QLD
NSW
Moree
PEL 6
Grafton
Narrabri
Gu
nn
PEL 428
ed
ah
Gunnedah
Tamworth
Ba
sin
Dubbo
Orange
Bathurst
Newcastle
SYDNEY
N
Gas pipeline
Wollongong
Wagga Wagga
16
200km
Proposed
Gas pipeline
Activities in
New Zealand
Activities in the
USA
As at 30 June 2014, Comet Ridge
held a 100% interest in two
petroleum permits in New
Zealand, these being PMP 50100
and PEP 50279 on the west coast
of the South Island.
Denver based Comet Ridge Resources LLC
(CRR) issued a cash call to Comet Ridge Limited
early in the year. Given the strong focus that
Comet Ridge Limited has on booking gas
reserves for the eastern Australian market, the
company elected not to pay these US cash calls
and consequently its interest in CRR has been
reduced from 12.1% to 10.04%.
As detailed in last year’s Annual Report, Comet
Ridge had made application to NZ Petroleum and
Minerals (NZP&M) to vary the work program
commitments for PEP 50279 which was
successfully concluded with the permit being
renewed for a further three years. Relinquishment
documents were submitted to NZPM in early
August.
PMP 50100, also on the West Coast of the South
Island, has been renewed for a term of 20 years
after agreement on the work program with New
Zealand Petroleum and Minerals.
Comet Ridge Montana LLC (subsidiary of Comet
Ridge Resources LLC) drilled four exploration
wells in its oil play in the Northern Rockies and is
now seeking a funding partner.
In SE Colorado, CRR secured a partner for the reentry and testing of up to three existing wellbores
on part of its acreage position. Targets include
the Mississippian and Pennsylvanian sections.
Success in any of these wellbores is expected to
lead to further drilling activity. CRR has greatly
reduced its overhead costs in line with its
strategy of bringing in partners for both plays.
During the second half of the year, a significant
amount of geological work was undertaken to
better understand the petroleum potential in the
West Coast area. Oil shows have been recorded
in many wells, including those in PMP 50100. This
work has generated some possible drilling
locations and efforts will be made to attract
potential farm-in partners for the remaining area
held by Comet Ridge.
E
Z
Greymouth
A
L
A
N
D
Auckland
Wellington
Christchurch
N
E
W
Comet Ridge Limited I Annual Report 2014
17
Health, Safety and
Environment
Comet Ridge continues to review
and improve its HSE
Management System, and
remains committed to ensuring
we continue to operate with zero
impact on people or the
environment.
No recordable health, safety or environmental
(HSE) incidents were reported in the period 1 July
2013 through to 30 June 2014. Total Recordable
Injury Frequency Rate (TRIFR) and Lost Time
Injury Frequency Rate (LTIFR) remain at zero. No
recordable environmental incidents occurred
during this period. This continues the positive
trend that has been established in previous
years.
A full review of the existing Safety Management
Plan and company HSE Policies was undertaken
in 2013 and into the early stages of 2014. Safe
Operating Procedures were further developed to
be in line with the Queensland Petroleum & Gas
(Production & Safety) Legislation and good
oilfield practice. These procedures were specific
to Comet Ridge’s operating parameters and all
processes have now been aligned according to
AS 4801 Safety Management System specifically
suited to Coal Seam Gas production.
This year focussed on critical elements that have
been identified within the oil and gas industry, as
carrying a higher risk. Activities and processes
such as working at heights and in confined
spaces, journey management, working with
chemicals and incident management, were some
of those addressed. Contractor management
was another process high on the list of areas to
be reviewed, and as such, an even greater
emphasis was placed on the selection, qualifying
and operational review and management of
contractor companies. This was implemented for
the drilling program, and identified valuable
opportunities for the drilling and other contractors
to improve their safety performance.
18
As part of the review of the HSE and operational
training needs of the company, a four day faceto-face training program was conducted for our
Landowner / Operators, in which they
successfully undertook a Certificate III in Process
Plant Operations. The training was well received
and provided valuable skills and knowledge to
assist with field operations.
Comet Ridge underwent an audit by the
Petroleum and Gas Inspectorate, during a visit to
the Gunn Project area. The result was very
positive, with only minor suggestions forming the
action list from the audit. This continues the good
relationship Comet Ridge has with government
agencies.
During the year, the Queensland Natural Gas
Exploration & Production Industry Safety Forum
(ISF) was started. The ISF is a not-for-profit,
member-led organisation of Operating
Companies and Contract Partner Companies
committed to achieving the safety vision
‘Together, develop a safer Natural Gas
Exploration & Production Industry in
Queensland’. Comet Ridge is pleased to be a
member of the ISF and a part of the Safety
Leaders Group that is made up of senior leaders
from Operating Companies and Contract Partner
Companies who will oversee and steer
implementation of the industry’s strategic safety
plan.
Comet Ridge Limited I Annual Report 2014
19
Community
Comet Ridge has a deep commitment, at all
levels of the Company, to working with
community stakeholders in the regions where we
operate.
Community engagement and respect for the
communities within which we operate is a core
value for Comet Ridge and is backstopped by
Legislation and Regulation. The Queensland
‘Land Access Code’, which has been developed
in compliance with the relevant legislation and
enshrined in Regulation, is the main formal
reference when it comes to landowner and
community relations and interaction between
landowners and the Oil and Gas Industry. Comet
Ridge has always acted consistent with the
principals and guidelines set out in this Code of
Practice.
The company believes that co-existence and
mutual respect are the cornerstones of
community relations. The company has built on
the strong relationships developed over previous
years and continues to enjoy excellent
relationships with landowners, Local
Government, the wider community and all
relevant stakeholders.
In the past year, the company has had regular
contact with key landowners and successfully
executed several new access agreements.
In terms of Local Government engagement, the
company continues to maintain close contact
with relevant officials and elected
representatives, particularly within Barcaldine
Regional Council. Contact with Local
Government, whilst not a regulatory imperative,
affords an excellent opportunity to communicate
with local communities at a broad level,
permitting the company to articulate forward
plans and hear local concerns and issues.
Comet Ridge has maintained its membership of
the Galilee Basin Operators Forum (GBOF),
which has now developed into a focal point for
contact, generally, with the Galilee-based CSG
explorer group, particularly in respect of
interaction with Local Government and the
Queensland Gasfields Commission. Independent
of GBOF, the company has been represented at
the Queensland Government QResources
initiative, designed to promulgate a 30-year plan
for the development of Queensland’s abundant
resource potential.
20
Through a variety of meetings in the Galilee
Basin, the company has maintained contact with
RAPAD (the Central West Remote Area Planning
and Development Board), MITEZ (Mt Isa to
Townsville Economic Zone) and AgForce.
Also during the year, the company was
represented at a Water Forum hosted by
Barcaldine Regional Council in Barcaldine and at
a Queensland Gasfields Commission workshop
held in Moranbah.
Cultural Heritage
Comet Ridge is legislatively required to protect
and secure indigenous cultural heritage when
conducting in-field activities and takes its
responsibilities in these matters with the utmost
seriousness. Protecting, preserving and
respecting indigenous culture, Aboriginal
peoples’ deep connection to the land and
ensuring artefacts and items of cultural
significance are secured, are very important to
the company.
Throughout the year the company engaged with
an Aboriginal Claimant Group and specialist
archaeological consultants to ensure that areas
to be the subject of in-field infrastructure
development were first given the ‘all clear’. This
high-level commitment has been the company’s
standard practice and will continue to be so into
the future.
Community engagement and respect
for the communities within which we
operate is a core value for Comet Ridge
and is backstopped by Legislation
and Regulation.
Comet Ridge Limited I Annual Report 2014
21
Comet Ridge Limited – Annual Report 30 June 2014
Corporate Governance Statement
Introduction
The Board and management of Comet Ridge Limited (Comet Ridge or the Company) are committed to the creation of shareholder value and meeting
the expectations of stakeholders for sound corporate governance.
This Corporate Governance Statement, dated 30 June 2014 has been approved by the Board at its meeting held 19 September 2014 and outlines the
key principles and practices of the Company which, taken as a whole, represents the system of governance.
During 2013/14, the Company’s corporate governance practices and policies have accorded with those outlined in the ASX Corporate Governance
Council’s Principles and Recommendations (2nd Edition) (ASX Guidelines), (except as outlined below). Even where there is a deviation from the
recommendations the Company continues to review and update its policies and practices in order that these keep abreast of the growth of the
Company, the broadening of its activities, current legislation and good practice.
While the ASX Corporate Governance Council released in March 2014 the 3rd Edition of its ASX Guidelines Comet Ridge is not required to report
against the third edition until the Financial Year ending 30 June 2015. Notwithstanding a review of the Company’s policies and practices has been
commenced so as to ensure that the Company will be in a position to report against the most up to date version of the ASX Guidelines when required to
do so.
The ASX Corporate Governance Council’s (The Council) recommendations are not prescriptive but rather they are guidelines. If certain
recommendations are not appropriate for the Company given its circumstances, it may elect not to adopt that particular practice in limited
circumstances.
Where the Company’s Corporate Governance practices do not correlate with the practices recommended by the Council, the Company does not
consider that the practices are appropriate due to either the size of the Board or the management team or due to the current activities and operations
being carried on by and within the Company. Further details of all the recommendations can be found on the ASX Corporate Governance Council’s
website at:
http://www.asx.com.au/governance/corporate-governance.htm
Additional information about the Company's corporate governance policies and practices including copies of the policies and charters listed below is set
out on the Company's website at www.cometridge.com.au where copies of the Company’s Charters and Policies can be accessed.
Principle 1 – Lay solid foundations for management and oversight
1.1
Lay Solid Foundations for Management and Oversight
The Board oversees and directs the activities of Comet Ridge on behalf of shareholders, whom they are ultimately accountable to being subject to
mandatory re-election on rotation. The Board is responsible for setting corporate direction, defining policies, and monitoring the business of the
Company, to ensure it is conducted appropriately and in the best interests of shareholders.
To ensure that the Board is well equipped to discharge its responsibilities, it has adopted a formal charter and code of conduct. The charter defines the
functions reserved to the Board and those delegated to management to facilitate accountability to Comet Ridge and its shareholders.
The Board is also responsible for the succession planning of Key Management Personnel including the Managing Director.
The Board has established three standing committees – the Audit Committee, Risk Committee and the Remuneration Committee. The composition,
structure, purpose and responsibilities of those Committees are described below.
The Board has delegated responsibility for the management of the Company’s business and affairs to the Managing Director.
The Board may also delegate specific functions to ad-hoc committees from time to time on an ‘as needs’ basis. At the time of joining Comet Ridge,
Directors and Senior Executives are provided with letters of appointment, together with key Company documents and information setting out their term
of office, duties, rights and responsibilities, and entitlements on termination.
(ASX Recommendation 1.1)
22
Comet Ridge Limited – Annual Report 30 June 2014
Corporate Governance Statement (continued)
1.1
Lay Solid Foundations for Management and Oversight (continued)
The Board delegates specific responsibilities to various Board Sub-Committees. The Board has established the following standing committees:



An Audit Committee, which is responsible for overseeing the external and internal auditing functions of the Company’s activities;
A Risk Committee, which comprises representatives of the Board and staff to advise and assist the Board in assessing risk factors associated
with the operation of the Company; and
A Remuneration Committee, which is responsible for making recommendations to the Board on remuneration packages for executives.
The Company Secretary whose role includes advising the Board and its Sub-Committees on governance matters, monitoring the adherence of the
Company’s policies and procedures and ensuring that accurate minutes of Board and Committee meetings are taken, directly reports to the Board on
these and other related matters. The Company Secretary reports directly to the Chair of the Board but Directors are also free to communicate directly
with the Company Secretary who is also at liberty to speak to any member of the Board direct in relation to a matter.
1.2
Process for Evaluating the Performance of Key Executives
Improvement in Board processes and effectiveness is a continuing objective and the purpose of the annual Board evaluation is to identify ways to
improve performance. The Chairman is responsible for conducting an annual review of the Board’s performance.
An evaluation of the performance of the Board was completed during the year.
The Board assesses annually, or as necessary, the performance of the Managing Director benchmarking his performance against the role description in
the employment contract and general industry standards expected of a Managing Director carrying on that role.
The Managing Director assesses, annually or as necessary, the performance of all key executives. Both qualitative and quantitative measures will be
used consistent with performance targets set annually by the Managing Director in consultation with those executives. The Managing Director reports
to the Remuneration Committee on their performance and who in turn will then consider any changes to remuneration and the establishment of new
performance targets.
(ASX Recommendation 1.2)
Principle 2 – Structure the Board to Add Value
2.1
Composition and Operation of the Board
The Board comprises five Non-executive Directors, including the Chairman, and one Executive Director being the Managing Director. The names of the
Directors of the Company in office at the date of this report or through the year and their qualifications are set out in the section of the Annual Report
headed “Directors’ Report”.
Under the Constitution, the maximum number of Directors is nine (9). Further, the Constitution mandates that there be a minimum of three Directors, at
least two of whom must reside in Australia. One third of the Directors retire annually on rotation in accordance with the Constitution, who are free to
seek re-election by shareholders.
The composition of the Board is determined so as to provide the Company with a broad base of industry, business, technical, administrative, financial
and corporate skills and experience considered necessary to achieve the strategic objectives of the Company.
Independence
Recommendation 2.1 provides that a majority of the Board should be independent.
When evaluating candidates, the Board has regard to the potential for conflicts of interest, whether actual or perceived, and the extent or materiality of
these in the ongoing assessment of Director Independence. In this respect the Board has regard to the definition of "independence" in the ASX
Guidelines.
Comet Ridge Limited I Annual Report 2014
23
Comet Ridge Limited – Annual Report 30 June 2014
Corporate Governance Statement (continued)
2.1
Composition and Operation of the Board (continued)
Independence (continued)
An independent Director, in the view of the Board, is a Non-executive Director who is not a member of management and who is free of any business or
other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their
judgement. In determining the independent status of a Director, the Board, in accordance with the ASX Guidelines, considers whether the Director:
a)
b)
c)
d)
e)
is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company;
within the last three years has been employed or has previously been employed in an executive capacity by the Company or another Group
member;
within the last three years has been a principal of a material professional adviser or a material consultant to the Company or another Group
member, or an employee materially associated with the service provided;
is a material supplier or customer of the Company or other Group member, or an officer of or otherwise associated directly or indirectly with a
material supplier or customer; and
has a material contractual relationship with the Company or another Group member other than as a Director of the Company.
The Board considers that, fundamentally, the independence of Directors is based on their capacity to put the best interests of the Company and its
shareholders ahead of all other interests, so that Directors are capable of exercising objective independent judgment.
The Board is of the view that the existence of one or more of the relationships in the definition will necessarily result in the relevant Director not being
classified as independent, particularly given the criteria outlined above, and that the Company will seek to implement additional safeguards to ensure
independence. An overall review of these considerations is conducted by the Board to determine whether individual Directors are independent.
Additional policies and practices, such as Directors not being present during discussions or decision making on matters in which they have or could be
seen to potentially have a material conflict of interest, as well as Directors being excluded from taking part in the appointment of third party service
providers where the Director has an interest, provide further separation and safeguards to independence.
The Board has considered materiality thresholds in relation to independence, but has determined not to establish fixed thresholds, believing that, if
taken in isolation and out of context, these can be misleading and inconclusive.
The criteria used to assess independence are reviewed from time to time. The results of this review are set out in the following table:Board Composition
Director
Board membership
Date of appointment
James McKay
Non-executive Chairman
16-Apr-09
Tor McCaul
Managing Director
16-Apr-09
Gillian Swaby
Independent Non-executive Director
09-Jan-04
Jeff Schneider
Independent Non-executive Director
28-Aug-03
Chris Pieters
Non-executive Director
16-Apr-09
Anthony Gilby
Non-executive Director
06-Oct-09
The Board considers that its current structure is appropriate to efficiently and independently carry out its functions, given the size of the Company and
level of its current activities.
Identification of Independent Directors
Mr Pieters was appointed by the Company in June 2013 as Commercial Director for an initial term of four months in respect to a specific project. The
project went longer than was expected but Mr Pieters’ executive role in respect to the same was completed in February 2014. Since that time he has
not provided any further services to the Company in such a capacity.
24
Comet Ridge Limited – Annual Report 30 June 2014
Corporate Governance Statement (continued)
2.1
Composition and Operation of the Board (continued)
Identification of Independent Directors (continued)
As announced at the time of his appointment (June 2013), a tightening of the gas market in eastern Australia provided the Company with a range of
commercial opportunities, and the Company believed that the appointment of Mr Pieters to assist with exploring these opportunities especially given his
knowledge of the Company, represented the best value for money and ensured that the role was filled by a candidate who did not need to get up to
speed on the project and assets of the Company.
Mr Pieters is not a substantial shareholder of the Company and meets all of the other Independence Criteria. Having regard to issues of materiality, the
Board, in the absence of Mr Pieters, considers that Mr Pieters’ brief and limited consultancy does not impede his ability to act in the best interests of the
Company. The Board therefore considers Mr Pieters to be independent and remains a Non-executive director.
The Board is made up of six Directors, half of which are considered independent.
(ASX Recommendation 2.1)
The Non-executive Directors understand the benefits of conferring regularly without management present, and do so. The Board is also committed to
ensuring that all Directors, whether independent or not, bring an independent judgement to bear on Board decisions. To facilitate this, the Board has
agreed on a procedure for Directors to have access, in appropriate circumstances, to independent professional advice at the Company’s expense. If a
Director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his/her office as a Director then,
provided the Director first obtains approval for incurring such expense from the Chairman, the Company will pay the reasonable expenses associated
with obtaining such advice. No Director availed him or herself of this entitlement during the year.
2.2
The Chairperson should be an Independent Director
The Chairperson (Mr McKay), if applying the Independence Criteria is not considered, to be independent, due to his family group of companies being a
substantial shareholder of the Company. However the Board considers that Mr McKay is the most appropriate person for the role due to his commercial
experience in such a capacity and that the interests of the Company and its shareholders are being more than adequately met by the current appointee.
(ASX Recommendation 2.2)
2.3
The Roles of Chairperson and Chief Executive Officer Should Not be Shared by the Same Person
The roles of the Chairperson and the Managing Director were not shared at any time during the year under review. The role of the Chairman was
fulfilled by Mr McKay, while the role of the Managing Director has been filled by Mr McCaul for the whole of the period. The roles of the Chairperson
and the Managing Director are set out in the Board Charter.
(ASX Recommendation 2.3)
2.4
Board Should Establish a Nomination Committee
The full Board carries out the functions of a Nomination Committee in respect of the selection and appointment process for Directors. While there is no
formal Nomination Committee as required by ASX Recommendation 2.4 the full Board deals with those matters and issues arising that would usually fall
to a Nomination Committee. The Board has in place processes which raise the issues that would otherwise be considered by a Nomination Committee.
Given the size of the Company and the number of executive positions currently held the Board considers that no efficiencies or other benefits would be
gained by establishing a separate Nomination Committee at this time due to the size of the Company and its current activities. The Company has
adopted a Nomination Committee charter that sets out the role and responsibilities of the Board acting in its capacity as the Nomination Committee.
(ASX Recommendation 2.4)
Comet Ridge Limited I Annual Report 2014
25
Comet Ridge Limited – Annual Report 30 June 2014
Corporate Governance Statement (continued)
2.5
Disclose Process for Evaluating the Performance of the Board, its Committees and Individual Directors
The Company has, as disclosed, a formal process for the evaluation of the effectiveness, processes and structure of the Board. The Board is committed
to regular assessment of its effectiveness and believes that the contribution of individual Directors is essential to improve the governance and guidance
of the Company.
The review of the Board Directors focused on matters such as the structure, the effectiveness and contributions made by each Director and the
progress towards the strategic objectives of the Company. The Chairman is responsible for conducting the annual review of the Board’s performance,
which involves open and constructive dialogue between the respective parties.
(ASX Recommendation 2.5)
Principle 3: Promote Ethical and Responsible Decision-Making
3.1
Establish a Code of Conduct and Disclose a Summary
The Board is cognisant of the expectation that Companies must, in addition to their legal obligations, make ethical and responsible decisions having
regard to the reasonable expectations of their shareholders and other parties affected by these decisions. To assist in that process the
Company has adopted a Corporate Code of Conduct which sets out ethical standards and a Code of Conduct to which all Directors, Executives and
employees are required to adhere to whilst carrying out their duties.
(ASX Recommendation 3.1)
The Code of Conduct for Executives forms part of this Corporate Code of Conduct. A copy of the Code of Conduct is available on the Comet Ridge
website in the corporate governance section.
The Company is committed to increasing shareholder value and aims to ensure its shareholders are fully informed as to the true financial position and
performance of the Group through timely and accurate disclosure of information and risk management practices and exemplary compliance with the
continuous disclosure regime.
(ASX Recommendation 3.1)
The Company has adopted in compliance with ASX Listing Rule 12.12 (previously ASX Recommendation 3.2) a Policy for Trading in Company
Securities which is binding on all Directors, employees and consultants of the Company. The purpose of this policy is to provide a brief summary of the
law on insider trading and other relevant laws, set out the restrictions on dealing in securities by people who work for or are associated with Company
and assist in maintaining market confidence in the integrity of dealings in Comet Ridge securities. The Policy has been posted on the Company’s
website to ensure that there is public confidence and understanding of the Company’s policies governing trading by “potential insiders”.
The Policy contains blackout periods and requires that all persons covered by the Policy may not deal in the securities in the Company without first
seeking and obtaining a written acknowledgement from the Chairman or Managing Director of the Company (or in their absence the Company
Secretary) prior to any trade, at which time they must confirm that they are not in possession of any unpublished price-sensitive information. The
Company Secretary maintains a register of notifications and acknowledgements given in relation to trading in the Company’s securities.
3.2
Establish a Policy Concerning Diversity and Disclose the Policy and a Summary
Comet Ridge has a Diversity Policy which aims to create a workplace culture that attracts and retains well-qualified, diverse and motivated people right
across the business. The Policy includes suggested procedures to help ensure that the policy is implemented correctly, which includes ensuring that
candidates for any executive position are drawn from as wide a base as reasonably possible. Diversity improves the quality of decision making,
productivity and teamwork within a business and can result in better business outcomes.
The Company is committed to diversity within the workplace and providing an environment in which employees have equal access to opportunities. The
Company recognises that a commitment to diversity and inclusiveness will increase the probability of the Company achieving its strategic objectives.
The Board has in accordance with Recommendation 3.2 adopted a Diversity Policy, a copy of which is available on the Company’s website.
26
Comet Ridge Limited – Annual Report 30 June 2014
Corporate Governance Statement (continued)
3.2
Establish a Policy Concerning Diversity and Disclose the Policy and a Summary (continued)
(ASX Recommendation 3.2)
3.3
Disclose In the Annual Report the Measurable Objectives for Achieving Gender Diversity.
The Company has given careful consideration to the adoption of measurable objectives for achieving gender diversity. The Board is of the view that
there is no “one size fits all” approach to the implementation of a diversity policy for all Australian companies and accordingly has had regard to external
guides, including possible forms of objectives published by the Australian Institute of Company Directors.
At this stage of the Company’s development the Board does not believe that setting a target in order to improve the number of women in a particular
area of the business where women are not currently well represented, is a realistic objective as there is a high probability there will not be sufficient
movement in staff in the next 12-18 months to achieve such a target.
The Board considers that the best way forward for the Company at this stage of its development has been to introduce a programme which blends
procedural objectives with a mentoring programme. The Board has set the following objectives for the purposes of implementing the Diversity Policy in
order to promote gender diversity within the make-up of the Company’s Board, Senior Management and employees:






