Final Results

RNS Number : 0942O

Global Petroleum Ltd

30 September 2019

 

30 September 2019

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ('MAR). Upon the publication of this announcement via a Regulatory Information Service ('RIS'), this inside information is now considered to be in the public domain.

Global Petroleum Limited

("Global" or "the Company")

Final Results for the Year Ended 30 June 2019, Annual Report, Appendix 4G

The Directors of Global Petroleum Limited present their report together with the consolidated financial statements of the Group comprising of 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 2019 ("Consolidated Entity" or "Group").

The Company confirms that a full copy of its latest Annual Report and Accounts, as well as the relevant Appendix 4G will be available shortly on the Company's website: www.globalpetroleum.com.au

Full copies of the Directors' Report and 2018-2019 Financial Statements are available at: 

https://www.asx.com.au/asxpdf/20190930/pdf/4490zxwc7g090g.pdf

For further information please visit www.globalpetroleum.com.au or contact:

Global Petroleum Limited
Peter Hill, Managing Director & CEO	[phone]
Andrew Draffin, Company Secretary	[phone]
Cantor Fitzgerald Europe (Nominated Adviser & Joint Broker)
David Porter/Rick Thompson	[phone]
GMP FirstEnergy Capital LLP (Joint Broker)
Hugh Sanderson	[phone]
Tavistock (Financial PR & IR)
Simon Hudson / Nick Elwes/ Barney Hayward	[phone]

Chairman and CEO's Review

The last financial year saw Global increase its acreage offshore Namibia by the acquisition of Block 2011A via the Company's wholly owned subsidiary, Global Petroleum Namibia Limited. In Italy, during the same period all of the appeals made against the Environmental Decrees relating to Global's four Adriatic Sea licence applications were heard, and ultimately all were rejected.

In September 2018, the Company was pleased to announce that it had signed a Petroleum Agreement to acquire Block 2011A (designated PEL 0094), offshore Namibia. PEL 0094 is located in the northern Walvis Basin, immediately to the east of the Company's other licence PEL 0029. The combination of the two licences increases the Company's presence in the Namibian offshore to 11,607 square kilometres, making Global one of the largest net acreage holders within the region.

Under the PEL 0094 work programme, within the first two years of the Initial Exploration Period, Global is to carry out various studies, plus acquire and reprocess all existing seismic data in the licence area. The studies and reprocessing will both enable the reservoirs in the Welwitschia structure and elsewhere in the acreage to be mapped with more confidence, and also facilitate the identification of future leads. In particular, the Company has been liaising with the state Oil Company, NAMCOR, with a view to agreeing terms for the acquisition of the existing 3D seismic data on the block.

At the end of two years, Global has the option either to shoot a new 2,000 square kilometre 3D seismic data survey in the eastern part of Block 2011A, or alternatively to relinquish the licence.

In its older licence, PEL 0029, Global agreed a work commitment for the Second Renewal Period (Phase 3) with the Namibian Ministry of Mines and Energy.

Phase 3 commenced on 3 December 2018 and the firm additional work programme for PEL 0029 consists of various studies, including mapping, with a financial commitment of US$350,000. In addition, and carried over from the First Renewal Period (Phase 2) extension, is the acquisition of 600 sq km of 3D seismic data - contingent upon Global concluding a farmout - plus the drilling of one exploration well.

The Ministry of Mines and Energy has also waived the requirement to surrender a further 25 per cent of the original PEL 0029 Licence Area, which is normally required at the end of the First Renewal Period. 50 per cent had already been surrendered in accordance with the Petroleum Agreement at the end of the Initial Exploration Period (Phase 1).

In Italy, as previously reported, a total of twelve parties had appealed against some or all of the four Environmental Decrees granted in relation to the Company's applications in the Adriatic Sea. All appeals were heard by the Administrative Tribunal in Rome ("Tribunal") in the course of the reporting period and all were adjudicated in Global's favour (the last of the judgements was published post the reporting period). In all cases costs were awarded to Global, and the Company is advised that that this is indicative of the attitude of the Tribunal regarding the merits of the appeals.

The largest of the original appellants, the Italian Region of Puglia, has appealed against the relevant judgements of the Tribunal with regard to all four Environmental Decrees (two of the four further appeals were made post the reporting period). These further appeals were made to the Council of State, the highest level of appeal in Italy.

Whilst the results of the various appeals are highly encouraging, as previously reported the Italian Parliament passed a Bill in February 2019 suspending all hydrocarbon exploration activities, including permit applications, for a period of 18 months.

Following the 18 month evaluation period, the intention is that a hydrocarbon plan will be activated, setting out a strategy for exploration and production, notably those areas to be excluded from future hydrocarbon exploitation.

The Company regards its Adriatic application areas as potentially valuable assets, prospective for both oil and gas and continues to monitor political developments in Italy in the period since the commencement of the exploration moratorium.

Financial

During the year ended 30 June 2019, the Group recorded a loss after tax of US$1,734,589 (2018: US$1,965,570). The cash balance at 30 June 2018 amounted to US$2,786,791 (2018: US$4,928,998). The Group has no debt outside of suppliers who are settled on normal commercial terms.

Strategy and Outlook

The Company remains very positive with regard to the prospectively of its Namibian assets, noting that oil & gas majors continue to make significant acreage acquisitions offshore Namibia. Global continues to monitor opportunities which might complement its existing portfolio of exploration assets, and remains open to strategic growth of a more structural nature.

John van der Welle	Peter G. Hill
Non-Executive Chairman	Chief Executive Officer

OPERATING AND FINANCIAL REVIEW

Namibian Project

The Namibian Project consists of an 85% participating interest in Petroleum Exploration Licence ("PEL") Number 0029 covering Blocks 1910B and 2010A and PEL 0094 (acquired in 2018) which covers Block 2011A.

PEL 0029, 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.

The Company's wholly owned subsidiary, Global Petroleum Namibia Limited, formerly Jupiter Petroleum (Namibia) Limited, is operator of the Licence, with an 85% interest in the two blocks. Partners NAMCOR and Bronze Investments Pty Ltd (Bronze) hold 10% and 5% respectively, both as carried interests.

In December 2015, the Company entered into the First Renewal Exploration Period (Phase 2) of the Licence with a reduced Minimum Work Programme, making a mandatory relinquishment of 50% of the Licence Area. Phase 2 originally had a duration of 24 months.

Following reprocessing and evaluation of historic 2D data, as previously reported, the Company entered into a contract with Seabird Exploration of Norway in order to acquire 834 km of full fold 2D seismic data over its Blocks, which was shot in June/July 2017. Processing and interpretation of the new 2D seismic data was completed early in Q4 2017.

