ACN Interim Financial Report For the Half Year ended 31 December 2018

Transcription

1 ACN Interim Financial Report For the Half Year ended 31 December

2 Half Year Financial Report 31 December Contents Directors Report 1-3 Auditor s Independence Declaration 4 Directors Declaration 5 Statement of Profit or Loss and Other Comprehensive Income 6 Statement of Financial Position 7 Statement of Cash Flows 8 Statement of Changes in Equity 9 Notes to the Half Year Financial Report Independent Auditor s Review Report to the Members

3 Directors Report The Directors of Petrel Energy Limited ( Petrel ) present the consolidated interim financial report for the half year ended 31 December. The consolidated entity consists of Petrel Energy Limited (the Company or Parent Entity ) and the entities it controlled during the half year. DIRECTORS The Directors in office during the half year in its entirety and up to the date of this report are: Greg Columbus Non-executive Chairman (appointed on 29 November ) David Casey Managing Director and Chief Executive Officer Russell Porter Non-executive Director (retired on 29 November ) Alexander Sundich Non-executive Director (retired as Non-executive Chairman and was appointed as Non-executive Director on 29 November ) Andrew Williams Non-executive Director (retired on 29 November ) PRINCIPAL ACTIVITY The principal activity of the consolidated entity during the year was the exploration and development of oil & gas resources. Its objective is to generate shareholder wealth. Due to funding constraints during the consolidated entity changed its exploration focus from the Norte Basin project in Uruguay to the Tesorillo project in Spain and the North Perth Basin project in Western Australia. OPERATING RESULTS The net loss of the consolidated entity for the period was 1,826,893 (2017: 19,968,209). This included the share of loss in associate of 578,789 (2017: Nil) and impairment loss on receivable from associate of 396,698 (2017: Nil) during the six months to 31 December. FINANCIAL POSITION The net assets decreased by 9,264 in the period up to 31 December made up of a decrease in total assets of 320,632 and a decrease in total liabilities of 311,368. The company raised a net amount of 964,505 during the half-year from a share placement and Share Purchase Plan. REVIEW OF OPERATIONS During the period the Company undertook the following activities: Reverse Takeover On 21 December the Company announced the signing of a Share Purchase Agreement (the SPA ) with Warrego Energy Limited ( Warrego ) agreeing the merger of the two groups via a reverse takeover (the RTO ). The SPA fully defines the RTO which will be effected by the acquisition by Petrel of all the shares of Warrego, a private UK company. As consideration for the RTO, Warrego shareholders will receive fully paid ordinary shares in Petrel, which will represent approximately 77% of the issued share capital of Petrel. Petrel Energy Limited - Half-Year Financial Report: 31 December 1