For vacancies at the Board and senior management level is to ensure that a diverse candidate pool is accessed;
Advertising any vacancies will be conducted more widely in sectors where a female audience is more prevalent;
Requiring that at least one serious female candidate be present on every short list for each executive position and if a female
candidate is not selected then the Board must be satisfied that there are objective reasons to support this decision;
The introduction of a mentoring, coaching programme for any female employees to promote stronger representation in all areas;
Reviewing all remuneration practices to ensure that they are free from gender bias and ensuring recruitment and selection
processes do not contain gender bias; and
Fostering a corporate culture which supports workplace diversity.
As this stage no separate Gender Diversity Committee has been established. The Board acting in its capacity as a Nomination Committee will
incorporate those roles and duties which a Gender Diversity Committee will otherwise carry out in exercising and implementing the above objectives.
3.4
Disclose in the Annual Report the Proportion of Women Employees in the Whole Organisation.
The Board is currently made up of 5 Non-executive Directors and 1 Executive Director. Of the Non-executive Directors one is a woman representing
20% of the total number of Non-executive Directors.
There are no women currently employed or engaged as a consultant within the group in a senior executive role.
As at 30 June 2014, the total portion of women employees and consultants in the whole of the organisation including Members of the Board was
35.70%.
Principle 4: Safeguard Integrity in Financial Reporting
4.1
Establish an Audit Committee
The Board has had established for the whole of the financial year under review an Audit Committee with a Charter that sets out the roles,
responsibilities, composition, structure and membership requirements. .
The primary objective of the Committee is to assist the Board to discharge its responsibilities with regard to:




Monitoring the integrity of the financial statements of the Company and reviewing significant financial reporting judgements;
Reviewing the Company’s internal financial control system;
Monitoring and reviewing the effectiveness of the Company’s internal audit function (if any);
Monitoring and reviewing the external audit function including matters concerning appointment and remuneration, independence and non-audit
services; and

Performing such other functions as assigned by law, the Company’s constitution, or the Board.
(ASX Recommendation 4.1)
Comet Ridge Limited I Annual Report 2014
27
Comet Ridge Limited – Annual Report 30 June 2014
Corporate Governance Statement (continued)
4.2
Structure of the Audit Committee
The Committee has been appointed by the Board and currently comprises three (3) Non-executive Directors of which two are independent.
The members of the Audit Committee during the year were as follows, including the dates members were appointed to the Committee:Gillian Swaby:
Independent Chair of the Audit Committee and Non-executive Director (appointed 09-Jan-2004)
James McKay:
Non-executive Director
(appointed 21-Apr-2009)
Jeffrey Schneider:
Independent Non-executive Director
(appointed 09-May-2013)
The Chair of the Committee is Gillian Swaby who is an independent director and not the Chairperson of the Board of Directors.
Each member of the Audit Committee has an appropriate knowledge of the Company’s affairs and has the financial and business expertise to effectively
discharge the duties of the Committee. The members of the Audit Committee by virtue of their professional background experience and personal
qualities are well qualified to carry out the functions of the Audit Committee. At least one member has significant, recent and relevant financial
experience.
Details of the experience and qualifications of the members of the Audit Committee can be found in the Directors’ Report preceding this statement.
The Audit Committee members’ attendance at meetings is set out in the Directors’ Report. The external auditors attend the meetings at least twice a
year and on other occasions where circumstances warrant as well as being available at the Company’s AGM to answer shareholders questions about
the conduct of the audit and the preparation and content of the audit report. The Audit Committee keeps minutes of its meetings and includes them for
review by the whole of the Board at its next meeting.
(ASX Recommendations 4.2)
4.3
Audit Committee to have a Formal Charter
The Committee has a documented charter. The Charter was updated and approved by the Board on 28 November 2013 and sets out the specific
responsibilities delegated to the Committee by the Board. A copy of the Charter as well as a copy of the procedures adopted for the appointment of
external auditors is available on the Company’s website.
The members of the Committee have direct access to any employee, the auditors and financial and legal advisers without management present. The
Committee meets as often as is required but no less than three times a year.
The Committee reports to the Board on the following:a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
28
Assessment of whether external reporting is consistent with Committee members’ information and knowledge and is adequate for
shareholder needs;
Assessment of the management processes supporting external reporting;
Procedures for the selection and appointment of the external auditor, rotation of external audit engagement partners, appointment and
removal of the external auditors, review of the terms of engagement;
Approving the audit plan of the external auditors, monitoring the effectiveness and independence of the external auditor, obtaining
assurances that the audit is conducted in accordance with the Auditing Standards and all other relevant accounting policies and
standards;
Providing recommendations to the Board as to the role of the internal auditor/internal audit function, if any, and recommendations for the
appointment or, if necessary, the dismissal of the head of internal audit;
Evaluating the adequacy, effectiveness and appropriateness of the Company’s administrative, operating and accounting control systems
and policies;
Reviewing and evaluating controls and processes in place to ensure compliance with the approved policies, controls, and with applicable
accounting standards and other requirements relating to the preparation and presentation of financial results;
Overseeing the Company’s financial reporting and disclosure processes and the outputs of that process;
Determining the reliability, integrity and effectiveness of accounting policies and financial reporting and disclosure practices; and
Reviewing the appropriateness of the accounting principles adopted by management in the composition and presentation of financial
reports and approving all Significant Accounting Policies.
(ASX Recommendation 4.3)
Comet Ridge Limited – Annual Report 30 June 2014
Corporate Governance Statement (continued)
Principle 5: Make Timely and Balanced Disclosure
5.1
Establish Written Policies to Ensure Compliance with ASX Listing Rule Disclosure Requirements
Comet Ridge has adopted policies and procedures to ensure compliance with its continuous disclosure obligations, and to ensure accountability at a
senior management level for that compliance.
(ASX Recommendation 5.1)
5.1
Establish Written Policies to Ensure Compliance with ASX Listing Rule Disclosure Requirements (continued)
The Board is committed to promoting investor confidence by ensuring that:


The market has equal access to material information concerning the Company; and
All Company announcements are factual and presented in a clear and balanced way.
The Company amended its Continuous Disclosure Policy in 2012 in compliance with Recommendation 5.1 to take into account the recommendations
contained in the revised Listing Rules Guidance Note 8. A copy of this policy is available on the Company’s website for download. Each employee and
consultant engaged by the Company is provided with a copy of the same while impressing upon them during their induction the importance of the same.
The Company Secretary has primary responsibility for discharging the Company's continuous disclosure obligations to the ASX. All officers and
employees must immediately notify the Company Secretary of any material information which may need to be disclosed under Listing Rule 3.1.
The Officers of the Company are committed to:

Encouraging prompt disclosure of any material information which may need to be disclosed under Listing Rule 3.1; and

Promoting an understanding of the importance of the continuous disclosure regime throughout the Company.
In addition the website contains a function to allow interested parties to subscribe to receive electronic notification of public releases and other relevant
material concerning the Company.
Principle 6: Respect the Rights of Shareholders
6.1
Design a Communications Policy for Effective Shareholder Communication
Comet Ridge respects the rights of its shareholders and places a high priority on communications with and accountability to shareholders. The Board
recognises that shareholders, as the ultimate owners of the Company, are entitled to receive timely and relevant high quality information about their
investment.
Similarly, prospective investors should be able to make an informed decision when considering the purchase of shares in Comet Ridge. To safeguard
the effective dissemination of information, the Board has implemented procedures for compliance with continuous disclosure requirements and adopted
a Shareholder Communications Policy. These reinforce the Company’s commitment to its continuous disclosure obligations imposed by law.
Information will be communicated to shareholders by:




Ensuring that published financial and other statutory reports are prepared in accordance with applicable laws and industry best practice;
Ensuring the disclosure of full and timely information about the Company’s activities in accordance with the general and continuous disclosure
principles in the ASX Listing Rules, the Corporations Act in Australia and any other relevant legislation;
Providing detailed reports from the Chairman and/or the Managing Director at the Annual General Meeting;
Placing all material information released to the market (including Notices of Meeting and explanatory materials) on the Company’s website as
soon as practical following release; and
Placing all of the Company’s press releases and market announcements for the last three years plus at least the last three years of financial data
on its website.
Shareholders are encouraged to attend General Meetings, and particularly the Annual General Meeting, and ask questions of Directors and senior
management and also the Company’s external auditors, who are required to be in attendance. In the event that shareholders are unable to attend
meetings, they are encouraged to lodge proxies signifying their approval or otherwise of the business to be considered. Copies of the Chairman’s and
Managing Directors’ presentations at the Annual General Meeting will also be loaded on to the Company’s website as well as the ASX announcements
platform.
Comet Ridge Limited I Annual Report 2014
29
Comet Ridge Limited – Annual Report 30 June 2014
Corporate Governance Statement (continued)
6.1
Design a Communications Policy for Effective Shareholder Communication (continued)
Shareholders and other stakeholders may also subscribe to email alerts through the Company’s website so that they are notified of when any material
announcement is made.
(ASX Recommendation 6.1)
Principle 7: Recognise and Manage Risk
7.1
Company to Establish Policies for the Oversight and Management of Material Business Risks
Comet Ridge recognises that effective risk management is central to achieving the operational and strategic objectives of the Company and to that end
has developed a strategy for risk management and internal compliance and control systems which covers internal controls, management, financial and
operational aspects of the Company's affairs.
The Board has appointed the Managing Director (who is assisted by senior management) as being responsible for ensuring the systems are maintained
and complied with.
(ASX Recommendation 7.1)
The Company has a formal Risk Policy and has established a Risk Committee (governed by a charter) which has the responsibility for identifying
assessing, treating, monitoring and reporting in respect of identified risks and the management of these to the Board. The Committee shall comprise at
least two board members in total, one of which must be the Managing Director who also chairs the Committee.
The members of the Risk Committee are appointed by the Board and Company personnel are required to attend Risk Committee meetings as and
when requested.
Specific functions of the Risk Committee include, but are not limited to, the review and reporting to the Board on the following:(i)
(ii)
(iii)
(iv)
the Group’s ongoing risk management programme effectively identifies all areas of potential risk;
adequate policies and procedures have been designed and implemented to manage identified risks;
a regular programme of audits is undertaken to test the adequacy of and compliance with prescribed policies; and
proper remedial action is undertaken to redress areas of weakness.
The following form part of the normal procedures that are adopted by the Risk Committee in order to discharge this responsibility:(i)
evaluating the adequacy and effectiveness of the management reporting and control systems used to monitor adherence to policies and
guidelines and limits approved by the Board for management of balance sheet risks;
(ii) evaluating the adequacy and effectiveness of the Group’s financial and operational risk management control systems by reviewing risk
registers and reports from management and external auditors;
(iii) evaluating the structure and adequacy of the Group’s own insurances on an annual basis;
(iv) reviewing and making recommendations on the strategic direction, objectives and effectiveness of the Group’s financial and operational
risk management policies;
(v) overseeing the establishment and maintenance of processes to ensure that there is:
a) an adequate system of internal control, management of business risks and safeguard of assets; and
b) a review of internal control systems and the operational effectiveness of the policies and procedures related to risk and control;
(vi) evaluating the Group’s exposure to fraud and overseeing investigations of allegations of fraud or malfeasance;
(vii) reviewing the Group’s main corporate governance practices for completeness and accuracy;
(viii) overseeing the proper evaluation of the adequacy and effectiveness of the Group’s legal compliance control systems; and
(ix) providing recommendations as to the propriety of related party transactions.
(ASX Recommendation 7.1)
The Risk Committee meets whenever necessary but no less than three times a year and keeps minutes of its meetings which are included for review at
the following Board Meeting.
30
Comet Ridge Limited – Annual Report 30 June 2014
Corporate Governance Statement (continued)
7.2
Board Should Require Management to Design & Implement the Risk Management & Internal Control System and Report to It
Management has implemented a Risk Management Policy. The policy requires the Managing Director’s Reports to the Board for each Board Meeting to
encompass, on an exception–basis, the relevant risks for the attention of the Board. Areas of risk that are covered include:


Strategic – impacts on the ability to achieve Company strategy/goals;
Operational – impacts on the operational aspects of the Company’s operations; and
Personnel – impacts on individual employees.
The Company’s policies are designed to ensure strategic, operational, legal, and reputational risks are identified, assessed effectively and managed
and monitored in an efficient manner.
(ASX Recommendation 7.2)
Environment
The Company is committed to sustainable development of energy resources in an environmentally and socially responsible manner. All operational
activities are conducted in strict compliance with the terms of relevant surface use agreements. Surface disturbances, critical wildlife habitat, viewsheds, noise levels, air quality and water quality impacts to the environment will, at a minimum, comply with all applicable legal and regulatory
thresholds and otherwise be managed for minimal impact. The Company employs technology and best environmental practices to achieve this
objective.
Safety
The Company believes that all injuries and industry related diseases should be preventable. The Company’s safety policy focuses on assessing,
mitigating or where possible, eliminating potential risk associated with any activity.
Responsibility for an individual’s safety starts with the individual but the Company is committed to the creation and maintenance of a work environment
and culture where we all think about safety as a first step. To meet these commitments, the Company has appointed a dedicated Occupational Health
and Safety Officer who meets at least once a month with the Managing Director in order to review the Company’s health and safety policies as well as
continuing to develop the Company’s Safety Management Plan, Emergency Response Plan and Environmental Plan. Contractors are also required to
manage health and safety in line with these plans and policy.
Each person involved in the Company’s operations has the authority and responsibility to delay or immediately stop activities where effective mitigation
controls are not in place to manage identified hazards.
7.3
Board to Disclose Extent of CEO/CFO Assurances under s295A of Corporations Law
The Board has received declarations from the Managing Director and the Chief Financial Officer pursuant to s295A of the Corporations Act which state
that the financial statements for both the half year (31 December 2013) and end of year (30 June 2014) periods are founded on sound risk management
and internal controls and that the system is operating effectively in all material respects in relation to financial reporting risks.
(ASX Recommendation 7.3)
Principle 8: Remunerate Fairly and Responsibly
8.1
Board to Establish a Remuneration Committee
Comet Ridge has established a Remuneration Committee. The role of the Committee, in accordance with the Remuneration Committee Charter, is to
assist the Board with respect to remuneration by reviewing and making appropriate recommendations on:a)
Remuneration packages of Executive Directors, Non-executive Directors and senior executives; and
b)
Employee incentive and equity based plans including the appropriateness of performance hurdles and total payments proposed.
(ASX Recommendation 8.1)
Comet Ridge Limited I Annual Report 2014
31
Comet Ridge Limited – Annual Report 30 June 2014
Corporate Governance Statement (continued)
8.1
Board to Establish a Remuneration Committee (continued)
The current members of the Remuneration Committee are as follows, including dates of their appointment to the Committee:Jeffrey Schneider
Anthony Gilby
*Christopher Pieters
Chair of the Committee and Non-executive Director
Non-executive Director
Independent Non-executive Director
(appointed 01-Jun-2004)
(appointed 11-Nov-2013)
(appointed 28-Jul-2010)
The Remuneration Committee shall meet at least twice a year and otherwise as required. The number of meetings of the Remuneration Committee
during the reporting period and the attendance record of members is set out in the Directors’ Report.
Christopher Pieters was absent and had no input into the discussions that were held regarding the remuneration and terms of his consultancy so as to
preserve the independence of the committee.
*Please see Note on determination of independence section 2.1 of this Corporate Governance Statement.
(ASX Recommendation 8.1)
8.2
Constitution of Remuneration Committee
The Remuneration Committee has 3 members and is constituted by a majority of independent directors. The Chair of the Committee is an independent
Non-executive Director having been appointed as chair of the committee 23 April 2012.
8.3
Distinguish the Structure of Non-executive Directors’ Remuneration from that of Executive Directors and Senior Executives
The ASX Listing Rules and the Constitution require that the maximum aggregate amount of remuneration to be allocated among the Non-executive
Directors be approved by the shareholders in a general meeting. In proposing the maximum amount of consideration by shareholders, and in
determining the allocation, the Remuneration Committee will take into account the time demands made on Directors and such factors as fees paid to
Non-executive Directors in comparable Australian companies.
The remuneration paid to Directors is shown in the Remuneration Report contained in the Directors’ Report, which includes details on the Company’s
remuneration policies. There are no termination and retirement benefits for Non-executive Directors other than statutory superannuation entitlements.
There has been no increase in the maximum aggregate amount of remuneration for Non-executive Directors since the 2009 Annual General Meeting.
32
Directors’ Report
Your Directors present their report on Comet Ridge Limited (Comet Ridge or the Company) and the consolidated entity
(the group) for the financial year ended 30 June 2014. The Company was incorporated on 23 August 2003 and listed on
the Australian Securities Exchange on 19 April 2004.
Anthony Gilby
Non-executive Director
James McKay
Non-executive Chairman
Tor McCaul
Managing Director
Chris Pieters
Non-executive Director
Gillian Swaby
Non-executive Director
Jeff Schneider
Non-executive Director
Comet Ridge Limited I Annual Report 2014
33
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report
Your Directors present their report on Comet Ridge Limited (Comet Ridge or the Company) and the consolidated entity (the group) for the financial year
ended 30 June 2014. The Company was incorporated on 23 August 2003 and listed on the Australian Securities Exchange on 19 April 2004.
1. Information on Directors
The following persons were the Directors of Comet Ridge Limited who held office at any time during the year and up to the date of this Report.
James McKay B.Com, LLB, Non-executive Chairman (Director since April 2009)
Special Responsibilities
Chairman
Member of Audit Committee
Experience
James McKay brings to Comet Ridge a strong commercial background, with sound financial business management and legal expertise. He has been
involved in the establishment and development of a number of businesses.
James is a director of Walcot Capital, a private venture capital business specialising in energy investment. He was the former Chairman of CSG
explorer Sunshine Gas Limited having overseen its merger with Queensland Gas Company for in excess of $1billion in 2008 as well as being a past
president of the Australasian Cemeteries and Crematoria Association.
Interest in Shares and Options
33,889,551 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Nil.
Tor McCaul B.E. (Hons/Petroleum), B.Econ, MBA, Managing Director (Director since April 2009)
Special Responsibilities
Managing Director
Chairperson of Risk Committee
Experience
Tor McCaul was appointed Managing Director of Comet Ridge in April 2009 when the Company merged with Chartwell Energy Limited. He previously
held the position of Chief Executive Officer of Chartwell having commenced with the company in 2008. Prior to this Tor spent 11 years working in Asia
for British independent companies in a wide variety of technical, finance, commercial and management roles.
Tor has 26 year’s oil and gas experience. Following his graduation from UNSW in 1987, Tor spent the next nine years based in Brisbane working for
operating companies such as LASMO plc and MIM Petroleum in technical roles on projects in Queensland, New Zealand and Papua New Guinea
before moving to Asia.
He is a member of the Society of Petroleum Engineers and has served on the executive committee, including as Chairman, for the Queensland section.
Tor is a past member of the UNSW Centre for Petroleum Engineering Advisory Committee and is the immediate past President of the Queensland
Petroleum and Exploration Association (QUPEX).
Interest in Shares and Options
4,210,000 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Nil.
34
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
2.
Information on Directors (continued)
Chris Pieters B.Sc (Hons) B.Bus, Non-executive Director (Director since April 2009. Acted as Commercial Director from June 2013 to February
2014 for a short-term project)
Special Responsibilities
Member of Remuneration Committee
Experience
Chris Pieters is the Managing Director and co-founder of Walcot Capital, a private venture capital business specialising in energy investment, and the
former Managing Director of Tlou Energy Limited, when it was a private unlisted public company with CSG exploration interests in Southern Africa.
Previously he was Chief Commercial Officer at Sunshine Gas Limited prior to its merger with the Queensland Gas Company in 2008. Chris also held
other technical and business development roles at Sunshine Gas.
He is a member of the Petroleum Exploration Society of Australia.
Interest in Shares and Options
1,050,000 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Tlou Energy Limited (appointed 23 July 2009)
Gillian Swaby B.Bus, FAICD, FCIS, Non-executive Director (Director since January 2004)
Special Responsibilities
Chairperson of the Audit Committee
Experience
Gillian Swaby has been involved in financial and corporate administration for listed companies, as both Director and Company Secretary covering a
broad range of industry sectors, for over 30 years. Ms Swaby has extensive experience in the area of secretarial practice, management accounting and
corporate and financial management.
Gillian is past Chair of the Western Australian Council of Chartered Secretaries of Australia, a former Director on their National Board and a lecturer for
the Securities Institute of Australia. Ms Swaby is the principal of a corporate consulting company and was a member of the Paladin Energy Ltd Board for
a period of 10 years. Her current role at Paladin is Company Secretary and EGM-Corporate Services. She also serves on the board of ASX listed Deep
Yellow Limited and the Australian Africa Mining Industry Group.
Interest in Shares and Options
Nil
Directorships Held in Other Listed Entities in Last 3 Years
Non-executive Director Deep Yellow Limited
Comet Ridge Limited I Annual Report 2014
35
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
1.
Information on Directors (continued)
Jeff Schneider B.Com, Non-executive Director (Director since August 2003)
Special Responsibilities
Chairperson of Remuneration Committee
Member of Audit Committee
Experience
Jeff Schneider joined the Board of Comet Ridge and was elected Chairman on 28 August 2003; He resigned as the Chairman on 11 November 2009.
He holds a degree in commerce and has over 30 years’ experience in the oil and gas industry, including 24 years with Woodside Petroleum Limited.
His roles at Woodside included General Manager Commercial, accountable for business and strategic planning, mergers and acquisitions, product
marketing and the business performance of Woodside’s North West Shelf investment. Other roles within Woodside included Director Australian Gas
where he was responsible for the commercialisation of reserves in the Otway Basin, Timor Sea and Browse Basin.
Jeff also holds a Non-executive Director position on the ASX listed Cooper Energy Limited. He has extensive corporate governance and board
experience as both a Non-executive Director and chairman in resources companies.
Interest in Shares and Options
4,248,416 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Cooper Energy Limited (appointed 12 October 2011)
Anthony (Tony) Gilby B.Sc. (First Class Honours), Non-executive Director (Director since April 2009)
Special Responsibilities
Member of Remuneration Committee
Member of Risk Committee
Experience
Anthony (Tony) Gilby began his career as a geologist for Delhi Petroleum in the Cooper Basin. He then held roles in exploration geology and
geophysics as well as petro-physics both in Delhi Petroleum and ESSO.
Following 12 months working in the Exxon Production Research Centre in Houston, Tony returned to Australia eventually working for MIM Petroleum
and the Louisiana Land and Exploration Company before taking on a variety of consulting roles as well as the acquisition of prospective Queensland
acreage in a private capacity. This work culminated in the founding of Sunshine Gas and his role as Managing Director. He is also MD & CEO of ASX
listed Tlou Energy.
Tony is a member of the Petroleum Exploration Society of Australia and the American Association of Petroleum Geologists.
Interest in Shares and Options
24,215,848 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Tlou Energy Limited (appointed 23 July 2009)
36
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
2. Principal Activities
The principal activities of the group during the financial year were to carry out coal seam gas (CSG) exploration and appraisal. The group has tenement
interests and a suite of prospective projects in Australia and New Zealand and an investment in a limited liability company based in the United States.
There have been no significant changes in the nature of the group's principal activities during the financial year.
3. Review of Operations and Financial Position
The loss after tax of the group for the financial year ended 30 June 2014 amounted to $13,600,655 (2013: loss of $6,986,546). The most significant
items contributing to the loss for the year were:
(a)
(b)
the impairment expense of $9,148,736 with respect to exploration permits PMP50100 and PEP50279 in New Zealand; and
the impairment of the investment in Comet Ridge Resources LLC (CRR) amounting to $3,287,033.
The material items in the prior year loss were:
(a)
(b)
(c)
the impairment expense of $3,575,370 with respect exploration permits ATP743P in the Galilee basin and PMP50100 and PEP50279 in New
Zealand:
a $1,366,978 write off of capitalised exploration expenditure with respect to New Zealand PEP50280 which was subsequently relinquished; and
the impairment of the investment in CRR amounting to $1,345,302 arising from the dilution of the group’s investment in the limited partnership of
which $397,329 was taken up in the loss for the year and the balance in other comprehensive income.
Please refer to the Overview of Activities Report for further information on the operations of the group.
4. Significant Affairs
The following significant changes in the state of affairs of the group occurred during the financial year ended 30 June 2014:
(a)
Capital raising
In August 2013, the group raised additional capital by way of a share placement to a number of institutional investors of 50 million new ordinary
shares at an issue price of 18 cents per share. The net proceeds from the placement amounted to $8.46 million which will be used to fund future
exploration and appraisal activities and provide for additional working capital.
(b)
Renegotiated Mahalo Option Agreement
On 18 March 2014, Comet Ridge entered into a renegotiated option agreement with Stanwell Corporation Limited (SCL) to buy- back the 5%
interest in the Mahalo Gas Project previously sold to Stanwell in 2011 increasing Comet Ridge’s project interest to 40%.
Under the terms of the renegotiated Mahalo Option Agreement:
1.
SCL will exchange its 5% interest in the Mahalo Gas Project and relinquish its options under the 2011 SPOA to secure up to a further 35%
interest in the Mahalo Joint Venture; and
2.
As consideration, SCL can elect either a Gas Supply Agreement (GSA or Option A) or a Pay Agreement (Option B).
The term of both Options is 4 years commencing from the date of execution of the substantive agreements evidencing the Options. Option A and
Option B are mutually exclusive. The conditions attaching to these options are outlined below.
Conditions for Gas Supply Agreement (Option A):
Option A is exercisable within eighty days after the receipt of a Final Investment Decision (FID) for any development of the Mahalo Gas Project.
The period to FID is a maximum period of four years from the date of the agreement. The GSA will provide a market linked gas price and an
agreed $/GJ discount for gas supplied under the agreement. This discount is based around repayment of the $15 million that SCL contributed to
the Mahalo pilot projects, largely during 2012 and 2013. The main terms of the gas supply agreement are as follows:
1.
Gas volume to be supplied is defined as a minimum 20 PJ up to a maximum 40 PJ but no more than one third
(-13.34% of total Mahalo field) of Comet Ridge’s delivered gas from its 40% interest in the project.
Comet Ridge Limited I Annual Report 2014
37
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
4.
Significant Affairs (continued)
(b)
Renegotiated Mahalo Option Agreement (continued)
2. Gas is to be delivered over a 10 year period, terminating when 40 PJ is reached, subject to the development schedule, infrastructure
requirements and the FID on full field development.
3. In the event that the minimum gas volume is not produced over the 10 year period then, subject to there being available future production
from the Mahalo Gas Project, SCL will have the option to extend the GSA for up to an additional 5 years to allow the balance of agreed gas
volume to be supplied.
4.
The gas price under the GSA will be calculated on an ex-field basis using a formula which reflects the Oil Linked Gas Price (OLP), the
field cost to produce plus a rate of return referred to as the Field Cost Plus Return (FCR) and with a specified Floor and Ceiling Price
range.
5.
The discount is capped at an amount which is the future value of $15m in 1 July 2013 $ terms indexed annually at CPI up to the date
the GSA is signed.
Conditions for Option B:
Option B is a cash payment which represents reimbursement for expenditure incurred by SCL. The option is exercisable upon the earlier of
FID for any development of the Mahalo Gas Project or on the 4th anniversary date of the execution of the renegotiated Mahalo Option
Agreement.
If SCL elects to exercise Option B, it will receive a cash payment of A$20m at 1 July 2014 $ terms which is escalated in accordance with CPI
up to the date the Pay Agreement is signed.
If final investment decision is not reached within 4 years SCL is deemed to have elected the Option B cash payment.
The buy-back of SCL’s interests in the Mahalo Gas Project provides considerable benefits to the Group as it:
(c)
1.
restores Comet Ridge’s 40% interest in Mahalo Gas Project with consideration in the form of a gas supply agreement or cash payment
deferred until after a final investment decision for the project. 40% is a key equity level inside the Mahalo project as it provides a
blocking vote to Comet Ridge;
2.
retains Comet Ridge’s ability to maximise the revenue from its share of gas produced i.e. after the gas supplied to SCL under a GSA if
Option A is chosen);
3.
provides exposure to increased gas prices from production or gas reserves in a tightening East Australian gas market; and
4.
requires no immediate cash payment.
Impairment of exploration expenditure
During the year the impairment expenses recognised with respect to exploration and evaluation expenditure amounted to $9,148,736
(2013: $3,575,370). This impairment relates to the two remaining New Zealand permits (PMP50100 and PEP50279) which have now been fully
impaired.
(d)
Farm-in with Queensland Energy Resources Pty Limited (QER)
In July 2012, Comet Ridge entered into a three-stage farm-in agreement with QER to earn up to 75 per cent of a farm-in area, located in the
south east of permit ATP 1015P, adjacent to the Company’s 100 per cent held Gunn project area in ATP 744P. On completion of each stage of
the farm-in, Comet Ridge has the option to proceed with the subsequent stage. The farm-in area consists of two separate areas totalling
approximately 870 km2. These areas represent 21 per cent of the total permit area in ATP 1015P. QER will retain a 100 per cent interest in the
remaining area of ATP 1015P. Comet Ridge is the operator of the farm-in area.
The completion of the Galilee drilling programme in late 2012 earned Comet Ridge a 20 per cent equity interest in the ATP 1015P farm-in area.
The Company drilled a further well into ATP 1015P in mid 2014, thereby maintaining a 20% equity level.
38
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
4.
(e)
Significant Affairs (continued)
Impairment Available-for Sale Financial Asset
Comet Ridge USA Inc. (CRUSA), a wholly owned subsidiary of Comet Ridge Limited, owns a 10.04 per cent (2013: 12.08 per cent) minority
interest in Comet Ridge Resources, LLC (“CRR”). CRR operations include oil and gas exploration and evaluation and oil production in the state of
Colorado USA. Pine Brook Road Partners LLC (Pine Brook), a private equity firm based in New York City, USA holds the majority interest at
approximately 89.5 per cent (2013: 87.5 per cent). Comet Ridge Limited may retain its minority interest in CRR by contributing cash as and when
requested to fund CRR’s ongoing exploration and evaluation programme. Under the arrangements with the private equity fund, should the group
not contribute, its interest will decline to no less than 7.2 per cent
The group has classified its interest in CRR as an available-for-sale financial asset and, in accordance with AASB 139 Financial Instruments:
Recognition and Measurement, values the investment at fair value. The fair value measurement of the 'available-for-sale' financial asset is based
on the group's proportionate interest in the net assets of CRR discounted for minority interest and liquidity considerations. As the valuation
technique for this asset is based on significant unobservable inputs, the asset is included in level 3. This is considered the most reliable valuation
method given:




the group has a minority equity interest in an unlisted company (CRR);
the nature of CRR’s activities, being oil and gas production and exploration;
the oil and gas reserves and resources interests of CRR are either carried at fair value or on a basis consistent with the group's
accounting policy for the recognition and measurement of exploration and evaluation expenditure; and
the continued contributions to CRR by Pine Brook.
During the year, COI elected not to pay cash calls which have resulted in COI's interest in CRR LLC being diluted slightly from 12.084% to
10.04%. Also, during the year CRR has impaired its exploration assets which also indicates that there has been a further impairment of COI's
investment.
Given that COI holds a minority interest in CRR that is now around the 10% level, and also given that the CRR investment is not material to COI
and COI plans to not pay further cash calls (given the COI’s eastern Australia gas focus) it is considered prudent to fully impair the investment in
CRR at 30 June 2014. As a result, an impairment expense of $Au 3,287,033 (2013: $Au 1,345,302) has been recognised. Also, because of the
movements of the $Au against the $US, an unrealised FX gain of $Au 31,254 (2013: FX loss $Au 238,389) arises on the translation of the Comet
Ridge USA Inc balances to $Au.
5. Dividends Paid or Recommended
The Directors recommend that no dividend be paid or declared at this point in time. No amounts have been paid or declared by way of dividend during
the financial year.
6.
After Balance Date Events
Late in August 2014, an independently certified reserves and resources estimate was provided by MHA Petroleum Consultants LLC of Denver,
Colorado for Comet Ridge Limited’s ATP 337P Mahalo block in the northern Denison Trough. This maiden reserves certification is a significant event
for the Company. Details of this certification were released to the ASX on 28 August 2014.
7.
Future Developments and Expected Results
The group proposes to continue its exploration programmes and investment activities.
Further information on the operations of the group and likely future developments are set out in the Overview of Activities.
8.
Environmental Regulations
The group's operations are subject to environmental regulation under the laws of Australia, New Zealand and USA where it undertakes its exploration,
development and production activities. It is the group’s policy to engage appropriately experienced contractors and consultants to advise on and ensure
compliance with its environmental performance obligations.
There have been no reports of breaches of any environmental regulations or obligations in the financial year and as at the date of this report.
Comet Ridge Limited I Annual Report 2014
39
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
9.
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the year ended 30 June 2014 has been received and is attached to this report.
10. Meetings of Directors
The number of meetings of the Company's Board of Directors and of each Board committee held during the financial year ended 30 June 2014 and the
number of meetings attended by each director were:
Board
Audit
Committee
Number
Number
eligible to
attended
attend
Number
eligible to
attend
Number
attended
J McKay
9
9
3
T McCaul
J Schneider
G Swaby
9
9
9
9
9
9
*
3
3
*
*
C Pieters
9
8
A Gilby
9
6
* = Not a member of the relevant committee
Remuneration Committee
Risk
Committee
Number
Number
eligible to
attended
attend
Number
eligible to
attend
Number
attended
3
*
*
*
*
*
3
3
*
2
*
*
2
*
3
*
*
3
*
*
*
*
2
2
1
2
*
3
*
2
11. Remuneration Report – Audited
This report outlines the remuneration arrangements in place for the Non-executive Directors, executive Directors and other Key Management Personnel
of the Company.
Remuneration Committee
The Board has established a Remuneration Committee which provides advice and specific recommendations on the remuneration packages and other
terms of employment for executive Directors, other senior executives; and Non-executive Directors including:



the level of Non-executive Director fees;
the amount and nature of remuneration arrangements for executive Directors and other executives; and
the type and nature of incentive arrangements including key performance targets effecting the remuneration of the executive team.
The objective of the Remuneration Committee is to ensure that the remuneration policies and arrangements are fair and competitive and aligned with
the long term interest of the Company.
The level of remuneration and other terms and conditions of employment for executive Directors and Company executives are reviewed annually having
regard to performance and relevant comparative information, and are approved by the Board after the Remuneration Committee has sought
independent professional advice, as required. In this respect, consideration is given to normal commercial rates of remuneration for similar levels of
responsibility.
The Corporate Governance Statement provides further information on the role of this Committee.
Non-executive Director Remuneration
The Board's policy is to remunerate Non-executive Directors at market rates for time, commitment and responsibilities. The Remuneration Committee
determines payments to the Non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability.
Independent external advice is sought when required. No advice was sought during the 2014 financial year.
The maximum aggregate amount of fees that can be paid to Non-executive Directors is subject to approval by shareholders at the Annual General
Meeting. The latest determination was at the Annual General Meeting held on 11 November 2009 when shareholders approved an aggregate
remuneration of AU$500,000 per year.
Fees for Non-executive Directors are not linked to the performance of the group, however, to align Directors’ interests with shareholder interests, the
Directors are encouraged to hold shares in the Company. There is no minimum holding prescribed in the Constitution.
40
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
11. Remuneration Report – Audited (continued)
Non-executive Director Remuneration (continued)
Non-executive Directors’ fees (inclusive of superannuation) have been paid on the following basis:
Base Fees
Chair
Other Non-executive Directors
Additional Fees
Chair of Audit Committee
Chairs of Remuneration and Risk Committees
Members of committees
Executive Remuneration Policy
2014
$
96,000
60,000
2013
$
96,000
60,000
10,000
5,000
3,000
10,000
5,000
3,000
The objective of the executive remuneration policy is to ensure that the group's remuneration arrangements are competitive and reasonable, enabling it
to attract and retain the right calibre of staff and to align the remuneration of executive Directors and other executives with shareholder and business
objectives. Executive remuneration arrangements comprise a fixed remuneration component and may also include specific long-term incentives based
on key performance areas affecting the group's financial and/or operational results as follows:
(a)
(b)
(c)
(d)
a base salary (which is based on factors such as length of service, qualifications and experience), superannuation, fringe benefits and
performance incentives;
short-term performance incentives in the form of cash bonuses which are paid only when predetermined key performance indicators have been
met;
executives engaged through professional service entities are paid fees based on an agreed market based hourly rate for the services provided
and may also be entitled to short term performance based incentives; and
long-term performance based incentives comprising Performance Rights which are designed to align the remuneration of executives with the
business objectives of the Company and its shareholders.
The Remuneration Committee reviews executive remuneration arrangements annually by reference to the group’s performance, executive performance
and comparable information from industry sectors.
Executive and Non-executive Directors and other employed executives receive the superannuation guarantee contribution required by the
Commonwealth Government, which was up to 30 June 2014 9.25% (to a maximum of $17,775), and do not receive any other retirement benefits. Some
individuals, however, may choose to sacrifice part of their salary to increase payments towards superannuation.
All remuneration paid is valued at either cost or the fair value to the Company and expensed.
Share trading policy
Shares issued under any of the group's employee equity plans are subject to, and conditional upon, compliance with the group's Securities Trading
Policy. Executives are prohibited from limiting risk attached to those instruments by use of derivatives or other means.
Key Management Personnel
Key Management Personnel comprise all of the Directors of the Company.
James McKay
Non-executive Chairman
Tor McCaul
Managing Director
Jeffrey Schneider
Non-executive
Gillian Swaby
Non-executive
Christopher Pieters
Non-executive (Acted as Commercial Director from June 2013 to February 2014 for a short-term project)
Anthony Gilby
Non-executive
There are no other Key Management Personnel of the group.
Comet Ridge Limited I Annual Report 2014
41
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
11. Remuneration Report – Audited (continued)
Details of Remuneration
Details of remuneration of each of the Key Management Personnel of the group during the financial year are set out in the following table:
Short-term benefits
& fees
Benefits and Payments for the
Year Ended 30 June 2014
Directors
J McKay
T McCaul
J Schneider
G Swaby
C Pieters
A Gilby
Salary
Cash
Bonus
$
$
93,364
362,225
59,497
64,073
188,566
60,412
-
Post
Employment
Superannuation
Long -term
Benefits
Long
Service
Leave
$
$
8,636
17,775
5,503
5,927
5,334
5,588
8,729
-
Share-based
Payments
Total Cash
Remuneration
Performance
Rights
$
$
102,000
388,729
65,000
70,000
193,900
66,000
Total
$
-
102,000
388,729
65,000
70,000
193,900
66,000
Total Key Management
Personnel
828,137
48,763
8,729
885,629
885,629
The remuneration report for the 2013 financial year was passed with 92% of those voting, voting in favour. No specific feedback on its remuneration
practices was received at the AGM or has been received at any time throughout the year.
Short-term Benefits
Benefits and Payments for the
Year Ended 30 June 2013
Directors
J McKay
T McCaul
J Schneider
G Swaby
C Pieters
A Gilby
Salary &
Fees
$
Cash
Bonus
$
Post
Employment
Superannuation
$
87,683
363,530
54,475
56,915
89,099
-
7,892
16,470
4,813
5,122
4,688
54,163
-
4,875
Long term
Benefits
Long
Service
Leave
$
8,802
-
Share-based
Payments
Total Cash
Remuneration
$
Performance
Rights
$
95,575
388,802
59,288
62,037
93,787
59,038
Total Key Management
Personnel
705,865
43,860
8,802
758,527
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Fixed Remuneration
2014
2013
At risk
Short term incentives
2014
2013
Total
$
269,250
-
95,575
658,052
59,288
62,037
93,787
269,250
1,027,777
59,038
At risk
Long term incentives
2014
2013
Executive Directors
Tor McCaul
100.0%
59.1%
0.0%
0.0%
0.0%
38.0%
Long term incentives are provided by way of Performance Rights and the percentages disclosed above are based on the value of the Performance
Rights expensed during the year.
42
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
11. Remuneration Report – Audited (continued)
Details of Remuneration (continued)
Comparison of Key Management Personnel Remuneration to Company Performance
The table below shows the total remuneration cost of the Key Management Personnel, earnings per ordinary share (EPS), dividends paid or declared,
and the closing price of ordinary shares on ASX at year end for the current year and previous year.
Financial Year
Total Remuneration
$
2014
2013
2012
2011
2010
Service Agreements
885,629
1,027,777
595,384
533,900
523,902
EPS/
(Loss)
Cents
Dividends
Cents
Share Price
Cents
-
15.00
22.00
10.50
10.05
15.00
(3.00)
(1.78)
1.12
0.40
(1.59)
Remuneration and other terms of employment for the Managing Director and the Commercial Director are formalised in employment contracts. The
contracts provide for the provision of performance related bonuses and participation in the Comet Ridge Employee Performance Rights Plan. Other
major provisions of the employment agreements are set out below.
Tor McCaul
Managing Director (Appointed 16 April 2009)
Term of Agreement:
No fixed term
Base Salary:
$380,000 per annum (inclusive of superannuation)
Termination Benefit:
Three (3) months base salary is to be paid in lieu of notice of termination. Twelve (12) months is payable if
services are terminated due to change of control event. Subject to Board discretion, a further six (6) months
can be paid in addition.
Termination Notice:
The Company or Mr McCaul may terminate the Agreement at any time providing each other a minimum of
three 3 months’ notice. No termination benefit is required if terminated for cause.
Chris Pieters
Commercial Director for period 6 June 2013 to 31 October 2013
Term of Agreement:
Four months with options for parties to extend as needed
Remuneration:
Services provided as a consultant at $2,000 per day
Termination Benefit:
No termination benefits payable
Termination Notice:
Either party may terminate the Agreement with a minimum of fourteen days’ notice
Share-based Compensation
Long term incentives are provided to certain employees through the Comet Ridge Share Incentive Option Plan (up to date of the 2010 AGM) and the
Comet Ridge Limited Employee Performance Share Rights Plan as approved by shareholders at the 2010 Annual General Meeting.
Options
No options over shares in Comet Ridge Limited have been granted under the Comet Ridge Share Option Plan in the current year to Key Management
Personnel.
Comet Ridge Limited I Annual Report 2014
43
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
11. Remuneration Report – Audited (continued)
Share-based Compensation (continued)
Performance Rights
There were no Performance Rights granted during the year effecting remuneration in the current or a future period with respect to Key Management
Personnel. The terms and conditions of Performance Rights granted in prior years are as follows:
Grant Date
Number of
Performance
Rights
Vesting
Date
Expiry
Date
Share Price
at
Grant date
Performance
Condition
% Vested
23-Nov-11
175,000
05-Jul-12
05-Jul-13
14.5 cents
24 months service
15-Nov-12
800,000
07-Jul-13
14-Jul-13
16.0 cents
VWAP
The movements in the current year in the number of Performance Rights granted to Key Management Personnel in prior years:
30 June 2014
Grant Date
Vesting
Date
Director
T McCaul
T McCaul *
23-Nov-11
15-Nov-12
5-Jul-13
7-Jul-13
Balance at
Beginning of
Year
Granted as
Remuneration
During the year
Number of
Rights Vested
Number of
Rights Lapsed
100%
*20%
Balance at
End of Year
175,000
(175,000)
800,000
(160,000)
(640,000)
975,000
(335,000)
(640,000)
* Because of the share price at grant date, the VWAP condition was only partially satisfied resulting in 20% of the Performance Rights vesting.
Performance Rights are issued for no consideration and no amount is payable on vesting.
Key Management Personnel Shareholdings
The number of ordinary shares in the Company held by each key management person of the group is as follows:
30 June 2014
Directors
J McKay
T McCaul
J Schneider
G Swaby
C Pieters
A Gilby
Total
Balance at
Beginning of Year
33,889,551
3,875,000
4,248,416
1,050,000
24,215,848
67,278,815
END OF AUDITED REMUNERATION REPORT
44
Issued on
Vesting of
Rights
335,000
335,000
Shares
Purchased
-
Shares Sold
During the Year
-
Balance at
30 June 2014
33,889,551
4,210,000
4,248,416
1,050,000
24,215,848
67,613,815
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
12.
Options and Performance Rights
Options
There were no options for ordinary in Comet Ridge Limited on issue at 30 June 2014.
Performance Rights
Movements in the number of Performance Rights on issue and the number of ordinary shares issued during the year ended 30 June 2014 as a result of
Performance Rights vesting during the year are as follows:
Grant Date
Vesting Date
1-Oct-11
3-Oct-11
4-Oct-11
23-Nov-11
21-Mar-12
1-Jul-12
1-Jul-12
1-Jul-12
15-Nov-12
1-Jul-13
1-Jul-13
1-Jul-13
1-Jul-13
1-Jul-13
1-Jul-13
31-Dec-13
VWAP
1-Jul-14
1-Jul-15
VWAP
1-Jul-14
1-Jul-15
Closing Balance
30 June 13
Granted During the
Year
Vested During the
Year
Expired During the
year
Closing Balance
30 June 14
105,000
(105,000)
330,000
(330,000)
230,000
(230,000)
175,000
(175,000)
500,000
(500,000)
600,000
(600,000)
600,000
(500,000)
100,000
500,000
(500,000)
800,000
(160,000)
(640,000)
50,000
50,000
50,000
50,000
3,840,000
100,000
(2,100,000)
(1,640,000)
200,000
Since the end of the year, up to the date of this report, the movements in the number of Performance Rights on issue and the number of ordinary shares
issued during the period as a result of Performance Rights vesting during the period are as follows:
Grant Date
Vesting
Date
1-Jul-12
1-Jul-13
1-Jul-13
1-Jul-14
1-Jul-14
1-Jul-15
Number
July 14
100,000
50,000
50,000
200,000
Granted
Expired
-
Shares Issued
-
Number at
Report Date
(100,000)
(50,000)
(150,000)
50,000
50,000
13. Insurance of Directors and Officers
The Company has entered into agreements with Directors to indemnify them against any claims and related expenses that may arise in their capacity
as Directors and officers of the Company or a related body corporate, except where the liability arises out of conduct involving a lack of good faith and
subject to the provisions of the Corporations Act 2001.
During the financial year, the Company paid premiums for Directors’ and officers’ liability Insurance. The contract prohibits disclosure of the details of
the nature of the liabilities covered or the premium paid.
The Company has not during or since the end of the financial period indemnified or agreed to indemnify an Auditor of the Company.
14. Proceedings on behalf of Company
No person has applied for leave of Court under section 237 of the Corporations Act 2001 to bring proceedings on behalf of the Company or intervene in
any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings. The Company was not a party to any such proceedings during the year.
15. Company Secretary
Mr Stephen Rodgers was appointed Company Secretary on 16 April 2009 and continues in office at the date of this report. He is a lawyer with more
than 20 years’ experience and holds a Bachelor of Laws degree from Queensland University of Technology.
After practising law with several firms in Brisbane over a 12 year period he then operated his own specialist commercial and property law practice for 7
years. Mr Rodgers then joined the successful team at Sunshine Gas Limited, where he was the in-house Legal and Commercial Counsel; a broad role
which also included assisting the Company Secretary with many of the facets of that position. During this period, Mr Rodgers gained invaluable
experience in the operation and running of an ASX200 coal seam gas company as well as being instrumental member of the team which led the
takeover negotiations and implementation of QGC’s friendly acquisition of that Company.
Comet Ridge Limited I Annual Report 2014
45
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Report (continued)
15. Company Secretary (continued)
Since 2009 merger of Comet Ridge with Chartwell Energy Limited in April 2009, Mr Rodgers has been the Company Secretary of Comet Ridge Limited
a position which he continues to hold. He also holds the position of Company Secretary of Tlou Energy Limited, an ASX listed CSG Exploration
Company operating in southern Africa. Mr Rodgers brings to Comet Ridge strong legal and commercial experience with a particular emphasis on the
coal seam gas industry
16. Non-Audit Services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience
with the Company and/or the group are important.
The Board of Directors has considered the position and, in accordance with advice received from the Audit Committee, is satisfied that the provision of
the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are
satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:


all non-audit services have been reviewed to ensure they do not impact the impartiality and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional
Accountants.
Details of the amounts paid or payable to the auditor for audit services provided during the year are set out in the financial statements.
During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and nonrelated audit firms:
Pitcher Partners
Tax consulting and compliance services
Total remuneration for non-audit services
This report is made in accordance with a resolution of the Board of Directors.
Tor McCaul
Managing Director
Brisbane, Queensland, 29 September 2014
46
2014
$
8,000
8,000
2013
$
14,300
14,300
PRIVATE AND CONFIDENTIAL
The Directors
Comet Ridge Limited
283 Elizabeth Street
Brisbane, QLD, 4000
Auditor’s Independence Declaration
As lead auditor for the audit of Comet Ridge Limited for the year ended 30 June 2014, I declare that, to the best of my knowledge and
belief, there have been:
(i)
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Comet Ridge Limited and the entities it controlled during the period.
PITCHER PARTNERS
N BATTERS
Partner
Brisbane, Queensland
29 September 2014
Comet Ridge Limited I Annual Report 2014
47
Comet Ridge Limited
ABN 47 106 092 577
48
2014
Annual Financial Statements
Contents
Statement of Comprehensive Income
50
Statement of Financial Position
51
Statement of Changes in Equity
52
Statement of Cash Flows
53
Notes to the Consolidated Financial
54
Directors' Declaration
98
Independent Auditor's Report
99
Comet Ridge Limited I Annual Report 2014
49
Comet Ridge Limited – Annual Report 30 June 2014
Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2014
Consolidated
Note
Revenue
Interest
Research & development tax offset
Other income
Expenses
Employee benefit’s expense
Contractors and consultants costs
Exploration restoration and rehabilitation
Exploration stand-by costs and other write-offs
Professional fees
2
2
3
3
12
2014
$
2013
$
222,319
2,981,989
-
304,641
182,045
19,691
(866,031)
(604,521)
(332,620)
(378,005)
(215,495)
(1,457,658)
(454,815)
(94,994)
(1,691,978)
(248,297)
(347,238)
(209,476)
(535,704)
(31,101)
(3,575,370)
(397,329)
Corporate expenses
Movement in fair value of financial liability at fair value
Occupancy costs
Other expenses
Depreciation and amortisation expense
Impairment - exploration expenditure
Impairment - available-for-sale financial assets
12
3
(255,705)
(340,776)
(221,683)
(322,756)
(27,517)
(9,148,736)
(3,287,033)
LOSS BEFORE INCOME TAX
Income tax (expense)/credit
4
(12,796,570)
(804,085)
(8,537,583)
1,551,037
(13,600,655)
(6,986,546)
705,281
-
928,440
(947,973)
3
3
3
LOSS FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Changes in fair value of available for sale financial assets
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS)
705,281
(19,533)
TOTAL COMPREHENSIVE LOSS
(12,895,374)
(7,006,079)
Loss attributable to:
Owners of the parent
Non-controlling interests
(13,600,655)
-
(6,986,546)
-
(13,600,655)
(6,986,546)
(12,895,374)
-
(7,006,079)
-
(12,895,374)
(7,006,079)
Total comprehensive loss attributable to:
Owners of the parent
Non-controlling interests
EARNINGS PER SHARE
Basic loss per share
Diluted loss per share
5
Cents
(3.00)
Cents
(1.78)
5
(3.00)
(1.78)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying Notes.
50
Comet Ridge Limited – Annual Report 30 June 2014
Statement of Financial Position
as at 30 June 2014
Consolidated
Note
2014
2013
$
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
6
7
4,814,076
960,092
4,464,130
818,937
Inventories
Other assets
8
9
98,571
464,254
108,389
473,760
6,336,993
5,865,216
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Available-for-sale financial assets
Property, plant and equipment
10
11
94,980
3,255,779
103,847
Exploration and evaluation expenditure
12
52,774,432
44,288,615
TOTAL NON-CURRENT ASSETS
52,869,412
47,648,241
TOTAL ASSETS
59,206,405
53,513,457
4,264,939
5,580,597
CURRENT LIABILITIES
Trade and other payables
13
Provisions
14
TOTAL CURRENT LIABILITIES
552,976
164,871
4,817,915
5,745,468
NON-CURRENT LIABILITIES
Financial liability at fair value
15
10,077,842
Provisions
Deferred tax liabilities
14
16
163,995
1,400,532
48,339
596,447
TOTAL NON-CURRENT LIABILITIES
11,642,369
644,786
TOTAL LIABILITIES
16,460,284
6,390,254
NET ASSETS
42,746,121
47,123,203
17
83,481,566
74,689,218
18
2,721,908
(43,457,353)
2,290,683
(29,856,698)
42,746,121
47,123,203
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
The above statement of financial position should be read in conjunction with the accompanying Notes.
Comet Ridge Limited I Annual Report 2014
51
Comet Ridge Limited – Annual Report 30 June 2014
Statement of Changes in Equity
for the year ended 30 June 2014
Contributed
Equity
$
Consolidated
Balance at 1 July 2012
Loss for the year
Impairment available-for-sale
Transfer to profit and loss
Other comprehensive income for the year
Total comprehensive income for the year
Foreign Currency
Translation Reserve
$
65,265,125
-
(216,139)
928,440
928,440
Balance at 30 June 2013
8,900,778
523,315
9,424,093
74,689,218
712,301
Balance at 1 July 2013
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
74,689,218
-
8,460,000
332,348
8,792,348
83,481,566
Transactions with owners in their
capacity as owners
Contributions of equity net of transaction costs
Shares issued on vesting of Performance Rights
Share-based payments
Transactions with owners in their
capacity as owners
Contributions of equity net of transaction costs
Shares issued on vesting of Performance Rights
Share-based payments
Balance at 30 June 2014
Available-for-Sale
Share-based
Accumulated
Reserve
Payments Reserve
Losses
$
$
$
947,973
(1,345,302)
397,329
(947,973)
1,508,283
-
(22,870,152)
(6,986,546)
(6,986,546)
44,635,090
(6,986,546)
(1,345,302)
397,329
928,440
(7,006,079)
-
(523,315)
593,414
70,099
1,578,382
(29,856,698)
8,900,778
593,414
9,494,192
47,123,203
712,301
705,281
705,281
-
1,578,382
-
(29,856,698)
(13,600,655)
(13,600,655)
47,123,203
(13,600,655)
705,281
(12,895,374)
1,417,582
-
(332,348)
58,292
(274,056)
1,304,326
(43,457,353)
8,460,000
58,292
8,518,292
42,746,121
The above statement of changes in equity should be read in conjunction with the accompanying Notes.
52
Total
$
Comet Ridge Limited – Annual Report 30 June 2014
Statement of Cash Flows
for the year ended 30 June 2014
Consolidated
Note
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Research and Development Tax Offset Grant received
Payments to suppliers and employees
Income tax paid
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES
2014
2013
$
$
211,936
337,967
2,981,989
(2,517,350)
182,045
(1,513,500)
26
(204,876)
676,575
(1,198,364)
(8,849,750)
(8,996,367)
(17,296)
(8,181)
(60,077)
(200,000)
(8,875,227)
(9,256,444)
Proceeds from issue of shares
Share issue costs
9,000,000
(540,000)
9,392,760
(491,982)
NET CASH PROVIDED BY FINANCING ACTIVITIES
8,460,000
8,900,778
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets
Payment for property, plant and equipment
Movements in restricted cash
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase/(decrease) in cash held
Cash at the beginning of the period
Effects of exchange rate changes on cash
CASH AT THE END OF THE YEAR
6
261,347
(1,554,030)
4,464,130
88,599
6,081,148
(62,988)
4,814,076
4,464,130
The above statement of cash flows should be read in conjunction with the accompanying Notes.
Comet Ridge Limited I Annual Report 2014
53
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements
Note 1 - Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently
applied to all of the years presented unless otherwise stated.
(a)
General information
These financial statements include the consolidated financial statements and Notes of Comet Ridge Limited (the Company) and its controlled entities
(Comet Ridge or “the group”). Comet Ridge Limited is a for-profit entity for the purpose of preparing the financial statements. Disclosures with respect to
the parent entity are included in Note 31. The financial statements were approved for issue by the Directors on 19 September 2014; subject to final
technical review.
Comet Ridge Limited is a public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business
is:
Level 3, 283 Elizabeth Street
BRISBANE QLD 4000
(b)
Basis of preparation
Compliance with Accounting Standards
These financial statements are a general purpose financial report that has been prepared in accordance with Australian Accounting Standards (including
the Australian Accounting Interpretations and other authoritive pronouncements of the Australian Accounting Standards Board) and the Corporations Act
2001. The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board.
Historical cost convention
The financial statements have been prepared on an accruals basis and are based on historical costs modified, where applicable, by the measurement at
fair value of selected non‑current assets, financial assets and financial liabilities.
Going concern
The consolidated financial statements have been prepared on a going concern basis which contemplates that the group will continue to meet its
commitments and can therefore continue normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of
business.
The ability of the group to execute its currently planned exploration and evaluation activities requires the group to raise additional capital within the next
12 months. Because of the nature of its operations, the Directors recognise that there is a need on an ongoing basis for the group to regularly raise
additional cash funds to fund future exploration activity and meet other necessary corporate expenditure. Accordingly, when necessary, the group
investigates various options for raising additional funds which may include but is not limited to an issue of shares, a farm-out of an interest in one or more
exploration tenements or the sale of exploration assets where increased value has been created through previous exploration activity.
At the date of this financial report, none of the above fund raising options have been concluded and no guarantee can be given that a successful
outcome will eventuate. As a result, the Directors have concluded that the current circumstances may cast significant doubt regarding the group's and
the Company's ability to continue as a going concern and therefore the group and Company may be unable to realise their assets and discharge their
liabilities in the normal course of business. Nevertheless, after taking into account the current status of the various funding options currently being
investigated and making other enquiries regarding other sources of funding, the Directors have a reasonable expectation that the group and the
Company will be successful with its current fund raising initiatives and, as a result, have adequate resources to fund its future operational requirements
and for these reasons they continue to adopt the going concern basis in preparing the financial report.
The financial report does not include adjustments relating to the recoverability or classification of recorded assets amounts or to the amounts or
classification of liabilities that might be necessary should the group not be able to continue as a going concern.
Reverse acquisition
In April 2009 Comet Ridge Limited acquired Chartwell Energy Limited resulting in Chartwell Energy Limited becoming a wholly owned subsidiary ("legal
subsidiary"). Pursuant to Australian Accounting Standard AASB 3 Business Combinations this transaction represented a reverse acquisition with the
result that Chartwell Energy Limited was identified as the accounting acquirer of Comet Ridge Limited (the "acquiree" and "legal parent").
The consolidated financial statements are issued under the name of the legal parent (Comet Ridge Limited) but are deemed to be a continuation of the
financial statements of the legal subsidiary (Chartwell Energy Limited).
54
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(b)
Basis of preparation (continued)
New and amended standards adopted
The group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant
to its operations and effective for the current reporting period. These standards are as follows:









AASB 10 Consolidated Financial Statements
AASB 11 Joint Arrangements
AASB 12 Disclosure of Interests in Other Entities
AASB 2011-7 Amendments to Australian Accounting Standards arising from Consolidation and
Joint Arrangements Standards
AASB 13 Fair value measurement and AASB 2011-8 Amendments to Australian Accounting Standards
arising from AASB 13
AASB 119 Employee benefits and AASB 2011-10 Amendments to Australian Accounting Standards
arising from AASB 119
AASB 128 Investments in Associates and Joint Ventures
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements
AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets
and Liabilities
The adoption of the new and revised standards has no effect on the amounts reported in the current and prior periods except as Noted below. The
group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. The nature of each new
standard and its impact on the group’s financial report are described below.
AASB 10 includes a new definition of control that focusses on the need to have both power and rights or exposure to variable returns. A review of all
investments in entities which are less than 100% owned was completed prior to transition to AASB 10 to assess the impact of the new standard. The
review determined that AASB 10 does not have any impact on the investments currently consolidated into the group.
Under AASB 11, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and
obligations of each investor, rather than the legal structure of the joint arrangement. The group has assessed the nature of its joint arrangements and
has determined that all of its interests are joint operations. The accounting for the group’s interest in joint arrangements has not changed as a result of
the adoption of AASB 11. As a result, the group continues to recognise its share of jointly held assets, liabilities, revenues and expenses which are
incorporated in the financial statements under the appropriate headings.
AASB 12 sets out the requirements for disclosures relating to the group’s interests in subsidiaries, joint arrangements, associates and structured entities.
Application of this standard does not affect any of the amounts recognised in the financial statements, but impacts the type of information disclosed in
relation to the group’s investments.
AASB 2011-7 gives effect to many consequential changes arising from the issue of AASB 10 and AASB 11.
AASB 13 explains how to measure the fair value of assets and liabilities and aims to enhance fair value disclosures. The standard defines a fair value
measurement hierarchy as follows:



Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Fair value assets and liabilities are required to be disclosed by level in accordance with fair value measurement hierarchy. The group has reviewed its
policies for measuring fair values and has determined that the adoption of AASB 13 has not changed how the group measures available-for-sale
financial assets, financial liabilities at fair value through the profit and loss and equity accounted investments. AASB 13 also introduced new disclosures
which have been included in Note 21.
AASB 119 changes the accounting for the group’s employee entitlement obligations. Liabilities for employee entitlements are now calculated on the date
of expected settlement rather than the date when settlement is due. In some cases, this may result in the liabilities, for example annual leave, being
discounted where employees are not expected to take their annual leave wholly within twelve months after the end of the reporting period. As a result,
some amount of annual leave will be measured as a long term benefit potentially resulting in lower annual leave liabilities where pay rises and
promotions were factored into the previously undiscounted leave liabilities. However, the annual leave is still presented as a current liability under AASB
101 Presentation of Financial Statements. These changes do not have a material impact on the financial performance or position of the group.
Limited amendments have been made to AASB 128 including extending the application of AASB 5 Non-current assets held for sale and discontinued
operations to interests in and joint ventures and how to account for changes in in interests in joint ventures and associates.
Comet Ridge Limited I Annual Report 2014
55
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(b)
Basis of preparation (continued)
New and amended standards adopted (continued)
AASB 2011-4 amends AASB 124 Related Party Disclosures and removes the requirement to disclose information about individual Key Management
Personnel (KMP) share and option holdings, loans and other transactions and balances in the Notes to the financial statements. Instead, Corporations
Act Regulation 2M.3.03 (1) now requires this information to be disclosed in the audited remuneration report. The amendments remove the duplication of
information relating to individual KMP in the Notes to the financial statements and the directors' report.
AASB 2012-2 amends AASB 7 Financial Instruments: Disclosures to require additional disclosures about offset positions and the nature of the
arrangements.
The adoption of these new Standards and Interpretations do not have a material impact on the financial performance or position of the group.
(c)
Critical accounting estimates and judgements
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement
when applying the group's accounting policies. These estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that may have a financial impact on the group and that are believed to be reasonable under the
circumstances.
The critical estimates and judgements applied in the preparation of the financial statements are as follows:
Recoverability of exploration and evaluation expenditure
The group assesses the recoverability of the carrying value of capitalised exploration and evaluation expenditure at each reporting date (or during the
year should the need arise). In completing this assessment, regard is given to the group's intentions with respect to proposed future exploration and
development plans for individual areas, to the success or otherwise of activities undertaken in individual areas, to the likely success of future planned
exploration activities, and to any potential plans for divestment of individual areas. Any required impairment of capitalised exploration and evaluation
expenditure is completed based on the results of the assessment. Furthermore, for various areas of interest, exploration and evaluation activities may
not have reached a stage to allow a reasonable assessment to be made regarding the existence of economically recoverable reserves. Accordingly,
exploration and evaluation assets may be subject to further impairment in the future.
During the year the impairment expenses recognised with respect to exploration and evaluation expenditure amounted to $9,148,736
(2013: $3,575,370). This impairment relates to the two remaining New Zealand permits (PMP50100 and PEP50279) which have now been fully
impaired.
Renegotiated Mahalo Option Agreement
Background
On 18 March 2014, Comet Ridge entered into a renegotiated option agreement with Stanwell Corporation Limited (SCL) with respect to the interest in
the ATP 337 Mahalo Gas Project.
Under the existing Mahalo Option Agreement which was entered into on 29 September 2011, the group entered into a Sale and Purchase Option
Agreement (SPOA) with the Queensland Government owned SCL for the sale of a 5% interest in the Mahalo JV i.e. 12.5% of the group’s 40% interest.
The key highlights of the original transaction were as follows:


The sale of an initial 5% interest in ATP 337P Mahalo for $7 million;
The grant of an option to acquire either an additional 15% (Option A) or 35% (Option B) interest in ATP 337P Mahalo in exchange for SCL funding
up to $8 million of expenditure commitments associated with the 40% interest held by Comet Ridge and SCL in the upcoming ATP 337P Mahalo
and Mira pilot programmes; and

In order to exercise the Option, SCL was required to pay Comet Ridge additional consideration based on the ATP 337P Mahalo certified 2P
reserves as at 31 December 2013, but this reserves date could be extended to as late as 31 December 2014.
Comet Ridge and SCL have now reconsidered the fundamental nature of the existing agreement and have determined that SCL’s main objective is to
secure future gas supplies rather than by SCL owning an interest in an exploration project.
56
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(c)
Critical accounting estimates and judgements (continued)
Renegotiated Mahalo Option Agreement (continued)
Background (continued)
As a result, Comet Ridge and SCL have renegotiated the existing SPOA. Under the Renegotiated Mahalo Option Agreement:

SCL will exchange its 5% interest in the Mahalo Gas Project and relinquish its options under the 2011 SPOA to secure up to a further 35% interest
in the Mahalo Gas Project; and

As consideration, Comet Ridge will enter into a new agreement being either a Gas Supply Agreement (Option A) or a Pay Agreement (Option B)
with SCL.
The term of both Options is 4 years commencing from the date of execution of the substantive agreements evidencing the Options. Option A and Option
B are mutually exclusive. The conditions attaching to these options are outlined below.
Option A is exercisable within eighty days after the receipt of a Final Investment Decision (FID) for any development of the Mahalo Gas Project permit
area. The period to FID is a maximum period of four years from the date of the agreement. The Gas Supply Agreement under Option A will provide SCL
with an agreed maximum gas volume at a market linked gas price and with an agreed $/GJ discount for gas supplied under the agreement.
Option B is be exercisable upon the earlier of FID for any development of the Mahalo Gas Project permit area or on the 4th anniversary date of the
execution of the new agreement. If SCL elects to exercise Option B, it will receive a cash payment of A$20m at 1 July 2014 dollar terms which is to be
escalated in accordance with CPI on and from 1 August 2015 and annually thereafter (or part thereof) up to the date the Pay Agreement is signed.
Nature of the Acquisition
For Comet Ridge, the renegotiated agreement with SCL is in essence a repurchase of the 5% interest in the Mahalo Gas Project originally sold to SCL
under the September 2011 SPOA. As a result of the new agreement, Comet Ridge will not only control 40% voting power of the joint operation but will
also be entitled to 40% of any gas recovered less the proportion guaranteed to SCL if it decides on the GSA option.
Australian Accounting Standard AASB 11 Joint Arrangements and the IASB Exposure Draft: Accounting for Acquisitions of Interests in Joint Operations
– Amendments to IFRS 11 issued in December 2012 deal with accounting for acquisitions of interests in joint operations. In accordance with the
Accounting Standards, an entity that acquires an interest or increases its interest in a joint operation is required to consider the principles of AASB 3
Business Combinations and determine whether the interest acquired constitutes a “business”. If the activities and assets acquired constitute a business,
the acquisition will then be accounted for in accordance with AASB 3.
AASB 3 Business Combinations defines a business as:
“An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of
dividends, lower costs or other economic benefits directly to investors or other owners, members or participants.”
For the purposes of determining the accounting treatment, it is considered that at the date of acquisition of the additional interest, the existing activities
and assets of the joint operation are not yet capable of being conducted and managed to provide a return. In this respect, it is acknowledged that before
the existing operations can provide a return, considerable additional investment will be required not only to define the characteristics and extent of the
resource but also in the form of surface facilities to recover, process and store the gas recovered.
Based on the analysis above, it has been concluded that the renegotiated Mahalo Option Agreement is not a business combination and Comet Ridge will
adopt the “cost approach” to account for the acquisition of the additional interest in the joint operation. Under the cost approach the total cost of
acquiring the interest is allocated to identifiable assets and liabilities on the basis of their fair values i.e. any premium will be allocated to individual assets
rather than goodwill. In addition, no deferred tax is recognised and acquisition costs are capitalised.
Accounting for the Acquisition
The nature of the consideration payable by Comet Ridge is at the option of SCL and is either by way of:
1.
2.
The discount under the Gas Supply Agreement (Option A). Under this option, the consideration is paid by Comet Ridge foregoing a portion of its
future revenue from the Mahalo field over the life of the Gas Supply Agreement. The revenue foregone by Comet Ridge is the $15m discount
expressed in 1 July 2013 dollar terms and indexed by CPI up to the date the Gas Supply Agreement is signed; or
A cash payment of $20m indexed by CPI from 1 July 2014. This is the amount which will be payable if SCL decides not to exercise Option A or an
acceptable gas supply agreement cannot be agreed.
Comet Ridge Limited I Annual Report 2014
57
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(c)
Critical accounting estimates and judgements (continued)
Renegotiated Mahalo Option Agreement (continued)
Accounting for the Acquisition (continued)
Of the two options available, it is considered reasonable to assume that SCL will choose the option that provides the greatest benefit. If the Mahalo field
proves up with significant reserves, SCL would be expected to proceed with Option A. If the field proves up with low gas volumes then SCL would be
expected to opt for Option B. Obviously, there is a midway point where SCL will be ambivalent as to whether it chooses Option A or Option B.
While not conclusive, the current results from the Mahalo and Mira pilot operations to date indicate that the Mahalo field has the potential for a significant
gas resource. On this basis, and for the purposes of establishing the initial accounting treatment to be adopted with respect to the Renegotiated Mahalo
Option Agreement, it has been assumed that the most likely outcome is that SCL would exercise Option A. At each balance date this assumption will
need to be reviewed to ensure that it is still relevant given the results being achieved by the ongoing pilot operations and any other subsequent
exploration activity.
The following assumptions have been made for the purpose of determining the initial accounting entries to be taken up to record the re-acquisition of the
5% interest in the Mahalo Gas Project.