The new information significantly improved the prospectively across PEL 0029 in general and the Gemsbok prospect in particular. Better imaging from the new 2D data revealed that the known source rock intervals are likely to be within the oil generative window and this, combined with data showing repeating oil seeps along the faulted flanks of Gemsbok, greatly improves the chance of a major oil discovery.

Consequently, the Company commissioned a Competent Person's Report ("CPR") in respect of its acreage from consultants AGR TRACS. Prospective resources have been calculated on three prospects: the Company's primary structure, Gemsbok, as well as Dik Dik and Lion. The results of the CPR are set out in more detail in the Company's announcement on 15 January 2018.

In late 2017, the Company also negotiated and agreed with the Namibian Ministry of Mines and Energy ("MME") an extension of the First Renewal Exploration Period (Phase 2) of the Company's Licence of 12 months to December 2018. At the same time, the MME had previously agreed entry into the Second Renewal Period (Phase 3) effective from 3 December 2018 for a period of two years. Subsequently, a firm work programme for Phase 3 was agreed with the MME whereby the Company will undertake various studies, including mapping of source rock, mapping of contourites deposits, fault studies and amplitude versus offset analyses and extended elastic impedance studies on seismic data.

The financial commitment to undertake the work programme is estimated at US$350,000. In addition, and carried over from the First Renewal Period (Phase 2), is the acquisition of 600 sq km of 3D seismic data, contingent upon the Company concluding a farmout and the drilling of one exploration well.

PEL 0094 is located in the northern Walvis basin, immediately to the east of PEL 0029. Global holds an 85% interest in the PEL 0094 as operator whilst State oil company, NAMCOR, and a local private company, Aloe Investments, hold interests of 10% and 5% respectively, both as carried interests.

The combination of the two licences gives Global an interest in an aggregate area of 11,608 square kilometres offshore northern Namibia, and makes it one of the largest net acreage holders in the region. Global believes that PEL 0094 contains the same plays as those detailed in the CPR for PEL 0029.

Under the PEL 0094 work programme, in the first two years of the Initial Exploration Period, Global will carry out various studies and will reprocess all existing seismic in the licence area, which includes a 3D seismic data survey shot in the western part. The studies and reprocessing will enable the reservoirs in the Welwitschia structure and elsewhere in the acreage to be mapped with more confidence, and the leads to be identified more accurately.

At the end of two years, Global has the option either to shoot a new 2,000 square kilometre 3D seismic data survey in the eastern part of Block 2011A, or alternatively, to relinquish the licence.

Permit Applications in the Southern Adriatic, Offshore Italy

In August 2013, the Company submitted an application, proposed work programme and budget to the Italian Ministry of Economic Development for four exploration areas offshore Italy (the "Permit Applications").

As previously reported, various local authorities and interest groups appealed against the Environmental Decrees in relation to applications d 82 F.R-GP and d 83 F.R-GP, which were published in October 2016. Publication of Environmental Decrees is the final administrative stage before grant of the Permits.

The Company announced in October 2017 that the remaining two Environmental Decrees in relation to the Permit Applications, designated d 80 F.R-GP and d 81 F.R-GP, had been published by the Italian authorities. As with the previous two Environmental Decrees, a number of appeals by various interested parties were made.

A total of seven parties filed appeals with the Rome Tribunal against the 2016 Decrees, and nine parties filed appeals with the Rome Tribunal against the 2017 Decrees.

Finally, three appellants filed appeals with the President of the Republic (one appellant against the 2016 Decrees, two against the 2017 Decrees) - it should be noted that in all cases the appellants were out of time for appeal to the Rome Tribunal.

In February 2019, the Italian Parliament passed a Bill suspending all hydrocarbon exploration activities, including permit applications, for a period of 18 months. Under the proposed legislation, the Ministries of Economic Development and Environment will review all onshore and offshore areas for the stated purpose of evaluating their suitability for hydrocarbon exploration and development in the future. In doing so, the suitability of such activities in the context of social, industrial, urban, water source and environmental factors will be evaluated. In offshore areas, suitability will additionally be assessed having regard to the impact of such activity on the littoral environment, marine ecosystems and shipping routes. Following the 18-month evaluation period, the intention is that a hydrocarbon plan will be activated, setting out a strategy for future exploration and development.

The Southern Adriatic and adjacent areas continue to be the focus of industry activity. Most notably, in Montenegro, offshore concessions were awarded in 2016/2017 to Energean and Eni/Novatek (the latter just 35 km from the nearest of the Applications). Eni/Novatek plan to spend nearly $100 million on exploration on these permits where, reportedly, 3D seismic acquisition has recently been completed. Energean plans to spend nearly $20 million on its permits, with 3D seismic acquisition reportedly imminent. In Albania, Shell continues to evaluate its Shpiragu discovery.

The four Application blocks are contiguous with the Italian median lines abutting Croatia, Montenegro and Albania respectively.

Results of operations

	2019 US$	2018 US$
Loss from continuing operations before tax	(1,734,589)	(1,965,570)
Income tax benefit / (expense)	-	-
Net loss	(1,734,589	(1,965,570)

The results of the Group include revenue from interest income of US$51,497 (2018: US$79,813).

Review of financial condition

As at 30 June 2019, the Group had cash of US$2,786,791 (2018: US$4,928,998) and had no debt outside of suppliers who are settled on normal commercial terms.

GLOBAL PETROLEUM LIMITED AND CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019
		2019	2018
	Note	US$	US$
Continuing operations Employee benefits expense		(375,890)	(416,647)
Administrative expense		(1,065,831)	(1,084,743)
Exploration and business development expenses		(135,758)	(208,622)
Depreciation and amortisation		(548)	(1,189)
Other expenses		(172,402)	(192,646)
Foreign exchange gain (loss)		(35,657)	(13,369)
Equity based remuneration		-	(128,167)
Results from operating activities before income tax		(1,786,086)	(2,045,383)
Finance income		51,497	79,813
Net finance income		51,497	79,813
(Loss) from continuing operations before tax		(1,734,589)	(1,965,570)
Tax expense	3	-	-
(Loss) from continuing operations after tax		(1,734,589)	(1,965,570)
(Loss) for the year		(1,734,589)	(1,965,570)
Earnings per share
From continuing and discontinued operations:
Basic earnings per share (cents)	6	(0.86)	(0.97)
Diluted earnings per share (cents)	6	(0.86)	(0.97)

The accompanying notes form part of these financial statements.