4 Directors Report The RTO is subject to shareholder approval at an Extraordinary General Meeting to be held on 15 March The Notice of Meeting provides full particulars of the RTO. Warrego Energy (UK) Limited ( Warrego ) is a single asset company which holds North Perth Basin Exploration Permit 469 in Western Australia. Warrego farmed out a 50% interest in EP469 and operatorship to Strike Energy Limited ( Strike ) via a joint venture arrangement in June. As part of this agreement Strike will fund the first A11,000,000 of the cost of drilling and completing one exploration well within the permit (the West Erregulla 2 well) and carrying out related G&G Studies including G&A costs, within 24 months of commencement of the joint venture. The well is expected to be drilled this year with a spud date in late May Spain The field programme has now been concluded and was focused on three strands. The first strand of the recent programme consisted of general field studies to provide information that is required to populate the Environmental and Social Impact Assessment ('ESIA') report. It is estimated that 70% of the overall fieldwork required for the ESIA is complete now. The final steps e.g. the hydrogeology, are well location dependent. These will be completed once the new drilling location is decided. The second strand was a detailed surface structural geology mapping exercise by a leading structural geologist from Granada University. The new map and related cross-sections show that the structural subsurface geometry of the exploration target (the Aljibe sandstone in the Lowermost Miocene) is formed by possibly several folds and thrust ramps of 3 to 5 km length which are inferred to be potential gas traps. The results have been formally presented to the Energy Resources Section of the Spanish Geological Survey (IGME), during a recent meeting in Madrid. The third strand, an Audio Magneto Telluric survey, was hampered and delayed by poor access to the study areas after the summer. The appointed contractors have now completed multiple tests over important areas and the raw field data is being processed now. Tarba Energia SRL, the local subsidiary, will seek to complete the full programme in the first half of 2019 and in any event, as soon as possible. North Perth Basin The Company and Warrego have agreed that they will exercise the call option over Palatine Energy Limited (Palatine) and acquire all of its issued share capital. Palatine holds the EPA application over 2.2m acres in the North Perth Basin. The substantive terms of the three Native Title Agreements that cover the EPA-0127 application are almost finalised and about to be lodged with the WA Department of Mines, Industry Regulation and Safety. Uruguay Schuepbach Energy International LLC (SEI), 41% owned by Petrel, is currently being funded by non-petrel shareholders. These investors in SEI invested 500,000 as preferred convertible capital to repay outstanding liabilities. On 28 September SIH elected to convert this preferred capital for a further 8% interest in SEI. As a result, Petrel s interest in its Uruguay project reduced from 49% to 41%. Corporate On 22 October Mr Greg Columbus was appointed to the Board as a Non-Executive Director. Mr Columbus was then appointed Chairman of the Company and Remuneration Committee at the AGM. His previous international oil and gas industry experience will enhance the Company s ability to drive its current projects forward while continuing to identify other ways to increase shareholder value. Petrel Energy Limited - Half-Year Financial Report: 31 December 2

5 Directors Report A share placement, on 4 July raised a total of 735,000. Of the total 350,000,000 shares issued at 0.21c under the placement, 177,904,762 were settled and allotted immediately utilising ASX Listing Rule 7.1. capacity. The subscription for the remaining shares received shareholder approval at an Extraordinary General Meeting on 8 August. An associated Share Purchase Plan which closed on 7 August raised a further 326,000 bringing the total funds raised to 1,061,000. SUBSEQUENT EVENTS No matter has arisen in the interval since 31 December and up to the date of this report that in the opinion of the directors has significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in future financial periods other than the following: On 14 January 2019 Strike Energy Limited ( Strike ) as Operator of EP469 (Strike 50% : Warrego Energy Limited 50%) confirmed the finalisation of a collaboration with another Perth Basin Operator to mobilise the Easternwell Rig106 to the Perth Basin to drill the West Erregulla-2 well in early May If Petrel shareholders approve the RTO with Warrego then they will participate in this well. On 6 February 2019 the Notice of General Meeting to approve the completion of the RTO was sent to shareholders. The meeting on 15 March 2019 will seek approval to consolidate share capital on a 20:1 basis, change the name of the Company to Warrego Energy Limited, appoint 5 new directors and issue shares to Warrego shareholders to complete the RTO. On 29 January 2019 Warrego Energy Limited provided a 300,000 interest free loan to the Company. The loan is repayable on completion of the RTO and if the RTO does not complete the loan will be forgiven by Warrego Energy Limited. AUDITOR S DECLARATION The lead Auditor s Independence Declaration under section 307C of the Corporations Act 2001 is set out on page 4 for the half year ended 31 December. This report is signed in accordance with a resolution of the Board of Directors. David Casey Managing Director and Chief Executive Officer 14 March 2019 Sydney Petrel Energy Limited - Half-Year Financial Report: 31 December 3

6 Tel: Fax: Level 11, 1 Margaret St Sydney NSW 2000 Australia DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF PETREL ENERGY LIMITED As lead auditor for the review of Petrel Energy Limited for the half-year ended 31 December, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and 2. No contraventions of any applicable code of professional conduct in relation to the review. This declaration is in respect of Petrel Energy Limited and the entities it controlled during the period. Gareth Few Partner BDO East Coast Partnership Sydney, 14 March 2019 BDO East Coast Partnership ABN is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN , an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

