ABN 68 064 120 896
ANNUAL FINANCIAL REPORT 30 JUNE 2016
DIRECTORS' REPORT
For the year ended 30 JUNE 2016
The Directors of Global Petroleum Limited present their report together with the consolidated financial statements of the Group comprising Global Petroleum Limited ("the Company" or "Global" or "Parent") and the entities it controlled at the end of, or during, the year ended 30 June 2016 ("Consolidated Entity" or "Group").
Contents
Directors' Report
Letter to shareholders 1
-
Operating and financial review 2
-
Directors 4
-
Company secretary 6
4. Directors' meetings……………………………………………………………………………………………………7
-
Directors' interests 7
-
Discretionary grant of shares and share options 7
-
Principal activities 7
-
Dividends 7
-
Events subsequent to reporting date 8
-
Likely developments. 8
-
Indemnification insurance of officers 8
-
Non-audit services 8
-
Remuneration report - audited 9
-
Corporate governance statement 15
-
Auditor's independence declaration 15
-
Directors' declaration 16
Consolidated statement of profit or loss and other comprehensive income 18
Consolidated statement of financial position 19
Consolidated statement of changes in equity 20
Consolidated statement of cashflows 21
Index to Notes to the consolidated financial statements 22
Index to significant accounting policies 23
Notes to the consolidated financial statements 24
Independent auditor's report to the members of Global Petroleum Limited 53
Additional information 55
Corporate directory 58
DIRECTORS' REPORT
For the year ended 30 JUNE 2016
28 September 2016
Dear Shareholders
We are pleased to present to you the Global Petroleum 2016 Annual Report.
During the period covered by this report macro-economic factors have remained challenging and continue to form the context for both operational and commercial activity in the upstream energy business. The Company has made significant progress in reducing its costs in response to these factors. The Brent oil price averaged $45 per barrel in the reporting year to 30 June 2016, compared to $75 in the preceding year to end June 2015. It is instructive to note that the average oil price in the twelve months to June 2014 (just before the oil price began to fall) was $109 per barrel.
The Company's Petroleum Exploration Licence offshore Namibia was extended in December 2015 into Phase 2, which has a duration of 24 months, with a reduced Minimum Work Programme. In place of the previous well commitment in Phase 2, the Company undertook to reprocess and re-interpret previously acquired 2D seismic and to shoot 800 kilometres of new 2D. To this end the Company's technical team has evaluated reprocessed 2D seismic data from the 1990s which was purchased earlier this year, and has recently taken delivery of reprocessed speculative 2D seismic data shot over its blocks in 2011/12 by the seismic company, TGS. The evaluation of this reprocessed data has proven to be very encouraging with regard to the hydrocarbon potential in Global's blocks. Notably the work has increased confidence in a syn-rift oil play in the outboard or deep water region offshore Namibia, and the likely presence of both reservoir and source within the Company's blocks. Combined with the existing prospect portfolio within the blocks, this has improved Global's view on the overall prospectivity of the acreage. Planning for the acquisition of infill 2D seismic survey data - likely to be shot in 2017- is also in progress in liaison with the Namibian Ministry of Mines and Energy.
The Company's four exploration applications offshore Italy are progressing and we are currently awaiting an Environmental Decree from the Italian Ministry of the Environment.
Financial
During the year ended 30 June 2016, the Group recorded a loss after tax of US$2,336,513 (2015: loss US$4,469,837). Cash balances at 30 June 2016 amounted to US$10,172,598 (2015: US$12,707,727). The Group has no debt.
Board
In January 2016 Mr Peter Dighton resigned from the Board to devote more time to his other business interests, and we thank Peter for his valuable contribution over the years he was a Non-Executive Director.
On 10 June 2016 we welcomed Mr Andrew Draffin to the Board as a Non-Executive Director. Andrew is a Melbourne based Chartered Accountant with a strong focus on corporate, treasury and financial services, provided to both listed and private companies covering a broad range of industries, including the energy and mining sectors.
Strategy and Outlook
The Company has continued to seek opportunities which would balance its existing higher risk/reward portfolio in Namibia and Italy (once awarded), prioritising investment in discovered contingent resources and/or exploration in proven hydrocarbon provinces.
Accordingly, over the past 12 months we have continued to engage with counterparties holding appropriate assets. We have found that a common feature of such assets is the presence of heavy work commitments, undertaken in a better macro-economic environment. This factor, combined with structural issues regarding availability of finance, continues to be a major hindrance for us in concluding transactions.
We would note, by way of contrast, that over the equivalent period Global Petroleum has not taken on acreage with short-term well commitments. Still less have we utilised our funds to drill high-risk frontier exploration wells.
Your Company is therefore well placed in comparison to many of its peers. We retain a strong cash position and remain confident of making a key investment in due course.
We look forward to meeting Shareholders at the Company's Annual General Meeting in November 2016.
John van der Welle Peter G. Hill
Non-Executive Chairman Chief Executive Officer
DIRECTORS' REPORT
For the year ended 30 JUNE 2016
-
OPERATING AND FINANCIAL REVIEW
Namibian Project
The Namibian Project consists of an 85% participating interest in Petroleum Exploration Licence Number 29 ("Licence") covering Offshore Blocks 1910B and 2010A in the Republic of Namibia. The Licence, issued on 3 December 2010, originally covered 11,730 square kilometres and is located offshore Namibia in water depths ranging from 1,300 metres to 3,000 metres (Refer Figure 1). The Initial Exploration Period of the Licence expired in December 2014, and Global fulfilled its corresponding work obligations approximately halfway through the initial four year term. The Company agreed with the Namibian Ministry of Mines and Energy ("MME") a 12 month extension of the Initial Exploration Period to December 2015, on the basis of an agreed work programme which entailed further interpretation work on existing seismic data.
In December 2015, the Company entered into the First Renewal Exploration Period (Phase 2) of the Licence, making a mandatory relinquishment of 50% of the Licence Area. Phase 2 is for a duration of 24 months with a reduced Minimum Work Programme which does not now contain a well commitment. Instead, the Company has undertaken to reprocess and re-interpret previously acquired 2D seismic and to shoot 800 kilometres of new 2D. To this end the Company's technical team has evaluated reprocessed 2D seismic data from the 1990s which was purchased earlier this year, and has recently taken delivery of reprocessed speculative 2D seismic data shot over its blocks in 2011/12 by the seismic company, TGS. Work on the seismic continues to be very encouraging with regard to the hydrocarbon potential in Global's blocks. Notably the work has increased confidence in a syn-rift oil play in the outboard or deep water region offshore Namibia and the likely presence of both reservoir and source within the Company's blocks. Combined with the existing prospect portfolio within the blocks, this has improved Global's view on the overall prospectivity of the acreage. Planning for the acquisition of infill 2D seismic survey data - likely to be shot in 2017- is also in progress in liaison with the Namibian Ministry of Mines and Energy.
The Company's wholly owned subsidiary, Jupiter Petroleum (Namibia) Limited, remains operator with an 85% interest in the two blocks, with partners NAMCOR and Bronze Investments Pty Ltd (Bronze) holding 10% and 5% respectively, both as carried interests.
Map of offshore Namibia showing Global blocks.