GLOBAL PETROLEUM LIMITED AND CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019
		2019	2018
	Note	US$	US$
Assets Current assets
Cash and cash equivalents	7	2,786,791	4,928,998
Trade and other receivables	8	73,667	97,416
Other assets	12	66,098	68,502
Total current assets		2,926,556	5,094,916
Non-current assets
Property, plant and equipment	10	4,933	4,755
Exploration and evaluation assets	11	2,339,095	1,988,145
Total non-current assets		2,344,028	1,992,900
Total assets		5,270,584	7,087,816
Liabilities
Current liabilities
Trade and other payables	13	183,331	267,511
Provisions	14	142,632	141,095
Total current liabilities		325,963	408,606
Total liabilities		325,963	408,606
Net assets		4,944,621	6,679,210
Equity
Issued share capital	15	39,221,112	39,221,112
Reserves		1,535,305	1,535,305
Accumulated losses		(35,811,796)	(34,077,207)
Total equity		4,944,621	6,679,210

The accompanying notes form part of these financial statements.

GLOBAL PETROLEUM LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2019

Consolidated Group		Share capital US$	Option reserve US$			Foreign currency translation reserve US$		Accumulated losses US$	Total equity US$
Balance at 1 July 2017		39,221,112	836,728			570,410		(32,111,637)	8,516,613
Comprehensive income/(loss)
Loss for the year		-	-			-		(1,965,570)	(1,965,570)
Total comprehensive income/(loss) for the year		-	-			-		(1,965,570)	(1,965,570)
Transactions with owners, in their capacity as owners, and other transfers
Issue of options	-				128,167	-		-	128,167
Total transactions with owners and other transfers	-				128,167	-		-	128,167
Balance at 30 June 2018	39,221,112				964,895	570,410		(34,077,207)	6,679,210
Balance at 1 July 2018	39,221,112			964,895		570,410	(34,077,207)		6,679,210
Comprehensive income/(loss)
Loss for the year	-			-		-	(1,734,589)		(1,734,589)
Total comprehensive income/(loss) for the year	-			-		-	(1,734,589)		(1,734,589)
Transactions with owners, in their capacity as owners, and other transfers
Issue of shares	-			-		-	-		-
Total transactions with owners and other transfers	-			-		-	-		-
Balance at 30 June 2019	39,221,112			964,895		570,410	(35,811,796)		4,944,621

The accompanying notes form part of these financial statements.

GLOBAL PETROLEUM LIMITED AND CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 30 JUNE 2019
		2019	2018
	Note	US$	US$
Cash flows from operating activities Interest received		51,497	79,813
Payments to suppliers and employees		(1,860,851)	(2,062,758)
GST/VAT refunds received		17,069	215,212
Net cash (used in) by operating activities		(1,792,285)	1,767,733)
Cash flows from investing activities Payments for exploration and business development expenditure		(350,950)	(1,087,652)
Payments for property, plant and equipment		(727)	-
Net cash (used in) by investing activities		(351,677)	(1,087,652)
Net (decrease) in cash held		(2,143,962)	(2,855,385)
Cash and cash equivalents at beginning of financial year		4,928,998	7,807,605
Effect of exchange rates on cash holdings in foreign currencies		1,755	(23,222)
Cash and cash equivalents at end of financial year	7	2,786,791	4,928,998

The accompanying notes form part of these financial statements.

GLOBAL PETROLEUM LIMITED AND CONTROLLED ENTITIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019

Note 1  Summary of Significant Accounting Policies

 

Basis of Preparation

These general purpose consolidated financial statements have been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards (AASBs) and Interpretations of the Australian Accounting Standards Board and in compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise.

Except for cash flow information, the financial statements have been prepared on an accrual 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.

(a)     Going Concern

The financial statements have been prepared on the going concern basis of accounting, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.

The Group has no source of operating revenue and settles its expenditure obligations from existing cash resources. It generated a loss of US$1,734,589 (2018: loss of US$1,965,570) and had net cash outflows from the operating activities of US$1,792,285 (2018: net cash outflows of US$1,767,733) for the year ended 30 June 2019. As of that date, the Group had net assets of US$4,944,621 (2018: US$6,679,210) and cash assets of US$2,786,791 (2018: US$4,928,998). The Group has no debt.

The Directors have prepared a cash flow forecast for the next 12 months based on best estimates of future inflows and outflows of cash, to support the Group's ability to continue as a going concern. The ability of the Company to continue as a going concern is principally dependent upon a combination of one or more of the following factors - management of existing funds; securing further funds via raising capital from equity markets (See note 15 - Issued Share Capital); concluding a farm-out arrangement whereby a farm-in party would assume the costs of meeting certain future exploration and other commitments on the Company's Namibian licences; and the deferral of licence commitments. (See note 11 - Exploration Assets and note 16 - Future Commitments).

The raising of additional equity capital is subject to market conditions and investor demand; securing a farm-out requires agreement with a suitable third party which the Group has not achieved to date; and any deferral of licence commitments would require the consent of the Namibian Ministry of Mines and Energy. As each of these are not within the Company's control, these conditions constitute a material uncertainty that may cast significant doubt on the use of the going concern basis of accounting. However the Directors have a reasonable expectation that one or more of these actions will be achieved. On this basis the Group's projections indicate that it will have sufficient liquidity to meet its expenditure related liabilities as they fall due in the next twelve months from the date of finalising these financial statements.

Accordingly the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, and therefore the Directors continue to adopt the going concern basis of accounting in preparing the financial statements. The financial statements do not include any adjustments relating to the classification of assets including Exploration and Evaluation assets, or the recoverability of asset carrying values, or to the amount and classification of liabilities, that might result should the Group be unable to continue as a going concern.

(b)   Principles of Consolidation

The consolidated financial statements incorporate all of the assets, liabilities and results of Global Petroleum Limited and all of its subsidiaries being entities that the Parent controls. The Parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 9.

The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Inter- company transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries may be changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.

Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as "non-controlling Interests". The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary's net assets on liquidation at either fair value or the non-controlling interests' proportionate share of the subsidiary's net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of financial position and statement of comprehensive income. No non-controlling interests were recognise for the reporting period.

Business Combinations

Business combinations occur where an acquirer obtains control over one or more businesses.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is obtained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions).

When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at the acquisition date.

All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument, are recognised as expenses in profit or loss when incurred.

The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

Goodwill

Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of:

i.      the consideration transferred at fair value;

ii.     any non-controlling interest (determined under either fair value or proportionate interest method); and

iii.    the acquisition date fair value of any previously held equity interest;

over the acquisition date fair value of any identifiable assets acquired and liabilities assumed.