7 Directors Declaration The directors of Petrel Energy Limited declare that: the attached financial statements and notes thereto comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes thereto give a true and fair view of the consolidated equity financial position as at 31 December and of its performance for the financial half-year ended on that date; and there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and the directors have been given the declarations required by s 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer. Signed in accordance with a resolution of directors made pursuant to section 303(5) of the Corporations Act On behalf of the directors David Casey Managing Director and Chief Executive Officer 14 March 2019 Sydney Petrel Energy Limited - Half-Year Financial Report: 31 December 5

8 Statement of Profit or Loss and Other Comprehensive Income for the Half Year ended 31 December Note Half year 31 December (Consolidated) Half year 31 December 2017 (Consolidated) Interest income 1,050 3,097 Foreign exchange (losses) / gains 9,401 (3,497) Total Income 10,451 (400) Director s fees (65,695) (83,889) Employee benefit expenses (225,457) (298,267) Share based payment expenses - (12,091) Professional and consulting fees (233,149) (272,925) Auditor s remuneration (28,086) (20,400) Depreciation and amortisation (9,133) (10,245) General insurance expenses (59,884) (23,926) Corporate services (16,047) (16,611) Donations - (19,799) Lease of offices (42,296) (34,923) Share registry fees (42,276) (44,283) Finance costs (15,404) - Travel local and overseas (64,652) (39,406) Share of loss in associate 3 (578,789) - Exploration and evaluation expenses - (58,253) Impairment loss on receivable from associate 4 (396,698) - Impairment loss on exploration and evaluation expenditure (Uruguay) - (17,617,157) Impairment loss on exploration and evaluation expenditure (Spain) - (1,349,577) Other operating expenses (59,778) (66,057) Total Expenses (1,837,344) (19,967,809) Loss from operations before income tax expense (1,826,893) (19,968,209) Income tax expense - - Loss from operations after income tax expense (1,826,893) (19,968,209) Foreign currency translation - (575,622) Other comprehensive income for the period, net of tax - (575,622) Total comprehensive loss for the period, net of tax (1,826,893) (20,543,831) Loss for the period is attributable to: Owners of the Parent (1,826,893) (10,752,734) Non-controlling interests - (9,215,475) Total comprehensive loss for the period attributable to: (1,826,893) (19,968,209) Owners of the Parent (1,826,979) (11,048,622) Non-controlling interests 86 (9,495,209) Loss per share from continuing operations attributable to the ordinary equity holders of the company: (1,826,893) (20,543,831) Basic and diluted loss per share (cents per share) (0.08) (0.80) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. Petrel Energy Limited - Half-Year Financial Report: 31 December 6

9 Statement of Financial Position as at 31 December ASSETS Note 31 December (Consolidated) 30 June (Consolidated) Current Assets Cash and cash equivalents 298,316 43,565 Other current assets 134,940 64,701 Restricted cash 8 110, ,467 Total Current Assets 543, ,733 Non-Current Assets Exploration and evaluation expenditure 2 426,630 95,262 Plant and equipment 7,030 9,663 Receivable from associate 4-396,698 Investment in associate 3 3,330,635 3,909,424 Total Non-Current Assets 3,764,295 4,411,047 Total Assets 4,308,148 4,628,780 LIABILITIES Current Liabilities Trade and other payables 510, ,025 Employee benefits 162, ,986 Financial liabilities 20,996 - Total Current Liabilities 693,967 1,063,011 Non-Current Liabilities Employee benefits 28,918 22,301 Payable to associate 51,059 - Total Non-Current Liabilities 79,977 22,301 Total Liabilities 773,944 1,085,312 Net Assets 3,534,204 3,543,468 EQUITY Contributed equity 5 58,239,040 56,864,449 Foreign currency translation reserve (86) - Options reserve 6 518, ,525 Accumulated losses (55,246,425) (53,843,266) Equity attributable to owners of the Parent 3,511,054 3,539,708 Non-controlling interests 7 23,150 3,760 Total Equity 3,534,204 3,543,468 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. Petrel Energy Limited - Half-Year Financial Report: 31 December 7