At balance date, the most likely outcome is that SCL will exercise Option A and enter into a Gas Supply Agreement;
The consideration payable will be the amount specified in Option A i.e. $15m at 1 July 2013 dollar terms indexed for four years from the date of
the agreement at CPI;

The CPI rate has been based on the target upper level inflation rate used by the RBA which is estimated to be 3% pa;

The Gas Supply Agreement will be signed on 18 March 2018 i.e. four years from the date of signing the Renegotiated Mahalo Option Agreement;

The consideration payable at 18 March 2018 i.e. $15m indexed represents the amount of finance provided by SCL;

The fair value of the exploration asset acquired will be the NPV at 18 March 2014 of the consideration payable to SCL at 18 March 2018;

The discount rate for the NPV calculation will be Comet Ridge’s pre-tax weighted average cost of capital (WACC) estimated at 14.75% pa; and

The amount of finance charges over the term of the agreement will be the difference between the consideration payable at 18 March 2018 and the
NPV of this amount at 18 March 2014.
Using these assumptions, the inputs to determine the initial accounting entries to be taken up to reflect the purchase are as follows:
Gas supply discount and liability to SCL @ 1 July 2013
$15,000,000
Gas supply discount and liability to SCL @ FID indexed using 3% pa CPI
$16,882,632
Fair value of exploration asset acquired = NPV of SCL liability @14.75% pa discount rate
$9,737,094
Total expected future value movements over 4 year period of gas supply agreement.
$7,145,538
If at some stage during the four year term of the option agreement it becomes apparent that Option B is the most likely outcome, then an additional
amount of exploration and evaluation assets will be taken up so that the full amount of the liability is recorded i.e. $20m indexed. This liability would then
be extinguished by payment. In addition, if Option B is chosen it may be an indication that the increased exploration and evaluation asset recorded is
impaired. Future movements in the fair value of financial liabilities at fair value will be recognised in profit and loss.
Financial Guarantee Contract
One of the terms of the renegotiated Mahalo Option Agreement is that the parent entity (Comet Ridge Limited) guarantees the indexed $20m
consideration payable by Comet Ridge Mahalo Pty Ltd (CRM) under Option B. In accordance with AASB 139 Financial Instruments, Recognition and
Measurement, at each balance date to the extent that a liability/asset exists, Comet Ridge Limited will need to recognise a Financial Guarantee Contract
liability and CRM will record a Financial Guarantee Contract asset.
AASB 13 Fair Value defines “fair value” as:
“Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most
advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable
or estimated using another valuation technique.”
58
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(c)
Critical accounting estimates and judgements (continued)
Financial Guarantee Contract (continued)
In accordance with AASB 13, when there is no market for the liability which is considered to be the position in this case, the standard directs the entity to
look at the identical item held by other parties as an asset. CRM is the market participant that holds the identical item as an asset. As a result, the value
of the liability at any point in time over the term of the option agreement i.e. the net amount Comet Ridge Limited could be called on to pay is the indexed
amount of the $20m less the fair value of CRM's interest in the Mahalo Gas Project. As a result, Comet Ridge Limited’s exposure to a financial
guarantee liability arises from the risk that at any point in time the fair value of CRM's interest in the Mahalo Gas Project is less than the amount indexed
liability.
In order to determine the fair value of CRM’s interest in the Mahalo Gas Project, CRM has developed a valuation methodology that takes into account
the estimated cash flows from the development of the Mahalo Gas Project for eight commencing from June 2018. The cash flows in the model are
prepared on a 100% project basis and CRM’s share calculated as 40% of the NPV. The valuation is based on the gas price scenario of ‘Stanwell 1/3 +
Westside 2/3’ scenario (currently active). Under this scenario the valuation adopts the Stanwell GSA pricing for 1/3 of gas volumes for the term of the
GSA, with the remaining 2/3 based on Westside’s GLNG GSA pricing indexed at CPI. Following the Stanwell GSA (after delivery of 40PJ over 8 years
based on the current set of assumptions), pricing reverts to Westside’s GLNG GSA pricing for all production. The well profile is based on drilling 840
wells over 8 years i.e. 105 wells each year.
The valuation concludes that the NPV CRM’s 40% interest in the Mahalo Gas Project is $144m. Based on this valuation, at 30 June 2014 CRM’s
Financial Guarantee Asset would have a zero value as the underlying asset supporting the financial guarantee is significantly above the value of the
guarantee. As a result, Comet Ridge Limited’s financial guarantee liability at 30 June 2014 is also nil.
Loans to subsidiaries and investments in subsidiaries
The parent entity has recorded investments in subsidiaries at cost of $48,289,611 (2013: $48,289,611) less provisions for impairment $47,307,807
(2013: $38,910,206). The parent entity has also loaned funds to its subsidiaries of net $20,514,802 (2013: $14,713,592) primarily to undertake
exploration expenditure. The parent entity has impaired the carrying amount of the loans by $15,601,046 (2013: $12,612,134). The impairment of the
investments and loans has been based on the underlying net assets of the subsidiaries. In future periods, as the underlying exploration and evaluation
activities progress on various tenements, and with changes in other market conditions, the carrying amounts of the investments and loans may need to
be reassessed in line with the net asset position of the subsidiaries or as otherwise appropriate.
Fair value of available-for-sale financial assets
Comet Ridge USA Inc. (CRUSA), a wholly owned subsidiary of Comet Ridge Limited, owns a 10.04 per cent (2013: 12.08 per cent) minority interest in
Comet Ridge Resources, LLC (“CRR”). CRR operations include oil and gas exploration and evaluation and oil production in the state of Colorado USA.
Pine Brook Road Partners LLC (Pine Brook), a private equity firm based in New York City, USA holds the majority interest at approximately 89.5 per cent
(2013: 87.5 per cent). Comet Ridge Limited may retain its minority interest in CRR by contributing cash as and when requested to fund CRR’s ongoing
exploration and evaluation programme. Under the arrangements with the private equity fund, should the group not contribute, its interest will decline to
no less than 7.2 per cent
The group has classified its interest in CRR as an available-for-sale financial asset and, in accordance with AASB 139 Financial Instruments:
Recognition and Measurement, values the investment at fair value. The fair value measurement of the 'available-for-sale' financial asset is based on the
group's proportionate interest in the net assets of CRR discounted for minority interest and liquidity considerations. As the valuation technique for this
asset is based on significant unobservable inputs, the asset is included in level 3. This is considered the most reliable valuation method given:



the group has a minority equity interest in an unlisted company (CRR);
the nature of CRR’s activities, being oil and gas production and exploration;
the oil and gas reserves and resources interests of CRR are either carried at fair value or on a basis consistent with the group's accounting policy
for the recognition and measurement of exploration and evaluation expenditure; and

the continued contributions to CRR by Pine Brook.
During the year, COI elected not to pay cash calls which have resulted in COI's interest in CRR LLC being diluted slightly from 12.084% to 10.04%.
Also, during the year CRR has impaired its exploration assets which also indicates that there has been a further impairment of COI's investment.
Comet Ridge Limited I Annual Report 2014
59
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(c)
Critical accounting estimates and judgements (continued)
Fair value of available-for-sale financial assets (continued)
Given that COI holds a minority interest in CRR that is now around the 10% level, and also given that the CRR investment is not material to COI and COI
plans to not pay further cash calls (given the COI’s eastern Australia gas focus) it is considered prudent to fully impair the investment in CRR at 30 June
2014. As a result, an impairment expense of $Au 3,287,033 (2013: $Au 1,345,302) has been recognised. Also, because of the movements of the $Au
against the $US, an unrealised FX gain of $Au 31,254 (2013: FX loss $Au 238,389) arises on the translation of the Comet Ridge USA Inc balances to
$Au.
Joint Arrangements
The group has interests in the following joint Arrangements:
ATP337P Mahalo
–
35%
PEL427 Gunnedah –
50%
PEL428 Gunnedah –
60%
PEL6 Gunnedah
–
22.5%
ATP1015P Galilee –
20%
In accordance with AASB 11 Joint Arrangements, the accounting treatment adopted for these joint arrangements depends upon an assessment of the
rights and obligations of the parties to the arrangement that are established in each of the joint operating agreements (JOAs) or the farm-in agreement
as the case may be. The JOA or farm-in agreement sets out the voting rights of the parties to the agreement. The voting rights determine who has
control i.e. the power to direct the operating activities of the joint arrangement.
Based on the on an analysis of each JOA and farm-in agreement, the group has classified each of its joint arrangements as a “joint operation” in
accordance with the requirements of AASB 11 in that:
1.
there is joint control because all decisions about the operating activities requires unanimous consent of all the parties, or a group of the parities
considered collectively; and
2. each party to the joint operation has rights to its respective interest in the assets and revenue of the arrangement, and obligations for its share of
the liabilities and expenditure.
As a result, the group recognises in its financial statements its share of the revenue, expenses, assets and liabilities of each of the joint operations in
which it has an interest.
(d)
Principles of consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to,
or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities
of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that
control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the group.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. The financial
statements of subsidiaries are prepared for the same reporting period as the parent entity. Investments in subsidiaries are accounted for at cost in the
separate financial statements of Comet Ridge Limited.
Changes in ownership interests
The group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the group. A
change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative
interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is
recognised in a separate reserve within equity attributable to owners of the parent entity.
When the group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the
change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the
retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive
income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This means that any amounts
previously recognised in other comprehensive income are reclassified to profit or loss.
60
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(d)
Principles of consolidation (continued)
Subsidiaries
If the ownership interest in a jointly-controlled entity or an associate is reduced but joint control or significant influence is retained, only a proportionate
share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.
Joint arrangements
The group’s exploration activities are often conducted through joint arrangements. Joint arrangements are classified as joint operations or joint ventures
depending on the contractual rights and obligations that each investor has, rather than the legal structure of the joint arrangement.
In accordance with AASB 11 Joint Arrangements, all of the groups’ interests in joint arrangements are classified as joint operations. A joint operation
involves joint control of the assets contributed or acquired for the purpose of the joint operation. Each party may take their share of the output of the joint
operation and each bears its share of the expenses incurred. The interests of the group in joint operations are brought to account by recognising the
group’s share of jointly controlled assets, liabilities, revenue and expenses.
(e)
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which
the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Comet Ridge Limited’s
functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income, except when they are deferred in equity as
qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.
Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on nonmonetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss.
Translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are included in the fair value reserve in
equity.
Group companies
The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation currency as follows:



assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial
position;
income and expenses for each Statement of Comprehensive Income are translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the
dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial
instruments designated as hedges of such investments, are recognised in other comprehensive income and accumulated as a separate component of
equity. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange
differences that have been accumulated in equity are recognised in the Statement of Comprehensive Income, as part of the gain or loss on sale where
applicable.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at
the closing rate.
(f)
Income taxes
The income tax expense (revenue) for the year is the tax payable on the current year's taxable income based on the applicable income tax rate for each
jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the year in the countries where
the Company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to (recovered from) the relevant tax authorities.
Comet Ridge Limited I Annual Report 2014
61
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(f)
Income taxes (continued)
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign
operations where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not
reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when deferred tax
balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right of offset
and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly
in equity. In this case, the tax is recognised in other comprehensive income or directly in equity, respectively.
Tax consolidation
Comet Ridge Limited and its wholly owned Australian subsidiaries (Chartwell Energy Pty Ltd, Comet Ridge Mahalo Pty Ltd, Comet Ridge Gunnedah Pty
Ltd, Davidson Prospecting Pty Ltd and Comet Ridge NZ Pty Ltd) have implemented the tax consolidation legislation and formed a tax consolidated group
from 1 July 2009. The members of the tax consolidated group have entered into a tax funding agreement such that each member recognises the assets,
liabilities, expenses and revenues in relation to its own transactions, events and balances only. This means:
i.
ii.
iii.
the parent entity recognises all current and deferred tax amounts relating to its own transactions, events and balances;
the subsidiaries recognise all current and deferred tax amounts relating to its own transactions, events and balances; and
current tax liabilities and deferred tax assets arising with respect to losses in subsidiaries are transferred from the subsidiaries to the parent entity
as inter-company payables or receivables.
The tax consolidated group also has a tax sharing agreement in place to limit the liability of subsidiaries in the tax consolidated group arising under the
joint and several liability requirements of the tax consolidation system, in the event of default of the parent entity to meet its payment obligations.
(g)
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial
position.
(h)
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
provision for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is
not expected more than 12 months after reporting date.
Collectability of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount
directly. An allowance account (provision for impairment of receivables) is used when there is objective evidence that the group will not be able to collect
all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of
the impairment allowance is the difference between the asset’s carrying amount and the present value of the estimated future cash flows, discounted at
the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in profit or loss as part of other expenses. When a trade receivable for which an impairment allowance
has been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are credited against other expenses in profit or loss.
(i)
Inventories
Inventories are measured at the lower of cost and net realisable value. Costs are assigned on the specific identification basis.
62
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(j)
Property, plant and equipment
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
The depreciable amount of all plant and equipment is calculated on a straight-line basis over the asset's useful life to the group commencing from the
time the asset is held ready for use. The depreciation rates used are:
Class of fixed asset
Plant and Equipment
10% - 33%
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Statement
of Comprehensive Income.
(k)
Intangible assets
Goodwill
Goodwill is initially recorded at the amount by which the purchase price for a business combination exceeds the fair value attributed to the interest in the
net fair value of identifiable assets, liabilities and contingent liabilities at date of acquisition. Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill on acquisition of associates is included in investment in associates. Goodwill is tested annually for impairment and carried at
cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity
sold.
(l)
Exploration, evaluation and development expenditure
Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets on an area of interest
basis. Costs incurred before the group has obtained the legal rights to explore an area are expensed in the profit or loss.
Exploration and evaluation assets are only recognised if the rights to the area of interest are current and either:
i.
ii.
the expenditures are expected to be recouped through successful development and exploitation of the area of interest or by its sale; or
activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or
otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility and commercial viability and facts
and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and
evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than the
area of interest.
Once the technical feasibility and commercial viability of the area of interest are demonstrable, exploration and evaluation assets attributable to that area
of interest are first tested for impairment and then reclassified from exploration and evaluation assets to property and development assets within
property, plant and equipment.
Restoration costs that are expected to be incurred are provided for as part of the cost of the exploration and evaluation activity that gives rise to the need
for restoration. Accordingly, these costs will be recognised gradually over the life of the project as the activities occur.
(m)
Investments and other financial assets and liabilities
Classification and measurement
The group classifies its financial assets and liabilities in the following categories: financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, available for sale financial assets and financial liabilities at fair value. The classification depends on the
purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of
assets classified as held to maturity, re-evaluates this classification at the end of each reporting period.
Financial assets are initially measured at fair value plus transaction costs, except where the asset or liability is classified at fair value through profit or
loss, in which case transaction costs are expensed to profit or loss immediately.
Financial assets are subsequently measured at either fair value or amortised cost using the effective interest method, or cost.
Comet Ridge Limited I Annual Report 2014
63
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(m)
Investments and other financial assets (continued)
Classification and measurement (continued)
Fair value represents the amount for which an asset could be exchanged between knowledgeable, willing parties. For listed investments, quoted prices
in an active market are used to determine fair value. For unlisted investments, valuation techniques are adopted to determine fair value including
reviewing publically available data from recent, comparable arm's length transactions or by reference to valuation and pricing models for similar financial
assets.
Amortised cost is calculated as:
i.
ii.
the amount at which the financial asset is measured at initial recognition less any principal repayments received;
minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the
effective interest method; and
iii.
less any reduction for impairment.
The effective interest method is used to allocate interest income over the relevant period and is equivalent to the rate that exactly discounts estimated
future cash receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably
predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset. Revisions to expected future net cash flows
will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.
The group’s financial assets comprise only non-derivative financial instruments consisting of equity securities, trade and other receivables, cash and
cash equivalents and term deposits.
(a) Financial assets at fair value through profit or loss
Financial assets are classified at fair value through profit or loss when they are either held for trading for the purpose of short-term profit taking,
derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance
evaluation where a group of financial assets is managed on a fair value basis in accordance with a documented risk management or investment
strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.
Assets in this category are classified as current assets if they are expected to settle within 12 months; otherwise they are classified as non-current.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are
subsequently measured at amortised cost. They are included in current assets except those with maturities greater than 12 months after reporting
date which are classified as non-current.
(c) Held-to-maturity
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the group's
intention to hold these investments to maturity. They are subsequently measured at amortised cost. Held-to-maturity financial assets are included in
non-current assets except for those with maturities less than 12 months from the end of the reporting period, which are classified as current assets.
(d) Available-for-sale
Available-for-sale financial assets include any financial assets not included in the above categories. Available-for-sale financial assets are
subsequently measured at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity. They are included
in non-current assets unless the investment matures or management intends to dispose of the investment within 12 months of the end of the
reporting period.
The group’s financial assets comprise only non-derivative financial instruments consisting of equity securities, trade and other receivables, cash and
cash equivalents and term deposits.
The group’s financial liabilities comprise the liability owed to Stanwell Corporation Limited arising from the renegotiated Mahalo Option Agreement which
is designated as a financial liability at fair value. The fair value of this liability is based on the anticipated discounted cash flows arising from the
renegotiated Mahalo Option Agreement. Future movements in the fair value of financial liability at fair value will be recognised in profit and loss.
The group does not designate any interests in subsidiaries, associates or joint ventures as being subject to the requirements of accounting standards
specifically applicable to financial instruments.
64
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(m)
Investments and other financial assets (continued)
Recognition and de-recognition
Financial assets are recognised on trade-date - the date on which the group commits to purchase or sell the asset. Financial assets are derecognised
when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the
risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are
reclassified to profit or loss as gains or losses from investment securities.
Impairment
At the end of each reporting period, the group assesses whether there is objective evidence that a financial asset or group of financial assets is impaired.
A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result
of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated
future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as
available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired
(i) Assets carried at the amortised cost
For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest
rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment
has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is
recognised in profit or loss.
Impairment testing of trade receivables is described in Note 1(g).
(ii) Assets classified as available-for-sale
If there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss – measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from
equity and recognised in profit or loss.
Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent period.
If the fair value of a debt instrument classified as available-for-sale increases in a subsequent period and the increase can be objectively related to
an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.
(n)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently
if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of impairment at each reporting date.
(o)
Trade and other payables
These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due
within 12 months from reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective
interest rate method.
Comet Ridge Limited I Annual Report 2014
65
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(p)
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Statement of Comprehensive Income over
the period of the borrowings using the effective interest method.
The fair value of the liability portion of a convertible Note is determined using a market interest rate for an equivalent non-convertible Note. This amount
is recorded as a liability on an amortised cost basis until extinguished on conversion or redemption of the Note. The remainder of the proceeds is
allocated to the conversion option. This is recognised and included in shareholders’ equity, net of income tax effects.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after
the Statement of Financial Position date.
(q)
Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled wholly within 12
months after the end of the reporting period in which the employees render the related service are recognised in respect of employees’ services up to the
end of the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is
recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables.
Other long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled wholly within 12 months after the end of the period in which the
employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments
are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least
twelve months after the reporting date, regardless of when actual settlement is expected to occur.
Superannuation
The group makes contributions to defined contribution superannuation funds. Contributions are recognised as an expense as they become payable.
Share-based payments
Share-based compensation benefits are provided to employees under the Comet Ridge Share Incentive Option Plan, the Comet Ridge Limited
Employee Performance Share Rights Plan or under terms and conditions as determined by the Directors.
The fair value of options granted is recognised as an employee benefits expense with a corresponding increase in equity. The total amount expensed is
determined by reference to the fair value of the options granted, which includes any market performance conditions but excludes the impact of any nonmarket performance vesting conditions and the impact of any non-vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over
the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its
estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to
original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
(r)
Provisions
Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of
economic benefits will result and that outflow can be reliably measured.
66
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(s)
Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
(t)
Revenue
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates
allowed.
The group recognises revenue when the amount of revenue can be reliably measured, it is probable the future economic benefits will flow to the entity
and specific criteria have been met for each of the group's activities as described below. The group bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the specifics of each Operation.
Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument.
Dividend revenue is recognised when the right to receive a dividend has been established.
All revenue is stated net of the amount of goods and services tax (GST).
(u)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax
Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables
and payables in the statement of financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are
disclosed as operating cash flows.
(v)
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare
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 profit or loss in the period in which they are incurred.
(w)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating
decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of
Directors.
(x)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company, excluding any costs of servicing equity other
than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares
issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of
interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that
would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
Comet Ridge Limited I Annual Report 2014
67
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(y)
Business combinations
The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and
the equity interests issued by the group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the
fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition
date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling
interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous
equity interest in the acquiree over the fair value of the group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are
less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is
recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of
exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair
value with changes in fair value recognised in profit or loss.
Reverse acquisitions
In some business combinations, commonly referred to as reverse acquisitions, the acquirer is the entity whose equity interests have been acquired (the
legal subsidiary) and the issuing entity is the acquiree (the legal parent). The legal subsidiary is the acquirer if it has the power to govern the financial
and operating policies of the legal parent so as to obtain benefits from its activities.
In a reverse acquisition, the cost of the business combination is deemed to have been incurred by the legal subsidiary (i.e. the acquirer for accounting
purposes) in the form of equity instruments issued to the owners of the legal parent (i.e. the acquiree for accounting purposes). If the published price of
the equity instruments of the legal subsidiary is used to determine the cost of the combination, a calculation is made to determine the number of equity
instruments the legal subsidiary would have had to issue to provide the same percentage ownership interest of the combined entity to the owners of the
legal parent as they have in the combined entity as a result of the reverse acquisition. The fair value of the number of equity instruments so calculated is
used as the cost of the combination.
If the fair value of the equity instruments of the legal subsidiary is not otherwise clearly evident, the total fair value of all the issued equity instruments of
the legal parent before the business combination is used as the basis for determining the cost of the combination.
Consolidated financial statements prepared following a reverse acquisition are issued under the name of the legal parent, but represent a continuation of
the financial statements of the legal subsidiary (i.e. the acquirer for accounting purposes).
Reverse acquisition accounting determines the allocation of the cost of the business combination as at the acquisition date but does not apply to
transactions after the combination.
(z)
Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and
subsequently at the higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the
amount initially recognised less any cumulative amortisation.
Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no compensation, the fair values are accounted for
as contributions and recognised as part of the cost of the investment.
68
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(aa)
Leases
Leases are classified at commencement as either finance leases or operating leases.
Finance leases
Leases of property, plant and equipment where substantially all the risks and rewards of ownership are transferred to the group are classified as finance
leases. Finance leases are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, the present value of the
minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each
lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period at the interest rate
implicit in the lease. Leased assets are depreciated on a straight line basis over the asset's estimated useful life or over the shorter of the asset's useful
life and the lease term where there is no reasonable certainty that the group will obtain ownership at the end the lease term.
Operating leases
Leases where a significant portion of the risks and rewards of ownership are not transferred to the group are classified as operating leases. Operating
lease payments (net of any incentives received from the leasor) are charged to profit or loss on a straight line basis over the period of the lease.
(ab)
Comparatives
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
(ac)
New accounting standards and interpretations for application in future periods
A number of Australian Accounting Standards and Interpretations have been issued or amended but are not yet mandatory for the 30 June 2014 annual
reporting period and have not been early adopted by the group for the preparation of these financial statements. The group’s assessment of the impact
of these new or amended Standards and Interpretations, most relevant to the group, are set out below:
AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities (effective from 1
January 2014)
The amendments to AASB132 Financial Instruments: Presentation clarifies when an entity has a legally enforceable right to set-off financial assets and
financial liabilities permitting entities to present balances net on the balance sheet. There will be no impact on the group as there are no offsetting
financial assets and financial liabilities.
AASB 2013-3 Amendments to Australian Accounting Standards AASB136 – Recoverable Amount Disclosures for Non-Financial Assets
(effective from 1 January 2014)
These amendments introduce additional disclosure requirements where the recoverable amount of impaired assets is based on fair value less cost of
disposal. There will be no impact on the group’s disclosures as the group does not determine the recoverable amounts of impaired asset using fair value
less cost of disposal.
AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivative and Continuation of Hedge Accounting (effective
from 1 January 2014)
These amendments to AASB139 Financial Instruments: Recognition and Measurement permit the continuation of hedge accounting in circumstances
where a derivative, which has been designated as a hedging instrument, is novated from one counterparty to a central counterparty as a consequence of
laws or regulations. There will be no impact on the group as it does not hold hedging instruments.
AASB2013-5 Amendments to Australian Accounting Standards AASB10 – Investment Entities (effective from 1 January 2014)
These amendments to AASB10 (and others) define an investment entity and require that, with limited exceptions, an investment entity not consolidate its
subsidiaries or apply AASB 3 Business Combinations when it obtains control of another entity. Instead, an investment entity is to measure
unconsolidated subsidiaries at fair value through profit or loss in accordance with AASB 9. There will be no impact on the group as it does not meet the
definition of an investment entity.
Comet Ridge Limited I Annual Report 2014
69
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(ac)
New accounting standards and interpretations for application in future periods (continued)
AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments (effective I
January 2014) – Part B – Materiality and AASB 2014-1 Amendments to Australian Accounting Standards – Part C: Materiality (effective from 1
July 2014)
Removes the guidance on materiality from AASB 1031 Materiality and inserts cross references to other standards and the Framework for the
Preparation and Presentation of Financial Statements where guidance on materiality is located. AASB 2014-1 makes amendments to particular
Australian Accounting Standards to delete their references AASB 1031 Materiality. These changes will not have any impact on the group.
Interpretation 21 – Levies (effective from 1 January 2014)
This interpretation clarifies the circumstances which a liability to pay a levy imposed by a government, other than for income taxes and fines/breaches
imposed for breaches of legislation, should be recognised, and whether that liability should be recognised in full at a specific date or progressively over a
period of time. These changes will not have any impact on the group.
AASB 2014-1 Amendments to Australian Accounting Standards – Part A: Annual Improvements 2010-2012 and 2012-2013 Cycles (effective
from 1 July 2014)
Amendments to existing accounting standards providing clarification in relation to Share-based payment vesting and non-vesting conditions, operating
segment asset disclosures, current/non-current debt classification, exemptions for joint ventures from business combination requirements and a number
of other standards. These changes will not have any impact on the group.
AASB 2014-1 Amendments to Australian Accounting Standards – Part B: Defined Benefits Plans: Employee Contributions (Amendments to
AASB 119 Employee Benefits (effective from 1 July 2014)
Allows employee and third party contributions that meet certain criteria to be recognised as a reduction of the service cost in the period in which the
related service is rendered. These changes will not have any material impact on the group.
AASB 2014-3 Amendments to Australian Accounting Standard AASB 11 Joint Operations - Accounting for Acquisitions of Interests in Joint
Operations (effective from 1 January 2016)
The amendments to IFRS 11 deal with accounting for acquisitions of interests in joint operations. Prior to these amendments, a joint operator was
required to account for what belongs to them i.e. its share of assets, liabilities, revenue and expenditure shared or incurred jointly. The effect of the
amendments is to require an entity that acquires an interest or increases its interest in a joint operation to consider the principles of AASB 3 Business
Combinations and determine whether the interest acquired constitutes a “business”. If the activities and assets acquired constitute a business, the
acquisition will then be accounted for in accordance with AASB 3.
While the amendments are not effective until 1 July 2016, these amendments merely clarify common practice and therefore need to be considered in the
context of the Renegotiated Mahalo Option Agreement entered into during the year. The possible impact of these amendments was taken into account
to determine the accounting treatment adopted for the renegotiated option agreement which is discussed in greater detail at Note 1 (c).
AASB 2014-4 Amendments to Australian Accounting Standards AASB 16 Property, Plant & Equipment and AASB 38 Intangible Assets Clarification of Acceptable Methods of Depreciation and Amortisation (effective from 1 January 2016)
The amendments clarify that (other than in limited circumstances for intangible assets) the use of revenue-based methods for calculating depreciation
and amortisation is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the
consumption of economic benefits embodied in the asset. There will be no impact from the application of these amendments as the group does not use
this method of calculating depreciation.
70
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
(ac)
New accounting standards and interpretations for application in future periods (continued)
AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9, AASB 2010-7
Amendments to Australian Accounting Standards arising from AASB 9 (December 2010), AASB 2013-9 Part C Amendments to Australian