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements.

Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Group.

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable AASB Accounting Standards). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 139: Financial Instruments: Recognition and Measurement, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

The amount of goodwill recognised on acquisition of each subsidiary in which the Group holds less than 100% interest will depend on the method adopted in measuring the non-controlling interest. The Group can elect in most circumstances to measure the non- controlling interest in the acquiree either at fair value (full goodwill method) or at the non-controlling interest's proportionate share of the subsidiary's identifiable net assets (proportionate interest method). In such circumstances, the Group determines which method to adopt for each acquisition and this is stated in the respective note to the financial statements disclosing the business combination.

Under the full goodwill method, the fair value of the non-controlling interest is determined using valuation techniques which make the maximum use of market information where available.

Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates.

Goodwill is tested for impairment annually and is allocated to the Group's cash-generating units or groups of cash-generating units, representing the lowest level at which goodwill is monitored and not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of.

(c)        Income Tax

The income tax expense (income) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to profit or loss is the tax payable on taxable income for the current period. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.

Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss or arising from a business combination.

A deferred tax liability shall be recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from: (a) the initial recognition of goodwill; or (b) the initial recognition of an asset or liability in a transaction which: (i) is not a business combination; and (ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property, plant and equipment measured at fair value and items of investment property measured at fair value, the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered entirely through sale. When an investment property that is depreciable is held by the entity in a business model whose objective is to consume substantially all of the economic benefits embodied in the property  through use over time (rather than through sale), the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of such property will be recovered entirely through use.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised, unless the deferred tax asset relating to temporary differences arises from the initial recognition of an asset or liability in a transaction that:

-                 is not a business combination; and

-                 at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (i) a legally enforceable right of set-off exists; and (ii) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

(d)        Fair Value of Assets and Liabilities

The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable accounting standard.

Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.

As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.

To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs).

For non-financial assets, the fair value measurement also takes into account a market participant's ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.

The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements.

(e)   Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses.

Property, Plant and Equipment

Property, plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of property, plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised either in profit or loss. A formal assessment of recoverable amount is made when impairment indicators are present (refer to Note 1(h) for details of impairment).

The carrying amount of property, plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset's employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The cost of fixed assets constructed within the consolidated Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are recognised as expenses in profit or loss during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is depreciated 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. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

Class of fixed asset	Depreciation rate
Property, plant and equipment	20%

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are recognised in profit or loss in the period in which they arise. Gains shall not be classified as revenue. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained earnings.

(f)    Exploration and Evaluation Expenditure

Expenditure on exploration and evaluation is accounted for in accordance with the 'area of interest' method and with AASB 6 Exploration for and Evaluation of Mineral Resources, which is the Australian equivalent of IFRS 6 - Exploration for and Evaluation of Mineral Resources.

Exploration and evaluation costs are capitalised as intangible assets and assessed for impairment where facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed the recoverable amount. Exploration and evaluation costs are capitalised if the rights to tenure of the area of interest are current and either:

(i)      the expenditure relates to an exploration discovery where, at balance sheet date, activities have not yet reached a stage which permits an 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; or

(ii)     it is expected that the expenditure will be recouped through successful exploitation of the area of interest, or alternatively, by its sale.

Costs incurred before the Group has obtained the legal rights to explore an area are expensed.

Each potential or recognised area of interest is reviewed every six months to determine whether economic quantities of reserves have been found or whether further exploration and evaluation work is underway or planned to support the continued carry forward of capitalised costs.

Where a determination is made that there is no further value to be extracted from the data licenses then any unamortised balance is written off.

Once management has determined the existence of economically recoverable reserves for an area of interest, deferred costs are tested for impairment and then classified from exploration and evaluation assets to oil and gas assets on the Consolidated Statement of Financial Position.

The recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

(g)   Financial Instruments

Recognition and Initial Measurement

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions to the instrument. For financial assets, this is the date that the Group commits itself to either the purchase or sale of the asset (i.e. trade date accounting  is adopted).

Financial instruments (except for trade receivables) are initially measured at fair value plus transactions costs except where the instrument is classified 'at fair value through profit or loss' in which case transaction costs are expensed to profit or loss immediately. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant financing component or if the practical expedient was applied as specified in AASB 15.63.

 

Classification and Subsequent Measurement

 

Financial liabilities

Financial instruments are subsequently measured at:

-  amortised cost; or

-  fair value through profit or loss.

A financial liability is measured at fair value through profit and loss if the financial liability is:

-  held for trading; or

-  initially designated as at fair value through profit or loss.

All other financial liabilities are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of the financial asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through the expected life of the instrument to the net carrying amount at initial recognition.

A financial liability is held for trading if:

-  it is incurred for the purpose of repurchasing or repaying in the near term; or

-  part of a portfolio where there is an actual pattern of short-term profit taking.

Any gains or losses arising on changes in fair value are recognised in profit or loss to the extent that they are not part of a designated hedging relationship are recognised in profit or loss.

A financial liability cannot be reclassified.

Financial assets

Financial assets are subsequently measured at:

-  amortised cost;

-  fair value through other comprehensive income; or

-  fair value through profit or loss.

Measurement is on the basis of two primary criteria:

-  the contractual cash flow characteristics of the financial asset; and

-  the business model for managing the financial assets.

A financial asset that meets the following conditions is subsequently measured at amortised cost:

-  the financial asset is managed solely to collect contractual cash flows; and

-  the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates.

A financial asset that meets the following conditions is subsequently measured at fair value through other comprehensive income:

-  the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates;

-  the business model for managing the financial assets comprises both contractual cash flows collection and the selling of the financial asset.

By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value through other comprehensive income are subsequently measured at fair value through profit or loss.

The Company initially designates a financial instrument as measured at fair value through profit or loss if:

-  it eliminates or significantly reduces a measurement or recognition inconsistency (often referred to as "accounting mismatch") that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases;

-  it is in accordance with the documented risk management or investment strategy, and information about the groupings was documented appropriately, so that the performance of the financial liability that was part of a group of financial liabilities or financial assets can be managed and evaluated consistently on a fair value basis.

The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option on initial classification and is irrevocable until the financial asset is derecognised.

Derecognition

Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement of financial position.

Derecognition of financial liabilities

A financial liability is derecognised when it is extinguished (i.e. when the obligation in the contract is discharged, cancelled or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of a financial liability is treated as an extinguishment of the existing liability and recognition of a new financial liability.