10 Statement of Cash Flows for the Half Year ended 31 December Note Half year ended 31 December (Consolidated) Half year ended 31 December 2017 (Consolidated) Cash Flows From Operating Activities Payments to suppliers and employees (inclusive of goods and services tax) (838,047) (503,410) Interest received 846 3,097 Interest expense (2,532) - Net cash (used in) Operating Activities (839,733) (500,313) Cash Flows From Investing Activities Proceeds from disposal of investment 443,038 - Payment for investment (30,000) - Proceeds from release of security deposits related to exploration and evaluation expenditure - 1,275,670 Purchase of plant and equipment (6,499) (1,982) Payments for exploration and evaluation expenditure (354,093) (9,181,838) Net cash (used in) Investing Activities 52,446 (7,908,150) Cash Flows From Financing Activities Proceeds from issue of shares (net of costs) 964,505 5,135,361 Proceeds from borrowings 575,860 - Repayment of borrowings (494,560) - Additional contribution of equity by non-controlling interests - 502,563 Net cash inflow from Financing Activities 1,045,805 5,637,924 Net (decrease) / increase in cash held 258,518 (2,770,539 Cash at the beginning of the Period 43,565 3,578,728 Net foreign exchange difference (3,767) (700) Cash at the end of the Period 298, ,489 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. Petrel Energy Limited - Half-Year Financial Report: 31 December 8

11 Statement of Changes in Equity for the Half Year ended 31 December Issued Capital Foreign Currency Translation Reserve Options Reserve Accumulated Losses Total Noncontrolling Interests Total equity Balance at 1 July 56,864, ,525 (53,843,266) 3,539,708 3,760 3,543,468 Loss from continuing operations (1,826,893) (1,826,893) - (1,826,893) Other comprehensive loss - (86) - - (86) 86 - Total comprehensive income for the period - (86) - (1,826,893) (1,826,979) 86 (1,826,893) Transactions with owners in their capacity as owners Share based payments Effect of NCI dilution by parent entity , ,734 19, ,038 Issue of share capital 1,471, ,471,186-1,471,186 Transaction costs arising on share issue (96,595) (96,595) - (96,595) Total transactions with owners in their capacity as owners 1,374, ,734 1,798,325 19,304 1,817,629 Additional contribution of equity by NCI Balance at 31 December 58,239,040 (86) 518,525 (55,246,425) 3,511,054 23,150 3,534,204 Balance at 1 July ,313, , ,040 (35,004,984) 17,755,419 14,553,395 32,308,814 Loss from continuing operations (10,752,734) (10,674,509) (9,215,475) (19,968,209) Other comprehensive loss - (295,888) - - (374,113) (279,734) (575,622) Total comprehensive income for the period - (295,888) - (10,752,734) (11,048,622) (9,495,209) (20,543,831) Transactions with owners in their capacity as owners Share based payments ,091-12,091-12,091 Effect of NCI dilution by parent entity - - 2,066,034 2,066,034 (2,066,034) - Issue of share capital 5,745, ,745,883-5,745,883 Transaction costs arising on share issue (398,373) - - (398,373) - (398,373) Total transactions with owners in their capacity as owners 5,347,510-12,091 2,066,034 7,425,635 (2,066,034) 5,359,601 Additional contribution of equity by NCI , ,564 Balance at 31 December ,661, , ,131 (43,691,684) 14,132,432 3,494,716 17,627,148 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. Petrel Energy Limited - Half-Year Financial Report: 31 December 9