Accounting Standards Conceptual Framework, Materiality and Financial Instruments and AASB 2014-1 Amendments to Australian Accounting
Standards Part E consequential to hedge accounting requirements and further amends application date (effective from 1 January 2018)
This standard provides guidance on the classification and measurement of financial assets and financial liabilities. The standard is not applicable until 1
January 2018 but is available for early adoption. AASB 9 permits the recognition of fair value gains and losses in other comprehensive income if they
relate to equity investments that are not held for trading. Upon realisation the accumulated changes in fair value are not recycled to profit or loss.
Currently, in accordance with AASB 139 Financial Instruments: Recognition and Measurement, a gain or loss on an available-for-sale financial asset is
recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses until the financial asset is
derecognised. At that time, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss
as a reclassification adjustment.
Changes in the fair value of other financial assets carried at fair value are reported in profit or loss. The de-recognition rules have been transferred from
AASB 139 Financial Instruments: Recognition and Measurement and have not been changed.
In the current financial period, in accordance with AASB 139 Financial Instruments: Recognition and Measurement, the group recognised in profit or loss
an impairment loss on its investment in Comet Ridge Resources LLC (CRR) of $397,329. In accordance with the requirements of AASB 9 this
impairment loss may be recognised in other comprehensive income. The full impact of this standard is yet to be fully assessed but at the present time
the group does not intend to change its accounting treatment, consequently adoption of this standard from 1 January 2018 is not expected to have a
material impact on the group.
Changes in the fair value of all other financial assets carried at fair value are reported in the profit or loss. There will be no impact on the group’s
accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit
or loss and the group does not have any such liabilities.
The de-recognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The
full impact of this standard is yet to be fully assessed, but, other than the effects mentioned above, adoption of this standard from 1 January 2018 is not
expected to have a material impact on the group. The group has not yet decided when to adopt AASB 9.
IASB Standards and Interpretations awaiting approval by the AASB
IFRS 15 Revenue from Contracts with Customers (effective from 1 January 2017)
This is a joint standard issued by the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB). With
some exceptions e.g. leases and insurance contracts, IFRS 15 applies to all contracts with customers. The core principle is that an entity should
recognise revenue when the various performance obligations included in the contract are satisfied. This means that revenue will be recognised when
control of the goods or services is transferred rather than on the transfer of risks and rewards as is currently the case under IAS 18 Revenue. It is not
expected that there will be any impact on the group.
Comet Ridge Limited I Annual Report 2014
71
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 2 - Revenue
Consolidated
2014
2013
$
(a)
Research & development tax offset
$
2,981,989
182,045
During the 2014 year Comet Ridge received a Research and Development tax offset from the
Australian Taxation Office. The research and development application was made in the prior financial
year and arose from the innovative well completion design for the Gunn2 Extended Production Test and
the associated water treatment requirements.
The prior year research and development application related to the geological modelling developed
from the aero-magnetic and aero-gravity surveying conducted during 2011.
(b)
Other income
Other income includes the following specific items:
Foreign exchange gains (net)
Total other income
-
Note 3 - Expenses
Loss before income tax includes the following specific expenses:
(a)
Employee benefit’s expense
Other employee benefit’s expense
Share-based payment’s expense
Defined contribution superannuation expense
(b)
(593,414)
(84,224)
(1,457,658)
(604,521)
-
(411,215)
(43,600)
(604,521)
(454,815)
(3,287,033)
-
(1,345,302)
947,973
(3,287,033)
(397,329)
(340,776)
-
(198,718)
(22,965)
(221,683)
(179,580)
(29,896)
(209,476)
(320,569)
(2,187)
(535,704)
-
(322,756)
(535,704)
Other expenses include the following specific items:
Other administration and office costs
Foreign exchange losses (net)
72
(780,020)
(58,292)
(93,773)
(866,031)
Occupancy costs
Rental expense relating to operating leases - minimum lease rentals
Other occupancy costs
(f)
(713,966)
Movement in fair value of financial liability at fair value
Fair value movement of financial liability at fair value through profit and loss
(e)
2013
$
Impairment of available-for-sale financial assets
Fair value adjustment
Amount transferred from available-for-sale reserve
(d)
Consolidated
2014
$
Contractor and consultants costs
Contractors' fees
Consulting fees
(c)
19,691
19,691
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 4 – Income Tax
(a)
Consolidated
2014
2013
$
$
Recognised in the statement of profit and loss and comprehensive income
Current tax (overprovision prior year)
-
(204,876)
Deferred tax (credit relating to the origination and reversal of temporary differences
804,085
1,755,913
Income tax expense
804,085
1,551,037
Deferred income tax credit included in income tax expense comprises:
(b)
Increase in deferred tax asset (Note 15)
(1,744,775)
4,072,820
Decrease/(increase) in deferred tax liability (Note 15)
2,548,860
(2,316,907)
804,085
1,755,913
(12,796,570)
(8,537,583)
(3,838,971)
(2,561,275)
Numerical reconciliation of income tax expense to prima facie tax on accounting profit
Loss before income tax
Tax at the Australian tax rate of 30% (2013:30%)
Under-provision prior year
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Share options expensed
17,488
204,876
178,024
Impairment of available-for sale financial assets
986,110
Research and development tax offset received
(894,597)
(54,614)
16,812
33,055
Previously unrecognised tax losses used to reduce deferred tax expense
1,987,993
648,897
Capital & tax losses not recognised in deferred tax assets
2,529,251
Other non-deductible items
Income tax expense/(credit)
(c)
-
-
-
804,085
(1,551,037)
18,142,182
9,138,510
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Temporary differences and tax losses (gross)
The deductible temporary differences and tax losses do not expire under current tax
legislation. Deferred tax assets have not been recognised in respect of these items because
it is not probable that future taxable profit will be available against which the group can utilise
the benefits from the deferred tax assets.
(d)
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30% (2013: 30%)
-
-
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(i)
franking credits that will arise from the payment of the amount of the provision for income tax;
(ii)
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
(iii)
franking credits that will arise from the receipt of dividends recognised as receivable at the reporting date.
Comet Ridge Limited I Annual Report 2014
73
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 5 – Earnings per Share
Consolidated
2014
$
(a)
(b)
(c)
2013
$
Reconciliation of earnings used in calculating basic and diluted earnings per share:
Loss for the year
13,600,655
6,986,546
Loss used in the calculation of the basic and dilutive earnings per share
13,600,655
6,986,546
Weighted average number of ordinary shares used as the denominator
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for the calculation of diluted earnings per share:
Options/Performance Rights
Number
453,232,965
Number
392,455,161
Weighted average number of ordinary shares used in calculating diluted earnings per share
453,232,965
-
392,455,161
Options and Performance Rights are considered to be "potential ordinary shares" and have been
included in the determination of diluted earnings per share to the extent to which they are dilutive.
Details relating to options and Performance Rights are set out in Note 19.
Note 6 - Cash and Cash Equivalents
Cash at bank and on hand
Consolidated
2014
$
2013
$
4,814,076
4,464,130
Note 7 - Trade and Other Receivables
Consolidated
2014
2013
$
$
960,092
818,937
Current
Other receivables
Other receivables mainly comprise the Group’s share of cash calls receivable by joint operations and GST
refunds. At 30 June 2014 $Nil (2013: $Nil) of the joint operations cash call receivables were past due and no
provision for impairment has been recognised. The carrying amount of other receivables are assumed to
approximate their fair values due to their short term nature.
Note 8 - Inventories
Consumables - at cost
74
Consolidated
2014
2013
$
$
98,571
108,389
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 9 - Other Assets
Prepayments
Restricted cash
Consolidated
2014
2013
$
$
61,073
78,760
403,181
395,000
464,254
473,760
Restricted cash
Restricted cash represents funds held on term deposit which support guarantees provided by the group's bankers to the States of Queensland
and New South Wales in respect of the group's exploration permits and environmental guarantees and to the landlord of the Brisbane office
premises to support the group's obligations under the lease. Refer Note 20(b).
Note 10 - Available-for-sale Financial Assets
Consolidated
2014
$
Investment in Comet Ridge Resources LLC
2013
$
-
3,255,779
Movement in carrying amount
Balance at the beginning of year
Fair value adjustment
Foreign exchange movements
Balance at the end of year
3,255,779
(3,287,033)
31,254
-
4,362,692
(1,345,302)
238,389
3,255,779
Comet Ridge USA Inc., a wholly owned subsidiary of Comet Ridge Limited, owns a 10.04% (2013: 12.08%) minority interest in Comet Ridge Resources,
LLC (“CRR”). CRR's operations include oil and gas exploration and evaluation and oil production in the state of Colorado, USA. A private equity firm
based in New York City, USA holds the majority interest at approximately 89.5% (2013: 87.5%).
CRR is not a controlled entity of Comet Ridge Limited because, even it though is is exposed to, or has the rights to, variable returns from its involvement
with the entity; Comet Ridge Limited does not have the ability to affect those returns through its power to direct the activities of the entity so as to obtain
benefits from it. The group may retain its minority interest in CRR by contributing cash to CRR as and when requested to fund CRR’s ongoing
exploration and evaluation program. Should the group not contribute, its interest will decline to no less than 7.2% under the arrangements with the
private equity fund.
For further information on the fair value adjustment and impairment refer Note 1(c) critical accounting estimates and judgements.
Note 11 - Property, Plant and Equipment
Plant and equipment at cost
Accumulated depreciation
Movements in carrying amounts of property, plant and equipment
Balance at the beginning of year
Additions
Depreciation
Foreign exchange movements
Balance at the end of year
Consolidated
2014
$
160,248
(65,268)
2013
$
145,878
(42,031)
94,980
103,847
103,847
17,296
(27,517)
1,354
73,816
60,077
(31,101)
1,055
94,980
103,847
Comet Ridge Limited I Annual Report 2014
75
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 12 - Exploration and Evaluation Expenditure
Consolidated
2014
2013
Exploration and evaluation expenditure
$
67,744,439
$
49,507,675
Less: provision for impairment
(14,970,007)
(5,219,060)
52,774,432
44,288,615
44,288,615
7,556,028
36,532,267
11,602,688
Acquisition of additional interest in Mahalo Gas Project
Acquisition of additional Gunnedah Basin permit interests
9,737,094
-
750,000
Impairment expense
Exploration and evaluation expenditure written off
Restoration and rehabilitation
(9,148,736)
(378,005)
109,022
(3,575,370)
(1,691,978)
25,000
610,414
646,008
52,774,432
44,288,615
Movements in exploration and evaluation phase
Balance at the beginning of the year
Exploration and evaluation expenditure during the year
Foreign currency translation
Balance at the end of the year
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is dependent on successful development
and commercial exploitation, or alternatively, sale of the respective areas of interest. Further information regarding the activity in each area of interest is
shown in Note 27 - Segment Information.
Interest in joint operations
The carrying amount of exploration and evaluation expenditure includes the group's interest in the exploration and evaluation expenditure of a number of
joint operations. The amount of exploration and evaluation expenditure employed in the joint operations is shown in Note 29.
Note 13 - Trade and Other Payables
Current
Trade payables
Consolidated
2014
2013
$
$
4,264,939
5,580,597
Trade payables includes $1,356,888 (2013: $3,377,579) representing the group’s share of joint operation liabilities (refer Note 29).
Note 14 - Provisions
Current
Employee benefits
Restoration & rehabilitation
Non-current
Employee benefits
Restoration & rehabilitation
76
Consolidated
2014
$
88,336
464,640
2013
$
64,871
100,000
552,976
164,871
40,973
123,022
23,339
25,000
163,995
716,971
48,339
213,210
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 14 – Provisions (continued)
Movements in carrying amounts of restoration and rehabilitation
Balance at the beginning of year
Additions charged to profit and loss
Additions capitalised to exploration and evaluation expenditure
Foreign exchange movements
Balance at the end of year
Consolidated
2014
2013
$
$
125,000
332,620
94,994
109,022
25,000
21,020
5,006
587,662
Note 15 – Financial Liability at Fair Value
125,000
Consolidated
2014
$
2013
$
Non-current
Financial liability at fair value - Stanwell Corporation Limited
10,077,842
-
The fair value of the liability owed to Stanwell Corporation Limited (SCL) is based on the anticipated discounted cash flows arising from the renegotiated
Mahalo Option Agreement. It is classified as level 3 in the fair value hierarchy due to the use of unobservable inputs (refer to Note 21 for further
disclosures).
Note 16 - Deferred Tax Liability
Deferred tax liability
The balance of deferred tax liability comprises:
Deferred tax assets
Tax losses
Capital expenditure
Provisions
Deferred tax liabilities
Exploration and evaluation expenditure
Accrued interest
Net deferred tax asset
Deferred tax assets not recognised
Net deferred tax liability recognised in accounts
Movements
Opening balance
Charged/(credited) to profit or loss
Closing balance
Consolidated
2014
2013
$
$
1,400,532
596,447
19,419,017
241,069
218,112
19,878,198
15,225,385
139,936
67,501
15,432,322
(15,832,330)
(3,745)
(15,836,075)
4,042,123
(5,442,655)
(2,352,360)
(13,286,585)
(630)
(13,287,215)
2,145,107
(2,741,554)
(596,447)
596,447
804,085
1,400,532
2,352,360
(1,755,913)
596,447
Comet Ridge Limited I Annual Report 2014
77
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 17 - Contributed Equity
Consolidated
2014
2013
$
$
83,481,566
74,689,218
Ordinary shares - fully paid
Movements in ordinary shares
2014
2013
2014
Number of Shares
406,498,746
307,351,144
Balance at the beginning of the year
Share placement (50,000,000 shares @ 18 cents)
Performance Rights vested during the year
50,000,000
2,100,000
Share placement (25,000,000 shares @ 10 cents)
Rights issue (68,927,602 shares @10 cents)
-
Share issue costs
5,220,000
25,000,000
68,927,602
-
Balance at the end of the year
-
458,598,746
406,498,746
2013
$
74,689,218
$
65,265,125
9,000,000
332,348
523,315
-
2,500,000
6,892,760
(540,000)
(491,982)
83,481,566
74,689,218
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and
amounts paid on the shares held. On a show of hands, every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote, and upon a poll, each share is entitled to one vote.
The Company does not have authorised capital or par value in respect of its issued shares.
Options and Performance Rights
At 30 June 2014, the following options for ordinary shares in Comet Ridge Limited were on issue:
Number
2014
-
% Exercisable
2013
500,000
500,000
500,000
1,000,000
2,500,000
Exercise Price
$0.50
$0.65
$0.50
$0.65
2014
0%
0%
0%
0%
2013
100%
0%
100%
0%
At 30 June 2014, the following Performance Rights for ordinary shares in Comet Ridge Limited were on issue:
Number
78
2014
100,000
50,000
50,000
2013
75,000
360,000
230,000
175,000
500,000
600,000
600,000
500,000
800,000
-
200,000
3,840,000
Grant Date
1-Oct-11
3-Oct-11
4-Oct-11
23-Nov-11
21-Mar-12
1-Jul-12
1-Jul-12
1-Jul-12
15-Nov-12
1-Jul-13
1-Jul-13
Expiry date
5-Jul-13
5-Jul-13
5-Jul-13
7-Jan-13
7-Jan-14
1-Jul-16
1-Jul-14
1-Jul-15
14-Jul-13
7-Jul-14
7-Jul-15
Expiry Date
30-Nov-13
31-Jan-14
28-Feb-14
31-Mar-14
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 17 - Contributed Equity (continued)
Capital risk management
When managing capital, management’s objective is to ensure the group continues as a going concern and to maintain a structure that ensures the
lowest cost of capital available and to ensure adequate capital is available for exploration and evaluation of tenements. In order to maintain or adjust the
capital structure, the group may seek to issue new shares.
Consistent with others in the industry, the group monitors capital on the basis of forecast exploration and exploration expenditure required to reach a
stage which permits a reasonable assessment of the existence or otherwise of an economically recoverable reserve. Total capital is calculated as
‘equity’ as shown in the statement of financial position.
There were no changes in the group's approach to capital management during the year. The group is not subject to externally imposed capital
requirements.
Note 18 – Reserves
Consolidated
Foreign currency translation
Share-based payments
2014
$
2013
$
1,417,582
1,304,326
712,301
1,578,382
2,721,908
2,290,683
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled entities.
Share-based Payments Reserve
The option reserve is used to record the expense associated with options granted to employees under equity-settled share-based payment
arrangements. It is also used to record fair value of options granted for other goods and services as well as acquisition of other assets.
Note 19 - Share-based Payments
The share-based payments expense included in the financial statements with respect to Performance Rights issued during the year and already issued
in prior years is as follows:
Consolidated
2014
2013
$
$
Share-based payment’s expense included in employee benefit’s expense
58,292
593,414
The movements in the share-based Payments Reserve during the year are as follows:
Consolidated
2014
$
2013
$
Balance at the beginning of the period
Shares issued on vesting of Performance Rights
Share-based payments during the half year
1,578,382
(332,348)
58,292
1,508,283
(523,315)
593,414
Balance at the end of the period
1,304,326
1,578,382
The types of share-based payment plans are described below.
Comet Ridge Limited I Annual Report 2014
79
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 19 - Share-based Payments (continued)
Employee Share Options
Options are granted either under the Company's Employee Share Incentive Option Plan or on terms determined by the directors or otherwise approved
by the Company at a general meeting. The options are granted for no consideration. Options are usually granted for a three to four year period and
entitlements to the options are vested on a time basis and/or on specific performance based criteria such as share price increases or reserves
certification. Options granted either under the plan or otherwise as described above carry no dividend or voting rights. When exercisable, each option is
convertible to one ordinary share.
The amount assessed as fair value at the grant date is allocated equally over the period from grant date to vesting date. Fair values at grant date are
determined using the Black-Scholes method of valuation that takes into account the exercise price, the terms of the option, the vesting and market
related criteria, the impact of dilution, the non-tradable nature of the option, the share price at grant date and the risk of the underlying share and the risk
free interest rate for the term of the option.
There were no employee share options granted during the year ended 30 June 2014. The following table shows the number, movements and weighted
average exercise price of share options during the year:
Grant Date
13-Apr-10
13-Apr-10
18-Jun-10
18-Jun-10
Expiry date
30-Nov-13
31-Jan-14
28-Feb-14
31-Mar-14
Exercise
price
$0.500
$0.650
$0.500
$0.650
Opening
Balance
July 2013
500,000
500,000
500,000
1,000,000
Granted
During the
Year
2,500,000
Weighted average exercise price
0.59
-
Exercised
During the
Year
-
-
Expired During
the year
(500,000)
(500,000)
(500,000)
(1,000,000)
-
-
(2,500,000)
-
Closing
Balance
June 2014
Vested &
Exercisable
-
-
-
-
Closing
Balance
June 2013
500,000
500,000
500,000
1,000,000
Vested &
Exercisable
500,000
500,000
1,000,000
0.59
The following table shows the number, movements and weighted average exercise price of share options during the 2013 year:
Grant Date
13-Apr-10
13-Apr-10
18-Jun-10
18-Jun-10
Expiry date
30-Nov-13
31-Jan-14
28-Feb-14
31-Mar-14
Total options
Weighted average exercise price
Exercise
price
$0.500
$0.650
$0.500
$0.650
Opening
Balance
July 2012
500,000
500,000
500,000
1,000,000
Granted
During the
Year
-
Exercised
During the
Year
-
2,500,000
-
-
-
2,500,000
-
-
-
0.59
0.59
Expired During
the year
-
Employee Performance Share Rights
Employee Performance Rights are provided to certain employees via the Comet Ridge Limited Employee Performance Share Rights Plan as approved
by shareholders at the 2010 Annual General Meeting. Performance Rights are granted on terms determined by the directors.
Performance Rights, which have a maximum term of seven years, are issued for no consideration and provide an equity based reward for employees
that is linked with the success of performance conditions determined when the Performance Rights are granted. The performance criteria are
determined on a case by case basis by the Board. These performance criteria are likely to be matters such as length of employment, successful
operational results and/or direct increase in shareholder value linked to the share price of the Company or reserve targets.
80
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 19 - Share-based Payments (continued)
Employee Performance Share Rights (continued)
The fair value of Performance Rights at grant date that are issued subject only to a service condition is determined by reference to the quoted price of
the Company's shares on the ASX. The fair value of Performance Rights at grant date issued subject to a market condition e.g. Volume Weighted
Average Share Price (VWAP) is determined using generally accepted valuation techniques including Black-Scholes option pricing model and Monte
Carlo simulation that take into account the term of the performance right, the impact of dilution, the share price at grant date, the expected price volatility
of the underlying share, the expected dividend yield and the risk free rate for the term of the performance right and an appropriate probability weighting
to factor the likelihood of the satisfaction of non-vesting conditions.
The maximum number of Performance Rights issued is determined by aggregating the number of Performance Rights on issue with the number of
shares issued during the previous five years under the plan or any other employee incentive scheme, cannot exceed 5% of the total number of shares
on issue.
The following table shows the number and movements of Performance Rights during the 2014 year:
Grant Date
1-Oct-11
3-Oct-11
4-Oct-11
23-Nov-11
21-Mar-12
1-Jul-12
1-Jul-12
1-Jul-12
15-Nov-12
1-Jul-13
1-Jul-13
Expiry date
5-Jul-13
5-Jul-13
5-Jul-13
5-Jul-13
7-Jan-14
30-Jun-16
30-Jun-16
30-Jun-16
14-Jul-13
7-Jul-14
7-Jul-15
Share Price
at Grant Date
(cents)
13.5
13.5
13.5
14.5
12.5
11.0
11.0
11.0
16.0
19.0
19.0
Opening
Balance
July 13
105,000
330,000
230,000
175,000
500,000
600,000
600,000
500,000
800,000
3,840,000
Granted
During the
Year
50,000
50,000
100,000
Vested During
the Year
(105,000)
(330,000)
(230,000)
(175,000)
(500,000)
(600,000)
(160,000)
(2,100,000)
Expired During
the year
(500,000)
(500,000)
(640,000)
(1,640,000)
Closing
Balance
June 14
100,000
50,000
50,000
200,000
All Performance Rights granted during the 2014 year were subject only to the employee/contractor satisfying a continuation of employment service
condition. Ordinary shares were issued for all Performance Rights that vested during the 2014 year.
Comet Ridge Limited I Annual Report 2014
81
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 19 - Share-based Payments (continued)
Employee Performance Share Rights (continued)
The following table shows the number and movements of Performance Rights during the 2013 year:
Grant Date
Expiry date
Share Price at
Grant Date
(cents)
Opening
Balance
July 2012
Granted
During the
Year
1-Oct-11
05-Jul-13
13.5
105,000
-
1-Oct-11
05-Jul-13
13.5
105,000
3-Oct-11
05-Jul-13
13.5
360,000
3-Oct-11
05-Jul-14
13.5
360,000
4-Oct-11
07-Jan-13
13.5
230,000
4-Oct-11
07-Jan-14
13.5
230,000
23-Nov-11
05-Jul-12
14.5
175,000
23-Nov-11
05-Jul-13
14.5
175,000
21-Mar-12
07-Jan-14
12.5
500,000
21-Mar-12
07-Jan-14
12.5
500,000
-
1-Jul-12
30-Jun-16
11.0
-
4,000,000
1-Jul-12
30-Jun-16
11.0
-
605,000
1-Jul-12
30-Jun-16
11.0
-
1-Jul-12
30-Jun-16
11.0
-
15-Nov-12
14-Jul-13
16.0
Vested During
the Year
Expired During the
year
Closing
Balance
June 2013
(105,000)
-
-
-
-
-
105,000
-
(360,000)
-
-
-
-
(30,000)
330,000
-
(230,000)
-
-
-
-
-
230,000
-
(175,000)
-
-
-
-
-
175,000
-
(500,000)
-
-
-
-
500,000
(3,850,000)
(150,000)
-
-
(5,000)
600,000
605,000
-
(5,000)
600,000
500,000
-
-
500,000
-
800,000
-
-
800,000
2,740,000
6,510,000
(5,220,000)
(190,000)
3,840,000
Ordinary shares were issued for all Performance Rights that vested during the 2013 year.
The fair value of Performance Rights is measured at grant date and is determined using a binomial or Black-Scholes pricing model that takes into
account the term of the performance right, the underlying share price at grant date, the expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the performance right.
Where the Performance Rights are granted subject only to service conditions, in accordance with the relevant accounting standard, it is assumed that
the service condition will be met and the Comet Ridge Limited share price at grant date is used to determine the fair value of the Performance Rights
issued. Where the Performance Rights are granted subject to a market condition in addition to the service condition, the pricing model also takes into
account the probability that the market condition will be satisfied/not satisfied during the term of the Performance Rights e.g. “monte carlo” simulation
technique.
Details of the Performance Rights granted during the 2014 year are as follows:
No. of Rights
Service Period
Issue No
From
To
Tranche 10
Tranche 11
82
50,000
50,000
1-Jul-13
1-Jul-13
30-Jun-14
30-Jun-15
Vesting Date
Grant Date
Fair Value
1-Jul-14
1-Jul-15
6-Sep-13
6-Sep-13
19 cents
19 cents
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 19 - Share-based Payments (continued)
Employee Performance Share Rights (continued)
All Performance Rights granted during the 2014 year were subject only to the employee or contractor satisfying a period of employment service
condition. For the year ended 30 June 2013, in addition to the service condition, the following Performance Rights were issued subject to a market
condition determined by the Comet Ridge Limited share price reaching a specific target based on a ten day volume weighted share price (VWAP).
Grant Date
Expiry date
Granted During
the Year
Share Price
VWAP Condition
% Vest
1-Jul-12
30-Jun-16
4,000,000
25 cents or above
100%
15-Nov-12
14-Jul-13
800,000
32 cents or above
25 cents or above
20 cents or above
100%
50%
20%
The following table lists the inputs to the model used to value the Performance Rights granted.
Input
Term (years)
Share price at grant date (cents)
Share price target (cents)
Expected share price volatility
Risk free interest rate
Value per performance right (cents)
Grant
4,000,000
Grant
800,000
4.0
11.0
25.0
90%
2.74%
8.0
0.62
16.0
20.0 to 32.0
90%
2.74%
6.0
Note 20 - Commitments
(a)
Operating lease commitments
Commitments for minimum lease payments for non-cancellable operating leases for offices and equipment contracted for but not recognised in the
financial statements.
Consolidated
2014
2013
Payable – minimum lease payments
$
$
• not later than 12 months
202,692
198,101
• between 12 months and 5 years
209,165
411,858
411,857
(b) Bank guarantees
Westpac Banking Corporation have provided bank guarantees totalling $401,437 (2013: $393,256) as follows:

$148,256 (2013: $148,256) to the State of Queensland in respect of the group's exploration permits and environmental guarantees;

$200,000 (2013 $200,000) to the State of NSW to support the group’s exploration permits and environmental guarantees; and

$53,181 (2013: $45,000) to the landlord of the Brisbane office premises to support the group's obligations under the lease.
609,959
The bank guarantees are secured by term deposits.
Comet Ridge Limited I Annual Report 2014
83
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 20 – Commitments
(c)
Exploration expenditure
In order to maintain an interest in the exploration tenements in which it is involved, the group is required to meet certain conditions imposed by the
various statutory authorities granting the exploration tenements or that are imposed by the joint venture agreements entered into by the group. These
conditions include minimum expenditure commitments. The timing and amount of minimum exploration expenditure obligations of the group may vary
significantly from the forecast based on the results of the work performed, which will determine the prospectivity of the relevant area of interest. The
group's minimum expenditure obligations, which are not provided for in the financial statements are as follows:
Minimum expenditure requirements
• not later than 12 months
• between 12 months and 5 years
Consolidated
2014
2013
$
$
4,350,513
4,246,381
5,082,861
12,097,950
9,433,374
16,344,331
The commitments shown above include the amounts with respect to the group's interest in joint operations (refer Note 29).
Note 21 - Financial Risk Management
Overview
The group's principal financial instruments comprise receivables, payables, available for sale financial assets, cash, term deposits and financial liabilities
at fair value. The main risks arising from the group's financial assets and liabilities are interest rate risk, price risk, foreign currency risk, credit risk and
liquidity risk.
This Note presents information about the group's exposure to each of the above risks, its objectives, policies and processes for measuring and
managing risk. Other than the recognition of the financial liability to Stanwell Corporation Limited arising from the renegotiated Mahalo Option
Agreement, there have been no significant changes since the previous financial year to the exposure or management of these risks.
Key risks are monitored and reviewed as circumstances change (e.g. acquisition of new entity or project) and policies are created or revised as required.
The overall objective of the group's financial risk management policy is to support the delivery of the group's financial targets whilst protecting future
financial security.
Given the nature and size of the business and uncertainty as to the timing and amount of cash inflows and outflows, the group does not enter into
derivative transactions to mitigate the financial risks. In addition, the group's policy is that no trading in financial instruments shall be undertaken for the
purpose of making speculative gains. As the group's operations change, the Directors will review this policy.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Board reviews and agrees
policies for managing the group's financial risks as summarised below.
84
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 21 - Financial Risk Management (continued)
Overview (continued)
The group holds the following financial instruments:
Consolidated
Financial Assets
Cash and cash equivalents
Trade and other receivables
Restricted cash
Available-for-sale financial assets
2014
2013
$
4,814,076
$
4,464,130
960,092
403,181
818,937
395,000
-
3,255,779
6,177,349
8,933,846
4,264,939
10,077,842
5,580,597
-
14,342,781
5,580,597
Financial Liabilities
Trade and other payables
Financial liability at fair value - Stanwell Corporation Limited
Interest rate risk
Exposure to interest rate risk arises on cash and term deposits recognised at reporting date whereby a future change in interest rates will affect future
cash flows or the fair value of fixed rate financial instruments.
A forward business cash requirement estimate is made, identifying cash requirements for the following period (generally up to one year) and interest
rate term deposit information is obtained from a variety of banks over a variety of periods (usually one month up to six month term deposits) accordingly.
The funds to invest are then scheduled in an optimised fashion to maximise interest returns.
Interest rate sensitivity
A sensitivity of 1% interest rate has been selected as this is considered reasonable given the current market conditions. A 1% movement in interest
rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other
variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2013.
Profit or Loss
2014 - Consolidated
1% increase
$
Equity
1% decrease
$
1% increase
$
1% decrease
$
Cash and cash equivalents and restricted cash
2013 - Consolidated
52,173
(52,173)
52,173
(52,173)
Cash and cash equivalents and restricted cash
48,591
(48,591)
48,591
(48,591)
Comet Ridge Limited I Annual Report 2014
85
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 21 - Financial Risk Management (continued)
Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The Board's approach to managing liquidity is to
ensure, as far as possible, that the group will always have sufficient liquidity to meet its obligations when due.
Ultimate responsibility for liquidity risk management rests with the Board of Directors. The group manages liquidity risk by maintaining adequate
reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. This is
based on the undiscounted cash flows of the financial liabilities based on the earliest date on which they are required to be paid. The following table
details the remaining contractual maturity for non-derivative financial liabilities.
Total Contractual
Carrying
<1 year
>3 years
Cash Flows
Amount
Consolidated - 30 June 2014
$
$
$
$
Trade and other payables
4,264,939
4,264,939
4,264,939
Financial liability at fair value - Stanwell Corporation Limited
16,882,632
16,882,632
10,077,842
4,264,939
16,882,632
21,147,571
14,342,781
Consolidated - 30 June 2013
Trade and other payables
5,580,597
-
5,580,597
5,580,597
Foreign exchange risk
As a result of activities overseas, the group's statement of financial position can be affected by movements in exchange rates. The group also has
transactional currency exposures. Such exposures arise from transactions denominated in currencies other than the functional currency of the group.
The group's exposure to foreign currency risk primarily arises from the group's operations overseas, namely in the USA and New Zealand.
The group currently does not engage in any hedging or derivative transactions to manage foreign currency risk. The group’s policy is to generally
convert its local currency to US or NZ dollars at the time of transaction. The group, has on rare occasions, taken the opportunity to move Australian
dollars into foreign currency (ahead of a planned requirement for those foreign funds) when exchange rate movements have moved significantly in
favour of the Australian dollar, and management considers that the currency movement is extremely likely to move back in subsequent weeks or
months. Therefore, the opportunity has been taken to lock in currency at a favourable rate to the group. This practice is expected to be the exception,
rather than the normal practice.
The group’s exposure to foreign currency risk at the reporting date, expressed in Australian dollars, was as follows:
Foreign exchange risk
Financial Assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
2014
2014
2013
2013
USD
NZD
USD
NZD
$
$
$
24,105
922,740
360
-
-
-
(1,470)
$
-
3,255,779
868,558
3,060
-
Financial Liabilities
Trade and other payables
86
-
(8,727)
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 21 - Financial Risk Management (continued)
Foreign exchange risk (continued)
Based on financial instruments held at 30 June 2014, had the Australian dollar strengthened/weakened by 10% the group’s profit or loss and equity
would be impacted as follows:
Foreign currency rate sensitivity
2014
US dollar
NZ dollar
2013
US dollar
NZ dollar
Profit or Loss
Equity
10%
Increase
$
(92,163)
10%
Decrease
$
92,163
10%
Increase
$
(2,410)
(92,163)
10%
Decrease
$
2,410
92,163
(86,289)
86,289
(325,578)
(86,289)
325,578
86,289
Credit risk
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. This
arises principally from cash and cash equivalents, restricted cash, and trade and other receivables. The group exposure and the credit ratings of its
counterparties are continuously monitored by the Board of Directors.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised in the table above.
Credit Risk Exposures
Trade and other receivables
Trade and other receivables comprise primarily of advances to joint operations and GST refunds due. Where possible the group trades with recognised,
creditworthy third parties. The receivable balances are monitored on an ongoing basis. The group’s exposure to bad debts is not significant. At 30 June
2014 $Nil, (2013: $nil) of the group's receivables were past due. The group has no other significant concentration of credit risk.
Cash and cash equivalents, restricted cash and term deposits
The group has a significant concentration of credit risk with respect to cash deposits with banks. However, significant cash deposits are invested across
three to four banks to mitigate credit risk exposure to a particular bank. AAA rated banks are mostly used and non AAA banks are utilised where
commercially attractive returns are available.
Price risk
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
The group is exposed to commodity price risk. Commodity prices can be volatile and are influenced by factors beyond the group's control. As the group
is currently engaged in exploration, no sales of commodities are forecast for the next 12 months, and accordingly, no hedging or derivative transactions
have been used to manage commodity price risk.
Fair value measurement
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement and for disclosure purposes.
Fair value hierarchy
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level as determined by the following fair value
measurement hierarchy:
a.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
b.
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices); and
c.
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Comet Ridge Limited I Annual Report 2014
87
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 21 - Financial Risk Management (continued)
Fair value measurement (continued)
The following table shows the 'fair value measurement hierarchy' classification of the group's assets and liabilities measured and recognised at fair value
at 30 June 2014 (refer Note 1 (c)).
Consolidated
2014
Financial Assets - Level 3
Available-for-sale financial asset - Investment in Comet Ridge Resources LLC
Financial Liabilities - Level 3
Financial liability at fair value - Stanwell Corporation Limited
2013
$
-
(10,077,842)
$
3,255,779
-
There have been no transfers between levels during the year.
Fair value measurements using unobservable inputs (level 3)
The following table presents the changes in level 3 items for the year ended 30 June 2014 not disclosed elsewhere:
Consolidated
$
Balance at 1 July 2013
Additions
Movement in financial liability at fair value
Balance at 30 June 2014
9,737,094
340,748
10,077,842
For changes in the available-for-sale financial asset refer Note 10.
Valuation techniques and process used to determine fair values
The fair value measurement of the investment in Comet Ridge Resources LLC (CRR) is based on the group's proportionate interest in the net assets of
CRR discounted for minority interest and liquidity considerations. As the valuation technique is based on significant unobservable inputs, the asset is
classified as a level 3 financial instrument.
The fair value of the liability owed to Stanwell Corporation Limited (SCL) is based on the anticipated discounted cash flows arising from the renegotiated
Mahalo Option Agreement. Refer to Note 1(c) for further details of the process undertaken to value the financial liability.
The inputs used in the calculation of the fair value of the Financial Liability at Fair Value are as follows:
1
2
3
4
5
88
The most likely outcome under the Mahalo Option Agreement is SCL will opt for the Gas Sale Agreement as a result the $15m discount will be the
basis for determining the liability calculations.
The agreement term for the initial calculations will be the maximum four years.
The CPI rate used to index the $15m gas supply discount from 1 August 2014 will be 3% pa based on upper level of RBA target for inflation.
The fair value of the 5% Mahalo Gas Project interest re-acquired will be the net present value (NPV) of the SCL liability discounted at a pre-tax rate
based on Comet Ridge’s cost of capital.
The Comet Ridge’s cost of capital is 14.75% per annum (refer WACC calculation below). The pre-tax discount rate is also 14.75% per annum as the
cost of debt is nil.
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 21 - Financial Risk Management (continued)
Fair value measurement (continued)
Starting Balance
Calculations
Indexed liability to SCL
Projected cash flow SCL liability
18-Mar-14
18-Mar-15
18-Mar-16
18-Mar-17
(15,000,000)
(450,000)
(463,500)
(477,405)
-
NPV of SCL liability
Ending
Balance
Annual Indexation Movement
-
-
-
18-Mar-18
18-Mar-18
(491,727)
(16,882,632)
(16,882,632)
(9,737,094)
Fair value exploration assets acquired
9,737,094
Total fair value movements
7,145,538
The relationships between the unobservable inputs and the fair value of the financial liability at fair value are as follows:
Unobservable input
Relationship to fair value
Likely outcome
If SCL opts for Option B the financial liability at fair value will increase.
Agreement term
CPI rate
Pre-tax discount rate
If the Final Investment Decision (FID) is reached earlier than the 4 year limit the carrying amount of the financial
liability at fair value will increase while the estimated total fair value movements over the new term will reduce.
If the 3% pa CPI rate reduces/increases to a low of 2% pa or a high of 4% pa the indexed liability will reduce/ increase
by approximately 3.9% or $650,000.
If the 14.75% pa pre-tax discount rate reduces/increases by 2.25% pa i.e. to a low of 12.5% pa and or a high of 17.0%
pa the NPV of the indexed liability will increase/reduce by approximately 8.0% or $750,000 with a resulting
reduction/increase in the total fair value movement to be expensed over the term of the agreement.
Other fair value disclosures
The Directors consider that the carrying amount of trade receivables and payables recorded in the financial statements approximates their fair values
due to their short term nature.
Note 22 - Key Management Personnel
Details of Key Management Personnel
Key Management Personnel comprise all of the Directors of the Company.
James McKay
Tor McCaul
Jeffrey Schneider
Gillian Swaby
Christopher Pieters
Anthony Gilby
Non-executive
Managing Director
Non-executive
Non-executive
Non-executive (Acted as Commercial Director from June 2013 to February 2014 for a short-term project)
Non-executive
Key Management Personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term employment benefits
Share -based payments
Consolidated
2014
2013
$
$
828,137
705,865
48,763
43,860
8,729
8,802
269,250
885,629
Comet Ridge Limited I Annual Report 2014
1,027,777
89
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 23 - Auditors' Remuneration
During the year the following fees were paid or payable for services provided by Pitcher Partners, the auditor of the group:
Consolidated
2014
Audit services
- Auditing or reviewing the financial statements
2013
$
95,000
$
136,000
8,000
14,300
Non-audit services
- Tax consulting and compliance services
Note 24 - Contingent Liabilities
The Directors are not aware of any contingent liabilities other than the Financial Guarantee Contract which is one of the terms of the renegotiated
Mahalo Option Agreement. Under the renegotiated agreement Comet Ridge Limited guarantees the indexed $20m consideration payable by Comet
Ridge Mahalo Pty Ltd (CRM) under Option B. Option B is be exercisable by Stanwell Corporation Limited (SCL) upon the earlier of FID for any
development of the Mahalo Gas Project permit area or on the 4th anniversary date of the execution of the new agreement.
If SCL elects to exercise Option B, it will receive a cash payment of A$20m at 1 July 2014 dollar terms which is to be escalated in accordance with CPI
on and from 1 August 2015 and annually thereafter (or part thereof) up to the date the Pay Agreement is signed (refer to Note 1(m) for a more detailed
explanation of the renegotiated Mahalo Option Agreement).
Note 25 - Related Party Transactions
(a)
Parent entity and subsidiaries
The legal parent entity is Comet Ridge Limited. Details of controlled entities are set out in Note 28.
(b)
Key Management Personnel
Disclosures relating to transactions with Key Management Personnel are set out in the Remuneration Report and at Note 22.
(c)
Transactions with controlled entities
Transactions between Comet Ridge Limited and its subsidiaries during the year included:
 loans advanced to/repayments from subsidiaries; and
 investments in subsidiaries.
The loans and investments have been impaired as Noted in Note 1 (c). The loans to subsidiaries are interest free, repayable in cash at call and
are unsecured.
90
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the financial Statements (continued)
Note 26 - Cash Flow Information
Consolidated
(a)
2014
$
Reconciliation of cash flow from operations
Loss for the period
Depreciation
(13,600,655)
27,517
(6,986,546)
31,101
Share-based payments
Impairment available-for-sale financial assets
58,292
3,287,033
593,414
397,329
Impairment - exploration and evaluation expenditure
Exploration and evaluation expenditure written off
9,148,736
378,005
3,575,370
1,691,978
(5,316)
(25,000)
105,964
Exploration permit restoration and rehabilitation
Net exchange differences
(b)
2013
$
Fair value movement of financial liability at fair value
Changes in assets and liabilities net of effects of purchase or disposal of subsidiaries
340,776
-
Increase in inventories
Decrease in trade and other receivables
9,818
(141,155)
(7,507)
(668,734)
Decrease in trade payables and accruals
(Increase) in prepayments and deposits paid
(21,967)
17,687
1,650,741
54,974
Increase in provisions
Decrease in deferred tax liability
373,719
804,085
144,465
(1,755,913)
676,575
(1,198,364)
Non-cash financing and investing activities
There were no investing and financing transactions undertaken during the current year that did not require the use of cash or cash equivalents
other than:
(a)
the repurchase of the 5% interest in the Mahalo Gas Project originally sold to SCL under the September 2011 SPOA (refer to Note 1(c)
for a detailed explanation of the renegotiated Mahalo Option Agreement; and
(b)
shares issued with respect to Performance Rights vesting during the year amounting to $332,348 (2013: $523,315)
Note 27 - Segment Information
Identification of reportable segments
The principal operating activities of the group are the exploration and evaluation of its tenements for oil and gas reserves. The group has identified its
operating segments based on the geographic location of its respective areas of interest (tenements). The internal reports used by the Board of Directors
(chief operating decision makers) in assessing performance and determining the allocation of resources are prepared on the same basis.
Reportable segments disclosed are based on aggregating operating activities where those activities are considered to have similar economic
characteristics and meet the other aggregation criteria of AASB 8 Operating Segments. Other than exploration and evaluation costs written off and
impairment losses and stand-by costs in relation to exploration and evaluation expenditure, income and expenditure as per the Statement of
Comprehensive Income consist of incidental revenue including interest and corporate overhead expenditure which are not allocated to the group's
operating segments.
Comet Ridge Limited I Annual Report 2014
91
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 27 - Segment Information (continued)
Identification of reportable segments (continued)
In addition, only exploration and evaluation expenditure assets are allocated to the group's operation segments. All other assets and liabilities relate to
corporate activities and are not allocated to operating segments.
Unless otherwise stated, all amounts reported to the Board of Directors as the chief decision makers with respect to operating segments are determined
in accordance with accounting policies that are consistent with those adopted in the annual financial statements of the group.
Activity by segment
At 30 June 2014, the group had the following interests in coal seam gas assets:
Comet Ridge Permits
ATP 743P
ATP 744P
ATP 1015P Farm-in area
ATP 337P Mahalo
PEL 6
PEL 427
PEL 428
PMP 50100
PEP 50279
(a)
Location
Galilee Basin
Galilee Basin
Galilee Basin
Bowen Basin
Gunnedah
Gunnedah
Gunnedah
West Coast
West Coast
State/Country
QLD
QLD
QLD
QLD
NSW
NSW
NSW
NZ South Island
NZ South Island
CSG Interest
100%
100%
20%
40%
22.5%
50%
60%
100%
100%
Area (km2)
4,314
4,296
873
911
5,162
5,764
6,018
140
1,200
Segment performance
The following tables show the revenue and profit information regarding the group’s operating segments.
Queensland
30 June 2014
Segment revenue
Total segment revenue
Galilee
$
Bowen
$
-
-
Impairment - exploration expenditure
Exploration and evaluation costs written off
Exploration permit restoration and
rehabilitation
Total segment expense
Segment result before tax
Reconciliation of segment result to group loss before tax
Interest revenue
Research & development tax offset grant
Total group revenue
Employee benefit’s expense
Contractor’s and consultant’s costs
Depreciation and amortisation expense
Impairment - available-for-sale
Fair value movement of financial liability at fair
value
Professional fees
Corporate expenses
Occupancy costs
Other expenses
Loss before tax
92
New Zealand
South Island
$
-
New South
Wales
Gunnedah
$
-
Total
$
-
-
(372,854)
(9,148,736)
-
(5,151)
(9,148,736)
(378,005)
-
(372,854)
(372,854)
(332,620)
(9,481,356)
(9,481,356)
(5,151)
(5,151)
(332,620)
(9,859,361)
(9,859,361)
222,319
2,981,989
3,204,308
(866,031)
(604,521)
(27,517)
(3,287,033)
(340,776)
(215,495)
(255,705)
(221,683)
(322,756)
(12,796,570)
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 27 - Segment Information (continued)
(a)
Segment performance (continued)
Queensland
30 June 2013
Segment revenue
Total segment revenue
Impairment - exploration expenditure
Exploration and evaluation costs written off
Exploration permit restoration and
rehabilitation
Total segment expense
Segment result before tax
Galilee
$
Bowen
$
-
-
New Zealand
South Island
$
-
New South
Wales
Gunnedah
$
-
Total
$
-
(2,410,279)
-
(325,000)
(1,165,091)
(1,366,978)
-
(3,575,370)
(1,691,978)
(2,410,279)
(2,410,279)
(325,000)
(325,000)
(94,994)
(2,627,063)
(2,627,063)
-
(94,994)
(5,362,342)
(5,362,342)
Reconciliation of segment result to group loss before tax
Interest revenue
Research & development tax offset grant
Other income
Total group revenue
Employee benefit’s expense
Contractor’s and consultant’s costs
Depreciation and amortisation expense
Impairment - available-for-sale
Professional fees
Corporate expenses
Occupancy costs
Other expenses
Loss before tax
304,641
182,045
19,691
506,377
(1,457,658)
(454,815)
(31,101)
(397,329)
(248,297)
(347,238)
(209,476)
(535,704)
(8,537,583)
Comet Ridge Limited I Annual Report 2014
93
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 27 - Segment Information (continued)
(b) Segment assets and liabilities
The following tables show the segment assets of the group’s operating segments.
Queensland
Galilee
30 June 2014
$
Segment assets
32,320,577
Reconciliation of segment assets to group assets
Unallocated assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Available-for-sale financial assets
Property, plant and equipment
Total group assets
Segment asset movement for the year
Balance at 1 July 2013
Exploration and evaluation expenditure
Exploration stand-by costs and other write-offs
Impairment - exploration expenditure
Restoration and rehabilitation
Foreign exchange movement
Balance at 30 June 2014
29,343,972
2,867,582
109,023
2,976,605
32,320,577
30 June 2013
Segment assets
29,343,972
Reconciliation of segment assets to group assets
Unallocated assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Available-for-sale financial assets
Property, plant and equipment
Total group assets
Segment asset movement for the year
Balance at 1 July 2012
Exploration and evaluation expenditure
Exploration stand-by costs and other write-offs
Impairment - exploration expenditure
Foreign exchange movement
Balance at 30 June 2013
94
24,085,880
7,668,371
(2,410,279)
5,258,092
29,343,972
Bowen
$
17,676,212
New Zealand
South Island
$
-
New South
Wales
Gunnedah
$
2,777,643
Total
$
52,774,432
4,814,076
960,092
98,571
464,254
94,980
59,206,405
3,752,702
14,296,364
(372,854)
13,923,510
17,676,212
8,443,378
94,945
(9,148,736)
610,413
(8,443,378)
-
2,748,563
34,231
(5,151)
29,080
2,777,643
44,288,615
17,293,122
(378,005)
(9,148,736)
109,023
610,413
8,485,817
52,774,432
3,752,702
8,443,378
2,748,563
44,288,615
4,464,130
818,937
108,389
473,760
3,255,779
103,847
53,513,457
1,200,310
2,877,392
(325,000)
2,552,392
3,752,702
10,155,092
174,346
(1,366,978)
(1,165,091)
646,009
(1,711,714)
8,443,378
1,090,985
1,657,578
1,657,578
2,748,563
36,532,267
12,377,687
(1,691,978)
(3,575,370)
646,009
7,756,348
44,288,615
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 28 – Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy
described in Note 1(d):
Country of
Class of
Equity holding
Name of entity
incorporation
shares
%
2014
2013
Chartwell Energy Limited (accounting parent)
Australia
Ordinary
100
100
Comet Ridge Limited (legal parent)
Australia
Ordinary
100
100
Comet Ridge NZ Pty Ltd
Australia
Ordinary
100
100
USA
Ordinary
100
100
Davidson Prospecting Pty Ltd
Australia
Ordinary
100
100
Comet Ridge Mahalo Pty Ltd
Comet Ridge Gunnedah Pty Ltd
Australia
Australia
Ordinary
Ordinary
100
100
100
100
Comet Ridge USA Inc.
Note 29 - Interests in Joint Operations
The group has entered into a number of joint operations for oil and gas exploration. The group's interests in the joint operations assets and liabilities are
included in the statement of financial position under the following classifications (refer accounting policies Notes 1(c) and 1(d)).
30 June 2014
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Exploration and evaluation
expenditure
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Share of joint venture net assets
ATP1015P
20%
$
ATP337
40%
$
Trade and other payables
Total current liabilities
Share of joint venture net assets
PEL428
60.0%
$
PEL6
22.5%
$
Total
$
-
198
26,290
26,488
248
53,161
53,409
297
24,976
25,273
111
31,529
31,640
854
135,956
136,810
5,783,146
5,783,146
5,783,146
13,283,738
13,283,738
13,310,226
311,617
311,617
365,026
263,256
263,256
288,529
180,399
180,399
212,039
19,822,156
19,822,156
19,958,966
1,260,750
1,260,750
4,522,396
13,310,226
49,106
49,106
315,920
20,246
20,246
268,283
26,786
26,786
185,253
1,356,888
1,356,888
18,602,078
ATP1015P
30 June 2013
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Exploration and evaluation
expenditure
Total non-current assets
Total assets
Current liabilities
PEL427
50%
$
ATP337
20%
$
PEL427
50%
$
PEL428
PEL6
Total
-
35%
$
71,071
417,405
488,476
248
75,020
75,268
60.0%
$
10,931
55,340
66,271
22.5%
$
26,306
32,133
58,439
$
108,556
579,898
688,454
3,734,393
3,734,393
3,734,393
2,175,699
2,175,699
2,664,175
218,113
218,113
293,381
182,678
182,678
248,949
120,102
120,102
178,541
6,430,985
6,430,985
7,119,439
-
2,279,421
64,129
132,148
98,551
2,574,249
3,734,393
2,279,421
384,754
64,129
229,252
132,148
116,801
98,551
79,990
2,574,249
4,545,190
Comet Ridge Limited I Annual Report 2014
95
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 29 - Interests in Joint Operations (continued)
In order for the joint ventures to maintain their interests in the exploration tenements in which they are involved, the joint ventures are required to meet
certain conditions imposed by the various statutory authorities granting the exploration permits or that are imposed by the joint venture agreements
entered into by the group. These conditions include minimum expenditure commitments. The timing and amount of minimum exploration expenditure
obligations of the group may vary significantly from the forecast based on the results of the work performed, which will determine the prospectivity of the
relevant area of interest. The group's minimum expenditure obligations from its interests in joint ventures, which are not provided for in the financial
statements are as follows:
Consolidated
2014
2013
Minimum expenditure requirements
$
$
3,721,511
3,006,781
● not later than 12 months
411,254
8,923,850
● between 12 months and 5 years
4,132,765
11,930,631
For all joint operations other than ATP1015P, the principal place of business is c/- Santos Limited, Level 16, 40 Creek Street, Brisbane QLD 4000. The
principal place of business for ATP1015P is Comet Ridge’s principal place of business.
Note 30 - Subsequent Events
Late in August 2014, an independently certified reserves and resources estimate was provided by MHA Petroleum Consultants LLC of Denver, Colorado
for Comet Ridge Limited’s ATP 337P Mahalo block in the northern Denison Trough. This maiden reserves certification is a significant even for the
Company. Details of this certification were released to the ASX on 28 August 2014.
Note 31 - Parent Entity Disclosures
2014
2013
$
4,695,729
$
4,148,423
Non-current assets
25,886,213
31,581,972
Total assets
30,581,942
35,730,395
Current liabilities
1,726,137
1,964,630
Non-current liabilities
2,967,636
4,896,808
Current assets
Total liabilities
4,693,773
6,861,438
Net Assets
25,888,169
28,868,957
Contributed equity
Option reserve
98,091,677
5,068,091
89,299,329
5,342,147
Accumulated losses
(77,271,599)
(65,772,519)
Total equity
25,888,169
28,868,957
Loss for the period
Other comprehensive income
(11,499,081)
-
(4,621,753)
-
Total comprehensive income
(11,499,081)
(4,621,753)
96
Comet Ridge Limited – Annual Report 30 June 2014
Notes to the Financial Statements (continued)
Note 31 - Parent Entity Disclosures (continued)
Bank guarantees
Bank guarantees are disclosed in Note 20(b).
Contingent Liabilities
The Directors are not aware of any contingent liabilities other than the Financial Guarantee Contract which is one of the terms of the renegotiated
Mahalo Option Agreement. Under the renegotiated agreement Comet Ridge Limited guarantees the indexed $20m consideration payable by Comet
Ridge Mahalo Pty Ltd (CRM) under Option B. Option B is be exercisable by Stanwell Corporation Limited (SCL) upon the earlier of FID for any
development of the Mahalo Gas Project permit area or on the 4th anniversary date of the execution of the new agreement.
If SCL elects to exercise Option B, it will receive a cash payment of A$20m at 1 July 2014 dollar terms which is to be escalated in accordance with CPI
on and from 1 August 2015 and annually thereafter (or part thereof) up to the date the Pay Agreement is signed (refer to Note 1(c) for a more detailed
explanation of the renegotiated Mahalo Option Agreement).
Commitments
(a) Operating lease commitments
Commitments for minimum lease payments for non-cancellable operating leases for offices and equipment contracted for but not recognised in the
financial statements.
2014
2013
Payable - minimum lease payments
$
$
● not later than 12 months
● between 12 months and 5 years
202,692
209,165
198,101
411,858
411,857
609,959
(b) Exploration expenditure
In order to maintain an interest in the exploration tenements in which the parent is involved, the parent is committed to meet the conditions under the
agreements. The timing and amount of exploration expenditure and obligations of the parent are subject to the minimum work or expenditure
requirements of the permit conditions or farm-in agreements (where applicable) and may vary significantly from the forecast based on the results of the
work performed, which will determine the prospectivity of the relevant area of interest. The obligations are not provided for in the financial statements.
Minimum expenditure requirements
2014
$
2013
$
● not later than 12 months
● between 12 months and 5 years
1,754,168
4,638,107
1,431,100
4,263,100
6,392,275
5,694,200
Comet Ridge Limited I Annual Report 2014
97
Comet Ridge Limited – Annual Report 30 June 2014
Directors’ Declaration
In the Directors’ opinion:
1)
the attached financial statements and Notes are in accordance with the Corporations Act 2001, including:
(a)
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
and
(b)
giving a true and fair view of the financial position as at 30 June 2014 and of the performance for the year ended on that date of the
consolidated entity.
2)
As stated in Note 1, the financial statements also comply with International Financial Reporting Standards.
3)
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations by the Managing Director and Chief Financial Officer required by section 295A of the Corporations Act
2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Tor McCaul
Managing Director
Brisbane, Queensland, 29 September 2014
98
Independent Auditor’s Report to the Members of Comet Ridge Limited
Report on the Financial Report
We have audited the accompanying financial report of Comet Ridge Limited, which comprises the statement of financial position as at
30 June 2014, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of
cash flows for the year then ended, Notes comprising a summary of significant accounting policies and other explanatory information,
and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement,
whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB101 Presentation of
Financial Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with
Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
company’s preparation of the financial report that gives a true and fair view 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 company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Comet Ridge Limited I Annual Report 2014
99
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Opinion
In our opinion:
a) the financial report of Comet Ridge Limited is in accordance with the Corporations Act 2001, including:
i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance for the year
ended on that date; and
ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b) the consolidated financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 1(b) in the financial report which states that the consolidated entity’s ability
to execute its planned exploration and evaluation activity and meet other necessary corporate expenditure is dependent on the
consolidated entity’s ability to raise additional funds. The matters set forth in Note 1 (b) indicate the existence of a material uncertainty
that may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated
entity may be unable to realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the
financial report.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 29 to 33 of the directors’ report for the year ended 30 June 2014. The
directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section
300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of Comet Ridge Limited for the year ended 30 June 2014 complies with Section 300A of the
Corporations Act 2001.
PITCHER PARTNERS
N BATTERS
Partner
Brisbane, Queensland
29 September 2014
100
Comet Ridge Limited – Annual Report 30 June 2014
Additional Information
The additional information set out below was applicable at 3 September 2014:1.
Number of Equity Holders
Ordinary Share Capital
458,748,746 fully paid ordinary shares are held by 1,927 individual shareholders.
2.
Voting Rights
In accordance with the Company's constitution, on a show of hands every shareholder present in person or by a proxy, attorney or representative
of a shareholder has one vote and on a poll every shareholder present in person or by a proxy, attorney or representative has in respect of fully
paid shares, one vote for every share held. No class of option holder has a right to vote, however the shares issued upon exercise of options will
rank pari passu with the then existing issued fully paid ordinary shares.
3.
Distribution of Shareholdings
Holdings
1
1,001
5,001
10,001
100,001

No. of Holders
- 1,000
- 5,000
- 10,000
- 100,000
- maximum
Units
94
248
233
927
425
1,927
Percentage
of Issued Capital*
3,219
819,947
1,906,067
38,584,591
417,434,922
458,748,746
0.001%
0.180%
0.420%
8.410%
90.980%
100.00%
Percentages have been rounded to the nearest 1/1000 decimal place.
The numbers of shareholders holding less than a marketable parcel (being 3,125 units or less) were:
210 Holders (254,448 Shares)
4.
Substantial Shareholders
The following information is extracted from the Company’s Register of Substantial Shareholders:
Name
FITEL Nominees Limited <Awal Bank BSC>
Waterford Atlantic Pty Ltd & McKay Super Pty Ltd
Gilby Resources Pty Ltd & Anthony Rechka Gilby
Quest Asset Partners Pty Ltd
Number of
Shares Held
51,930,000
33,889,551
24,215,848
23,415,711
Percentage
of Issued Capital
11.34%
7.398%
5.286%
5.11%
The above shareholdings are disclosed pursuant to section 671B (3) of the Corporations Act 2001 but the relevant interests shown do not
necessarily represent the beneficial interest in the share capital of the Company or the parties concerned.
Comet Ridge Limited I Annual Report 2014
101
Comet Ridge Limited – Annual Report 30 June 2014
Additional Information (continued)
5.
Unquoted Securities
Unlisted Share Rights: The Company has 550,000 share rights on issue, issued in accordance with the Share Rights Plan approved by
shareholders in November 2013. The number of beneficial holders of share rights totals 3.
6.
The 20 Largest Holders of Ordinary Shares
Number of Ordinary Fully
Paid Shares Held
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Fitel Nominees Limited
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
McKay Super Pty Ltd <McKay Super Fund A/C>
Gilby Resources Pty Ltd <The Gilby Investment A/C>
Villiers Queensland Pty Ltd <Paul Brosnan Account>
Waterford Atlantic Pty Ltd <McKay Family Trust>
Citicorp Nominees Pty Limited
Power Industries Pty Ltd <The Power Property A/C>
Kabila Investments Pty Ltd
Sixth Erra Pty Ltd <I Collie Family A/C>
Christopher John Blamey & Ann Margaret Blamey <ACB Super Fund
A/C>
Invia Custodian Pty Ltd <GSJBW Managed A/C>
KLIP Pty Ltd <Bernie Super Fund A/C>
Gilby Resources Pty Ltd <Gilby Super Fund A/C>
Dynamic Supplies Investments Pty Ltd <DSI Cash Trading A/C>
Norfolk Enchants Pty Ltd <Trojan Retirement Fund>
Tor Raymond McCaul
Crownace Pty Ltd
Mr. Paul Fudge
TOTAL
7.
Restricted Securities
There were no restricted securities issued or held during the reporting period.
102
51,930,000
24,875,594
24,874,900
19,341,571
18,813,945
18,288,782
14,472,980
13,530,514
13,425,000
10,933,375
8,838,582
Percentage of Issued
Capital
%
11.32%
5.42%
5.42%
4.22%
4.10%
3.99%
3.15%
2.95%
2.93%
2.38%
1.93%
7,325,000
1.60%
6,365,421
5,300,000
5,015,653
5,000,000
5,000,000
4,053,750
3,500,000
3,070,812
1.39%
1.16%
1.09%
1.09%
1.09%
0.88%
0.76%
0.67%
263,955,879
57.54%
Comet Ridge Limited – Annual Report 30 June 2014
Additional Information (continued)
8.
Interest in Petroleum Tenements
Authority to Prospect (ATP), Joint Venture, Petroleum Exploration Lease (PEL)
Petroleum Mining Permit (PMP) Interests
ATP / PEL / PMP
ATP337 Mahalo Farmin Area
**PEL427
Location
Bowen Basin
Gunnedah Basin
*Interest %
^40
100 Conventional
50 CSG
100 Conventional
60 CSG
Operator
Santos
Comet Ridge Limited (Conventional)
Santos NSW (Betel) (CSG)
Comet Ridge Limited (Conventional)
Santos NSW (Betel) (CSG)
**PEL428
Gunnedah Basin
**PEL 6
Gunnedah Basin
Galilee Basin
Galilee Basin
100 Conventional
22.5 CSG
100
100
Comet Ridge Limited (Conventional)
Santos NSW (Betel) (CSG)
Comet Ridge Limited
Comet Ridge Limited
ATP743
ATP744
ATP1015 Farmin Area
PMP50100
^^PEP50279
Galilee Basin
South Island, New Zealand
South Island, New Zealand
20
100
100
Comet Ridge Limited
Chartwell NZ Pty Ltd
Chartwell NZ Pty Ltd
* The interest is held either by Comet Ridge Limited or one of its wholly owned subsidiaries.
** The Petroleum Exploration Permits located in the Gunnedah Basin are divided into CCSG and Conventional Joint Ventures. The percentages
recorded show the interests that Comet Ridge (or a wholly owned subsidiary) holds in these in these respective joint ventures.
^ 40% net equity share subject to joint venture consent to the assignment of Stanwell Corporation’s 5% equity interest in the MGP to COI in connection
with the buy-back announced to ASX on 19 March 2014. COI’s legal interest in MGP is currently 35%.
^^subsequent to the end of the reporting period Comet Ridge NZ Pty Ltd applied for the surrender of PEP 50279. If the surrender is granted by New
Zealand Petroleum & Minerals (which is expected to be granted) then the interest held in the asset will be nil.
Comet Ridge Limited I Annual Report 2014
103
We continue to view our Galilee Basin
interests as having significant potential,
with the next step being a full scale pilot
program to convert the project's large
Contingent Resource base to
commercial reserves
104
Corporate Directory
Comet Ridge Limited
Directors
James McKay
Non-executive Chairman
Tor McCaul
Managing Director
Gillian Swaby
Non-executive Director
Jeff Schneider
Non-executive Director
Chris Pieters
Commercial Director
Anthony Gilby
Non-executive Director
Stephen Rodgers
Company Secretary
Registered Office
Level 3
283 Elizabeth Street
Brisbane Queensland 4000
Telephone: +61 7 3221 3661
Facsimile: +61 7 3221 3668
Email:
[email protected]
Share Registry
Computershare Registry Services Pty Ltd
117 Victoria Street
West End Queensland 4101
Telephone: +61 7 3237 2100
Facsimile: +61 7 3229 9860
Auditors
Pitcher Partners
345 Queen Street
BRISBANE, QLD 4000
Telephone: +61 7 3222 8444
Securities Exchange Listing
Australian Securities Exchange Ltd
Home Exchange: Brisbane
ASX Code: COI
ASX Code: COI
www.cometridge.com.au
Comet Ridge Limited I Annual Report 2014
105
Annual Report 2014
Comet Ridge Limited
Brisbane Office:
Level 3, 283 Elizabeth Street
Brisbane QLD 4000
Telephone: +61 7 3221 3661
Facsimile: +61 7 3221 3668
www.cometridge.com.au