The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

Derecognition of financial assets

A financial asset is derecognised when the holder's contractual rights to its cash flows expires, or the asset is transferred in such a way that all the risks and rewards of ownership are substantially transferred.

All of the following criteria need to be satisfied for derecognition of financial asset:

-  the right to receive cash flows from the asset has expired or been transferred;

-  all risk and rewards of ownership of the asset have been substantially transferred; and

-  the Company no longer controls the asset (i.e. the Company has no practical ability to make a unilateral decision to sell the asset to a third party).

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

On derecognition of a debt instrument classified as at fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is reclassified to profit or loss.

On derecognition of an investment in equity which was elected to be classified under fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings.

Impairment

The Group recognises a loss allowance for expected credit losses on:

-  financial assets that are measured at amortised cost or fair value through other comprehensive income;

Loss allowance is not recognised for:

-  financial assets measured at fair value through profit or loss.

Expected credit losses are the probability-weighted estimate of credit losses over the expected life of a financial instrument. A credit loss is the difference between all contractual cash flows that are due and all cash flows expected to be received, all discounted at the original effective interest rate of the financial instrument.

The Group uses the general approach to impairment, as applicable under AASB 9: Financial Instruments:

General approach

Under the general approach, at each reporting period, the Group assesses whether the financial instruments are credit-impaired, and if:

-  the credit risk of the financial instrument has increased significantly since initial recognition, the Group measures the loss allowance of the financial instruments at an amount equal to the lifetime expected credit losses; or

-  there is no significant increase in credit risk since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.

(h)   Impairment of Non-Financial Assets

At the end of each reporting period, the Company assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information, including dividends received from subsidiaries, associates or joint ventures deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset's fair value less costs of disposal and value in use, to the asset's carrying amount. Any excess of the asset's carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116: Property, Plant and Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard.

Where it is not possible to estimate the recoverable amount of an individual asset, the entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and intangible assets not yet available for use.

When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

(i)    Interests in Joint Arrangements

Joint arrangements represent the contractual sharing of control between parties in a business venture where unanimous decisions about relevant activities are required.

Separate joint venture entities providing joint venturers with an interest to net assets are classified as a joint venture and accounted for using the equity method.

Joint operations represent arrangements whereby joint operators maintain direct interests in each asset and exposure to each liability of the arrangement. The Company's interests in the assets, liabilities, revenue and expenses of joint operations are included in the respective line items of the financial statements.

Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties' interests. When the Company makes purchases from a joint operation, it does not recognise its share of the gains and losses from the joint arrangement until it resells those goods/assets to a third party.

(j)    Foreign Currency Transactions and Balances

 

Functional and presentation currency

The functional currency of the Company is the currency of the primary economic environment in which that entity operates. The financial statements are presented in United States dollars, which is the Company's functional currency.

Transaction and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in profit or loss, except exchange differences that arise from net investment hedges.

Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive income, otherwise the exchange difference is recognised in the profit or loss.

The Company

The financial results and position of foreign operations whose functional currency is different from the entity's presentation currency are translated as follows:

-  assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;

-  income and expenses are translated at exchange rates on the date of transaction; and

-  all resulting exchange differences are recognised in other comprehensive income.

Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial position and allocated to non-controlling interest where relevant. The cumulative amount of these differences is reclassified into profit or loss in the period in which the operation is disposed of.

(k)   Employee Benefits

Short-term employee benefits

Provision is made for the Company's obligation for short-term employee benefits.  Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.

The Company's obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as part of current trade and other payables in the statement of financial position. The company's obligations for employees' annual leave and long service leave entitlements are recognised as provisions in the statement of financial position.

Other long-term employee benefits

Provision is made for employees' long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees.

Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that approximate the terms of the obligations. Any re-measurements for changes in assumptions of obligations for other long- term employee benefits are recognised in profit or loss in the periods in which the changes occur.

The Company's obligations for long-term employee benefits are presented as non-current provisions in its statement of financial position, except where the company does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions.

(l)    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.

Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.

(m)  Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and deposits available on demand with banks, other short-term highly liquid investments with original maturities of 3 months or less.

(n)   Revenue and Other Income

Revenue recognition

Interest income is recognised using the effective interest method.

(o)   Trade and Other Payables

Trade and other payables represent the liabilities for goods and services received by the Group that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. Trade and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method.

(p)     Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST/VAT, except where the amount of GST/VAT incurred is not recoverable from the relevant taxation authority.

Receivables and payables are stated inclusive of the amount of GST/VAT receivable or payable. The net amount of GST/VAT recoverable from, or payable to, the relevant taxation authority is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST/VAT components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the relevant taxation authority are presented as operating cash flows included in receipts from customers or payments to suppliers.

(q)    Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

Where the Company retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies items in its financial statements, an additional (third) statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements is presented.

(r)       Critical Accounting Estimates and Judgements

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following Notes:

Note 11 - Exploration and evaluation assets

Note 3 - Taxes

(s)       New Accounting Standards for Application in Future Periods

The AASB has issued a number of new and amended Accounting Standards that have mandatory application dates for future reporting periods, some of which are relevant to the Group. The directors have decided not to early adopt any of the new and amended pronouncements. Their assessment of the pronouncements that are relevant to the entity but applicable in future reporting periods is set out below:

- AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019).

The Group has chosen not to early-adopt AASB 16. However, the Group has conducted a preliminary assessment of the impact of this new Standard, as follows.

A core change resulting from applying AASB 16 is that most leases will be recognised on the balance sheet by lessees, as the new Standard does not differentiate between operating and finance leases.

An asset and a financial liability are recognised in accordance with this new Standard. There are, however, two exceptions allowed. These are short-term and low-value leases.

At the date of this report, the Group has no leases other than for the short-term rental of office accommodation.

Note 2  Parent Information

The following information has been extracted from the books and records of the financial information of the parent entity set out below and has been prepared in accordance with Australian Accounting Standards.

	2019	2018
	US$	US$
Statement of financial position Current assets	2,905,961	5,087,738
Non-current assets	3,244,451	2,559,643
Total assets	6,150,412	7,638,381
Liabilities
Current liabilities	318,757	321,323
Non-current liabilities	-	-
Total liabilities	318,757	321,323
Net assets	5,831,655	7,317,058
Equity
Issued capital	39,221,112	39,221,112
Accumulated losses	(34,354,352)	(32,868,949)
Option reserve	964,895	964,895
Total equity	5,831,655	7,317,058
Statement of profit or loss and other comprehensive income
Loss for the year	(1,485,403)	(1,568,951)
Total comprehensive income/(loss)	(1,485,403)	(1,568,951)

As at 30 June 2019, the parent entity has no capital commitments (2018: nil).