12 Notes comprising a summary of significant accounting policies and other explanatory notes for the Half Year ended 31 December 1. Summary of significant accounting policies The interim financial report has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and interpretations issued by the Australian Accounting Standards Board and the Corporations Act This financial report covers Petrel Energy Limited as a consolidated entity consisting of Petrel Energy Limited and the entities it controlled and was authorised for issue in accordance with a resolution of Directors on 14 March The half year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report. The half year financial report should be read in conjunction with the annual financial report of Petrel Energy Limited as at 30 June and any public announcement made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act Petrel Energy Limited is a public company, listed on the Australian Stock Exchange, incorporated and domiciled in Australia. The consolidated entity s operations comprise exploration for oil and gas resources. The main interests of the consolidated entity are located in the United States of America, Uruguay and Spain. a) Basis of preparation The financial report has been prepared on the historical cost basis except as disclosed in the notes to the financial report. Cost is based on the fair value of the consideration given in the exchange for assets. b) Significant accounting policies The half-year financial report has been prepared using the same accounting policies as used in the annual financial report for the year ended 30 June except for the investment in associate Schuepbach Energy International LLC (Note 3) which was valued at fair value as at 30 June but is valued applying the equity method as at 31 December. c) Going Concern These financial statements have been prepared on the going concern basis which contemplates the consolidated entity s ability pay its debts as and when they become due and payable for a period of at least 12 months from the date of authorising the financial report for issue. During the year, the company raised net cash of 964,505 from a share placement and Share Purchase Plan. In addition, there were proceeds of 443,038 (EUR280,000) from the disposal of a 12.5% interest in Tarba Energia SRL to PXOG Muirhill Limited ( Muirhill ) under the Share Purchase Agreement as part of Tesorillo stage 2 funding. The proceeds were used to fund working capital including the Tesorillo magnetotelluric programme in southern Spain and the repayment of a 200,553 (EUR126,750) short term loan from Muirhill to the Company. The Group had cash outflows from operations in the period ending 31 December of 879,733 (2017: 500,313). The Group recorded a net loss after tax from operations of 1,826,893 for the six-month period to 31 December (2017: 19,968,209). The Group s net cash inflow from investing activities in the period ended 31 December was 52,446 Petrel Energy Limited - Half-Year Financial Report: 31 December 10

13 Notes comprising a summary of significant accounting policies and other explanatory notes for the Half Year ended 31 December (2017: outflow 7,908,150). The Group s net current liabilities as at 31 December were 150,114 (30 June : 845,278). These conditions indicate the existence of a material uncertainty that may cast significant doubt over the consolidated entity s ability to continue as a going concern over the next 12 months and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business. The consolidated entity has prepared a cash flow forecast, which indicates that it will not have sufficient cash from operations to meet its ongoing planned expenditure. The directors are confident, based on past performance and the likely completion of the Warrego RTO, that they will be successful in their plan to raise further funds from issue of equity, the sale of noncore assets, partial sale of equity or farm-out of core tenements or other corporate activity designed to fund the Group s ongoing planned expenditure. As such, these financial statements have been presented on a going concern basis. Should the Group be unable to continue as a going concern it may be required to realise its assets and discharge its liabilities other than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of liabilities that might result should the Group be unable to continue as a going concern and meet its debts as and when the fall due. 2. Exploration and evaluation expenditure 31 December 30 June Movement During the Period / Year At beginning of period / year 95,262 29,339,971 Additions at cost period / year 328,713 10,437,784 Impairment charged to Statement of Profit and Loss in the current period De-recognition of Schuepbach Energy International LLC - (19,138,440) - (20,676,661) Movement in foreign currency translation 2, ,608 At end of period / year 426,630 95,262 Petrel Energy Limited - Half-Year Financial Report: 31 December 11