Note 3  Tax Expense

(a)       The prima facie tax on profit from ordinary activities before income tax is reconciled to income tax as follows:

	2019 US$	2018 US$
Prima facie tax payable/(benefit) on profit from ordinary activities before income tax at 19% (2018: 19%)
Consolidated Group	(329,572)	(373,458)
Increase/(decrease) in income tax expense due to:
Expenditure not allowable for income tax purposes	4,852	6,550
Adjustment for different tax rates and consequences of changing tax domicile	34,684	38,622
Deferred tax assets not recognised	290,036	328,286
Income tax attributable to entity	-	-

(b)    Current tax payable

The Group has no current tax payable (2018: Nil).

On 1 April 2014, Global Petroleum Limited changed its tax domicile from Australia to the United Kingdom. However, it must be noted that under Australian tax law, Global Petroleum Limited remains an Australian tax resident. As a result, Global Petroleum Limited is a tax resident of both Australia and the United Kingdom. Under the terms of the Australia-United Kingdom Double Tax Treaty, Global Petroleum Limited will be a dual resident company deemed to be a resident in the UK for the purposes of allocating taxing rights.

Multilateral Instruments (MLI) came into force in January 2019 which impact the tie breaker rule previously used for dual resident entities. The MLI changes currently cover six of Australia's double tax treaties which includes the UK. The dual residents entitlement to any treaty benefits will be denied where the two competent authorities, the Australia Taxation Office and HM Revenue and Customs do not reach an agreement on a single jurisdiction of tax residency. The Company is in the process of seeking such agreement from the relevant authorities and does not believe that the tax treatment of the Group will be impacted.

(c)   Deferred income tax

	2019 US$	2018 US$
Deferred tax assets
Tax losses available to offset future taxable income	2,201,926	1,911,890
Tax benefit not brought to account	(2,201,926)	(1,911,890)
	-	-

Deferred tax assets have not been recognised in respect of tax losses because there is no convincing evidence that future taxable profit will be available against which the Group can utilise the benefits which amount to US$2,205,847 (2018: US$1,911,890).

The amount of UK tax losses carried forward is US$10.91m as at 30 June 2019. (2018: US$9.43m). A corresponding deferred tax asset, calculated using the tax rate of 17%, of US$1.86m (2018: US$1.6m) has not been recognised due to insufficient certainty regarding the availability of future profits against which the losses can be utilised. The reduction in the main rate of corporation tax to 17% from 2020 was enacted in September 2016. It is not expected that the tax losses will be utilised before 2020. Therefore, a potential deferred tax asset has been calculated using this rate.

In addition, the Group has a pool of pre-trading expenditure of US$1.02m (2018: US$0.77m) arising in the overseas subsidiaries for which no deferred tax asset has been recognised due to insufficient certainty regarding the availability of future profits against which the costs can be utilised.

Note 4  Key Management Personnel (KMP) Compensation

The total of remuneration paid to KMP of the Company and the Group during the year are as follows:

	2019 US$	2018 US$
Short-term employee benefits	565,967	530,314
Post-employment benefits	16,237	19,176
Share-based payments	-	128,167
Total KMP compensation	582,204	677,657

Short-term employee benefits

-         these amounts include fees and benefits paid to the Non-Executive Chairman and Non-Executive Directors as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other KMP.

Post-employment benefits

-         these amounts are the current year's estimated costs of providing for the Group's defined benefits scheme post-retirement, superannuation contributions made during the year and post-employment life insurance benefits.

Share-based payments

-         these amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as measured by the fair value of the options, rights and shares granted on grant date.

 

Other key management personnel transactions

A number of Directors, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities. A number of these entities transacted with the Company or its controlled entities in the reporting period.

During the year, the Company paid DW Accounting and Advisory Pty Ltd, a company controlled by Mr A Draffin US$26,748 (2018: US$13,746) for company secretarial services and Northlands Advisory Services Limited, a company controlled by Mr J van der Welle, US$44,382 (2018: US$44,066) for consulting services. During the financial year ending 30 June 2018, the Company paid Damien Cronin Pty Ltd trading as Law Projects, a company controlled by Mr D Cronin, US$18,536 for company secretarial services.

Included in the above are the following amounts payable to related parties at 30 June 2019. All payable in full within 30 days of invoice, have standard industry terms and conditions and non of the amounts are secured on any assets. Amount owed to DW Accounting and Advisory Pty Ltd US$13,140 (2018: US$15,290) and Northlands Advisory Services Limited US$10,311 (2018: US$10,732).

Note 5  Auditor's Remuneration

Remuneration of the Group auditor KPMG Australia for:	2019 US$	2018 US$
- auditing or reviewing the Group's financial statements	47,505	38,878
- assurance, taxation and due diligence services	3,714	4,157
	51,219	43,035

Note 6  Earnings per Share

(a) Reconciliation of earnings to profit or loss	2019 US$	2018 US$
Loss used in calculating basic and diluted earnings per share	(1,734,589)	(1,965,570)
Weighted average number of ordinary shares used in calculating basic earnings per share	202,652,927	202,652,927
Effect of dilutive securities	-	-
Adjusted weighted average number of ordinary shares and potential ordinary shares used in calculating basic and diluted earnings per share	202,652,927	202,652,927
Basic and diluted (loss) per share	(0.86)	(0.97)

The above data reflects the income and share data used in the calculations of basic and diluted earnings per share.

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Note 7  Cash and Cash Equivalents

	2019 US$	2018 US$
Cash at bank and on hand	2,786,791	4,928,998
Short-term bank deposits	-	-
	2,786,791	4,928,998

Reconciliation of cash

Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows:

	2019 US$	2018 US$
Cash and cash equivalents	2,786,791	4,928,998
	2,786,791	4,928,998

Note 8  Trade and Other Receivables

Current Other receivables	2019 US$	2018 US$
-  deposits	22,320	8,842
-  GST & VAT receivable	51,347	88,574
Total current trade and other receivables	73,667	97,416

Credit risk

The Group has no significant concentration of credit risk with respect to any single counter party or group of counter parties other than those receivables specifically provided for and mentioned within Note 8. The class of assets described as Trade and Other Receivables is considered to be the main source of credit risk related to the Group.

On a geographic basis, the Group has credit risk exposures in Australia and the United Kingdom given the substantial operations in those regions. The Group's exposure to credit risk for receivables at the end of the reporting period in those regions is as follows:

	2019 US$	2018 US$
Australia	12,013	8,003
United Kingdom	61,654	89,413
	73,667	97,416

The Group always measures the loss allowance for trade receivables at an amount equal to lifetime expected credit loss. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor's current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

There has been no change in the estimation techniques or significant assumptions made during the current reporting period.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or when the trade receivables are over two years past due, whichever occurs earlier. None of the trade receivables that have been written off is subject to enforcement activities.

(a)  Financial Assets Measured at Amortised Cost Trade and other receivables	2019 US$	2018 US$
-  total current	12,013	8,003
-  total non-current	61,654	89,413
Total financial assets measured at amortised cost	73,667	97,416

Note 9  Interests in Subsidiaries

(a)    Information about Principal Subsidiaries

The subsidiaries listed below have share capital consisting solely of ordinary shares or ordinary units which are held directly by the Group. The proportion of ownership interests held equals the voting rights held by Group. Each subsidiary's principal place of business is also its country of incorporation.

		Ownership interest held by the Group
Name of subsidiary	Country of Incorporation	2019	2018
Global Petroleum UK Limited	United Kingdom	100%	100%
Global Petroleum Exploration Limited	United Kingdom	100%	100%
Global Petroleum Namibia Limited	British Virgin Islands	100%	100%

Subsidiary financial statements used in the preparation of these consolidated financial statements have also been prepared as at the same reporting date as the Group's financial statements.

(b)  Significant Restrictions

There are no significant restrictions over the Group's ability to access or use assets, and settle liabilities, of the Group.

Note 10  Property, Plant and Equipment

	2019 US$	2018 US$
Property, plant and equipment Furniture and fittings
At cost	16,337	15,611
Accumulated depreciation	(11,404)	(10,856)
	4,933	4,933
Total property, plant and equipment	4,933	4,933

(a)  Movements in Carrying Amounts

Movements in carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year.

Consolidated Group:	2019 US$	2018 US$
Balance at 1 July 2017	5,944	5,944
Additions	-	-
Depreciation expense	(1,189)	(1,189)
Balance at 30 June 2018	4,755	4,755
Additions	726	726
Depreciation expense	(548)	(548)
Balance at 30 June 2019	4,933	4,933

Note 11  Exploration and Evaluation Assets

	2019 US$	2018 US$
Balance at beginning of year	1,988,145	1,109,115
Expenditure capitalised during the period	350,950	879,030
Balance at end of year	2,339,095	1,988,145

At 30 June 2019, the balance of the Group's exploration and evaluation assets relates solely to its interests in Namibia.

During the year, the Group also incurred exploration and evaluation expenditure of US$62,462 (2018: US$107,379) which has been expensed as business development as it did not meet the criteria for recognition as exploration assets under the Group's accounting policy.

In addition, an amount of US$73,296 (2018: US$101,243) was spent on business development, which relates to the Group's activities in assessing opportunities in the oil and gas sector.

Namibia

In November 2017, Global Petroleum Namibia Limited ("GBPN") agreed with The Ministry of Mines and Energy ("MME") an extension to the First Renewal Exploration Period of 12 months to 3 December 2018. In addition, the MME has agreed entry into the Second Renewal Period which became effective from 3 December 2018.

In September 2018, GBPN was awarded Licence PEL 0094 and the Petroleum Agreement was signed on 11 September 2018. The Initial Exploration Period runs for four years, and is divided into two sub periods of two years each; IEP1 and IEP2. IEP 1 runs from September 2018 to September 2020. During IEP1, Global has undertaken to purchase and reprocess the existing available 3D Seismic data and other 2D data, as well as some additional G & G studies.

Exploration commitments on the Company's exploration tenements are detailed in Note 16.

Note 12  Other Assets

	2019 US$	2018 US$
Current
Prepayments	66,098	68,502
Non-current
Prepayments	-	-
	66,098	68,502

Note 13  Trade and Other Payables

	2019 US$	2018 US$
Current
Trade payables	33,819	169,827
Sundry payables and accrued expenses	149,512	97,684
	183,331	267,511
(a)   Financial liabilities at amortised cost classified as trade and other payables	2019 US$	2018 US$
Trade and other payables
Current	183,331	267,511
Non-current	-	-
	183,331	267,511

Note 14  Provisions

Current Employee benefits	2019 US$	2018 US$
Opening balance at 1 July	141,095	117,055
Additional provisions	1,537	24,040
Balance at 30 June	142,632	141,095

Provision for Employee Benefits

Provision for employee benefits represents amounts accrued for annual leave and long service leave.

Liabilities for wages, salaries and remuneration, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in provisions in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised  when the leave is taken and measured at the rates paid or payable. Employee benefits payable later than one year are measured at the present value of the estimated future cash flows to be made for those benefits.

Note 15  Issued Share Capital

	2019 US$	2018 US$
202,652,927 (2018: 202,652,927) fully paid ordinary shares	39,221,112	39,221,112
	39,221,112	39,221,112

The Group has authorised share capital amounting to 202,652,927 fully paid ordinary shares. The shares have no par value.

(a)   Ordinary shares

	2019 No.	2018 No.
At the beginning of the reporting period	202,652,927	202,652,927
Shares issued during the year	-	-
At the end of the reporting period	202,652,927	202,652,927

No shares were issued during the 2019 financial year.

(b)   Options

	2019		2018
	Number of options	Weighted average exercise prices AU$	Number of options.	Weighted average exercise prices AU$
At the beginning of the reporting period	15,600,000	0.048	15,600,000	0.048
Options issued during the year	-	-	-
At the end of the reporting period	15,600,000	0.048	15,600,000	0.048

(c)   Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Given the stage of development of the Group, the Board's objective is to minimise debt and to raise funds as required through the issue of new shares. (See Note 1(a) - Going Concern)

There were no changes in the Group's approach to capital management during the year. The Group is not subject to any externally imposed capital requirements.

(d)   Dividends

No dividends have been paid or declared during the year (2018: Nil).

Note 16  Capital and Future Commitments

(a)    Exploration and expenditure commitments

In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum exploration work  to meet the minimum expenditure requirements specified by various foreign governments where exploration tenements are held. These obligations are subject to renegotiation when application for a tenement is made and at other times. These obligations are not provided for in the financial statements. Financial commitments for subsequent periods can only be determined at future dates, as the success or otherwise of exploration programmes determines courses of action allowed under options available in  tenements. The Group's only exploration expenditure commitments relate to its interest in joint ventures. Refer to Note 16(b) for further information.