14 Notes comprising a summary of significant accounting policies and other explanatory notes for the Half Year ended 31 December 3. Investment in associate On 28 September, Schuepbach International Holdings ( SIH ) has converted its USD500,000 of preference capital in Schuepbach Energy International LLC ( SEI ) in return for an additional 8% interest in SEI. As a result, the ownership in SEI of the Petrel Energy Limited and SIH are now at 41% and 59% respectively. The investment in associate SEI was valued at fair value as at 30 June but is valued applying the equity method as at 31 December. 31 December 30 June Movement During the Period / Year At beginning of period / year 3,909,424 - Share of associate entity s financial position on loss of control in subsidiary - 3,909,424 Share of loss in associate period / year (578,789) - At end of period / year 3,330,635 3,909,424 Share of associate entity s financial position 31 December 30 June Current assets ,660 Non-current assets 4,765,974 5,049,879 Total assets 4,766,868 5,129,539 Current liabilities 1,106, ,277 Non-current liabilities 329, ,838 Total liabilities 1,436,233 1,220,115 Net assets 3,330,635 3,909, Receivable from associate The receivable from associate reflected a Promissory Note entered into by the Company on 7 March 2012 and extended on 31 March 2015 whereby SEI shareholders loaned money to SEI to fund its security arrangements with ANCAP in Uruguay. The Company has a 51% interest in the US450,000 Promissory Note plus outstanding interest of US63,596. SEI has been unable to pay interest or repay capital on the Promissory Note since 2015 and SEI is no longer controlled by the Company consequence an impairment loss has been recognised against the Receivable from associate. Petrel Energy Limited - Half-Year Financial Report: 31 December 12

15 Notes comprising a summary of significant accounting policies and other explanatory notes for the Half Year ended 31 December 31 December 30 June Movement During the Period / Year At beginning of period / year Receivable balance including accrued interest due to Company share of ANCAP deposit - 396,698 Impairment loss on receivable from associate (396,698) - At end of period / year - 396, Contributed equity (a) Share capital 31 December Shares 30 June Shares 31 December 30 June Ordinary shares (net of capital raising costs) 2,414,437,494 1,761,382,464 58,239,040 56,864,449 (b) Movements in equity Date Details Number of Shares Issue Price 1 July Opening balance 1,761,382,464 56,864,449 9 July 13 August 13 August 13 August 13 August Shares issued under share placement 350,000, ,000 Shares issued under Share Purchase Plan 155,285, ,100 Shares issued to Directors in lieu of fees and salary in accordance with shareholder approval at Extraordinary General Meeting on 08 August 95,258, ,043 Shares issued to Directors in lieu of fees and salary in accordance with shareholder approval at Extraordinary General Meeting on 08 August 52,510, ,043 2,414,437,494 58,335,635 Less: Transaction costs arising on share issue (96,595) 31 December Closing balance 58,239,040 Petrel Energy Limited - Half-Year Financial Report: 31 December 13

16 Notes comprising a summary of significant accounting policies and other explanatory notes for the Half Year ended 31 December 6. Options Listed Date Details Number of Options Expire Date Exercise Price 1 July Opening balance 519,961,935 4 cents 31 October Expired (519,961,935) 4 cents 31 December Closing balance - Options Reserve The options reserve comprises the fair value of ordinary shares and options issued over ordinary shares of the Company relating to the Employee Incentive Plan. There was no share-based payment expense for the six months to 31 December, as a result, the option reserve carrying amount of 518,525 is unchanged (June : 518,525). No shares or options under the Employee Incentive Plan were issued in the six months to 31 December. 7. Non-controlling Interests On 18 December, PXOG Muirhill Limited ( Muirhill ) has completed the second closing for an additional 12.5% to total ownership of 15% in Tarba Energia SRL ( Tarba ) under the Share Purchase Agreement signed on 18 December 2017 at a consideration price of 443,038 (EUR280,000). The proceeds amount was utilised to repay a short-term loan from Muirhill to the Company and to fund working capital requirements of Tarba as described in note 1(c). 8. Restricted cash 31 December 30 June Obligations under a bank corporate credit card facility with the Commonwealth Bank of Australia 30,000 30,000 Bankers guarantee issued as security for the performance by the Company of its obligations under a lease of office premises at Suite 604, 10 Bridge Street, Sydney 33,409 33,409 Cash pledged as deposit for Spanish Ministry compliance programme 46,058 46,058 Movement in foreign currency translation related to cash pledged as deposit for Spanish Ministry compliance programme 1,130 - Totals 110, ,467 Petrel Energy Limited - Half-Year Financial Report: 31 December 14