(b)  Joint venture commitments

Global Petroleum Namibia Limited, a 100% subsidiary of the Group, holds prospective oil and gas exploration interests offshore Namibia. In order to maintain current rights to tenure to the exploration licences, Global is required to perform minimum   exploration work to meet the minimum expenditure requirements specified in each Namibian Petroleum Exploration Licence (PEL).

Namibia Licence PEL 0029

 

The obligations include:

(i)      First Renewal Exploration Period (Two years from 3 December 2015 to 3 December 2017 - with subsequent extension to 3 December 2018):

-     Following the completion of the minimum required exploration expenditure for the 2 year period, in November 2017, Global agreed with the MME an extension to the First Renewal Exploration period of 12 months to 3 December 2018, which has become effective.

-     The minimum work programme for the one year extension is the acquisition of 600 square kilometres of 3D seismic data, contingent upon Global concluding a farm-out agreement with a third party to fund the acquisition of the 3D data. The 3D acquisition was not completed during the 12 month extension period and has been carried over into the Second Renewal Period.

(ii)     Second Renewal Period (Two years from 3 December 2018):

-     During the Second Renewal Period, effective from 3 December 2018 for a period of two years, the firm commitment is a work programme that consists of various studies, including mapping of source rock, mapping of contourites deposits, fault studies and amplitude versus offset (AVO) analyses and extended elastic impedance (EEI) studies  on seismic data. The financial commitment to undertake the firm work programme is US$350,000. In addition, and carried over from the First Renewal Period (Phase 2) extension, is the acquisition of 600 sq km of 3D Seismic data - contingent upon the Company concluding a farmout and drilling one exploration well, depth and location yet to be agreed.

Global Petroleum Namibia Limited has an 85% interest in the Petroleum Exploration Licence, however, it is responsible for 100% of the expenditure requirements with its joint venture partners holding a total of 15% free carried interest.

 

Namibia Licence PEL 0094

Global was awarded this licence in Namibia in September 2018, and a Petroleum Agreement was signed on 11 September 2018. The Initial Exploration Period ("IEP") runs for four years, and is divided into two sub periods of two years each; IEP1, and IEP2.  IEP 1 runs from September 2018 to September 2020. During IEP1, Global has undertaken to purchase and reprocess the existing available 3D seismic data and other 2D data, as well as some additional G&G studies. The Company is currently negotiating the acquisition of the 3D data.

The estimated cost of acquisition for 2D data and reprocessing of both 2D and 3D is estimated at US $1.3 million.

During IEP2, Global has the option to either shoot a new 2,000 square kilometre 3D seismic data survey within the eastern part of PEL 0094, or alternatively relinquish the licence.

Global Petroleum Namibia Limited has an 85% interest in the Petroleum Exploration Licence, however, it is responsible for 100% of the expenditure requirements with its joint venture partners holding a total of 15% free carried interest.

The Group issued a bank guarantee for US$130,050 to secure licence PEL 0094 during the reporting period.

Note 17  Operating Segments

 

General Information

 

Identification of reportable segments

The Group operates in the oil and gas exploration, development and production segments as described below. The Group currently holds prospective oil and gas exploration interests offshore Namibia.

Basis of accounting for purposes of reporting by operating segments

 

(a)  Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating 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.

(b) Intersegment transactions

An internally determined transfer price is set for all intersegment sales. This price is reset quarterly and is based on what would be realised in the event the sale was made to an external party at arm's length. All such transactions are eliminated on consolidation of the Group's financial statements.

Corporate charges are allocated to reporting segments based on the segment's overall proportion of revenue generation within the Group. The Board of Directors believes this is representative of likely consumption of head office expenditure that should be used in assessing segment performance and cost recoveries.

Intersegment loans payable and receivable are initially recognised at the consideration received/to be received net of transaction costs. If intersegment loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market  interest rates. This policy represents a departure from that applied to the statutory financial statements.

(c)  Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of the economic value from the asset. In most instances, segment assets are clearly identifiable on the basis of their nature and physical location.

(d)  Segment liabilities

Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

(e)  Unallocated items

The following items of revenue, expense, assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment:

·   Derivatives

·   Net gains on disposal of available-for-sale investments

·   Impairment of assets and other non-recurring items of revenue or expense

·   Income tax expense

·   Deferred tax assets and liabilities

·   Current tax liabilities

·   Other financial liabilities

·   Intangible assets

·   Discontinued operations

·   Retirement benefit obligations

(f)  Segment information

 

(i)  Segment performance

	Africa		Consolidated
	2019 US$	2018 US$	2019 US$	2018 US$
Interest income	-	-	51,497	79,813
Net foreign exchange gain/(loss)	-	-	(35,657)	(13,369)
Corporate and administration costs	-	-	(1,750,429)	(1,903,847)
Equity based remuneration	-	-	-	(128,167)
Loss before income tax	-	-	(1,734,589)	(1,965,570)
Income tax (expense)/benefit for continuing operations	-	-	-	-
Loss for the year	-	-	(1,734,589)	(1,965,570)

(ii) Segment assets and liabilities

	Africa		Consolidated
30 June 2019	2019 US$	2018 US$	2019 US$	2018 US$
Segment assets Assets	2,339,095	2,004,324	2,339,095	2,004,324
Total segment assets	2,339,095	2,004,324	2,339,095	2,004,324
Unallocated assets			2,931,489	5,083,492
Consolidated assets			5,270,584	7,087,816
Segment liabilities
Liabilities	7,211	87,282	7,211	87,282
Total segment liabilities	7,211	87,282	7,211	87,282
Unallocated liabilities			318,752	321,324
Consolidated liabilities			325,963	408,606
Acquisition of non-current assets, including capitalised exploration assets	350,950	879,030	350,950	879,030

Note 18  Cash Flow Information

(a) Reconciliation of cash flows from operating activities with profit after income tax	2019 US$	2018 US$
Loss after income tax	(1,734,589)	(1,965,570)
Adjustments for items classified as investing/financing activities:	-	208,622
Adjustments for non-cash items:
Depreciation	548	1,188
Unrealised net foreign exchange (gain)/loss	(1,755)	23,222
Equity based remuneration	-	128,167
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries:
Decrease/ (increase) in receivables and prepayments	26,154	16,406
(Decrease)/ increase in payables	(84,180)	(177,044)
Increase/ (decrease) in provisions	1,537	(2,724)
Net cash (used in) operating activities	(1,792,285)	(1,767,733)

-ends-

 

END

 

 

FR SDASISFUSELU