17 Notes comprising a summary of significant accounting policies and other explanatory notes for the Half Year ended 31 December The above are all secured by a charge over term deposits lodged with bankers of a like amount. 9. Segment information Identification of reportable segments The consolidated entity has identified its operating segments based on the four geographical areas in which the consolidated entity operates. In Australia, is its central location, responsible for overseeing the company strategic direction, development, performance and capital management. In Alberta Canada the consolidated entity has a 40% working interest in the Lochend Cardium Project targeting tight oil. In Uruguay, the consolidated entity has a 41% interest in projects targeting oil and gas in the Piedra Sola and Salto concessions. In Cadiz Spain the consolidated entity has an 85% interest in the Tesorillo and Ruedalabola gas exploration licences. Management has identified that exploration and development of oil & gas resources as the consolidated entity s only operating segment. Revenue and profit and loss information of consolidated entity s operating segments Consolidated Australia Uruguay Spain Total Six month ended 31 December Revenue from external customers Other income Segment loss before income tax (1,826,893) - - (1,826,893) Consolidated Australia Uruguay Spain Total Six month ended 31 December 2017 Revenue from external customers Other income Segment loss before income tax (1,001,475) (17,617,157) (1,349,577) (19,968,209) Assets information of consolidated entity s operating segments Consolidated Australia Uruguay Spain Total Non-current assets 31 December 7,030 3,330, ,630 3,764, June 406,361 3,909,424 95,262 4,411,047 Petrel Energy Limited - Half-Year Financial Report: 31 December 15

18 Notes comprising a summary of significant accounting policies and other explanatory notes for the Half Year ended 31 December 10. Events occurring after the reporting date The Directors are not aware of any matters or circumstances that have arisen since the end of the period that has significantly affected or may significantly affect the operations of the Company, the results of its operations or the state of its affairs, other than the following: On 14 January 2019 Strike Energy Limited ( Strike ) as Operator of EP469 (Strike 50% : Warrego Energy Limited 50%) confirmed the finalisation of a collaboration with another Perth Basin Operator to mobilise the Easternwell Rig106 to the Perth Basin to drill the West Erregulla-2 well in early May If Petrel shareholders approve the RTO with Warrego then they will participate in this well. On 6 February 2019 the Notice of General Meeting to approve the completion of the RTO was sent to shareholders. The meeting on 15 March 2019 will seek approval to consolidate share capital 20:1, change the name of the Company to Warrego Energy Limited, appoint 5 new directors and issue shares to Warrego shareholders to complete the RTO. On 29 January 2019 Warrego Energy Limited provided a 300,000 interest free loan to the Company. The loan is repayable on completion of the RTO and if the RTO does not complete the loan will be forgiven by Warrego Energy Limited. Petrel Energy Limited - Half-Year Financial Report: 31 December 16

19 Tel: Fax: Level 11, 1 Margaret St Sydney NSW 2000 Australia INDEPENDENT AUDITOR S REVIEW REPORT To the members of Petrel Energy Limited Report on the Half-Year Financial Report Conclusion We have reviewed the half-year financial report of Petrel Energy Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the halfyear then ended, notes comprising a statement of accounting policies and other explanatory information, and the directors declaration. Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of the Group is not in accordance with the Corporations Act 2001 including: (i) Giving a true and fair view of the Group s financial position as at 31 December and of its financial performance for the half-year ended on that date; and (ii) Complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations Emphasis of matter Material uncertainty relating to going concern We draw attention to Note 1 c) in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the Group s ability to continue as a going concern and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our conclusion is not modified in respect of this matter. Directors responsibility for the Half-Year Financial Report The directors of the company are responsible for the preparation of the half-year 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 half-year financial report that is free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group s financial position as at 31 December and its financial performance for the half-year ended on that date and complying with Accounting Standard AASB 134 BDO East Coast Partnership ABN is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN , an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

20 Interim Financial Reporting and the Corporations Regulations As the auditor of the Group, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Independence In conducting our review, we have complied with the independence requirements of the Corporations Act We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Group, would be in the same terms if given to the directors as at the time of this auditor s review report. BDO East Coast Partnership Gareth Few Partner Sydney, 14 March