TIDMRRL
RNS Number : 3696L
Range Resources Limited
03 October 2016
Annual Report 2016
Range today releases the financial report for the year ending 30
June 2016. A copy of the full Annual Financial Report is available
on the Company's website www.rangeresources.co.uk and also the
Australian Securities Exchange website www.asx.com.au (ASX code:
RRS).
Commenting on today's announcement, Yan Liu, Chief Executive
Officer, said:
"During the period, the Company has achieved a number of
significant milestones as we move towards full implementation of
the waterflood projects and growth in production. We continue to
firmly believe in the long-term prospects of the Trinidad assets to
deliver value to shareholders and look forward to continued
progress. There is a lot of work to be done to start generating
long-term sustainable profitability, but we are confident that the
right building blocks are now in place and will remain focused on
improving performance in the years ahead."
HIGHLIGHTS OF THE FINANCIAL YEAR
Completion of funding: The Company has established a stable
funding position to underpin its growth by completing a US$30
million equity financing at a 50% premium to the share price.
Increase in reserves: The Company commissioned an independent
reserves audit with 2P reserves increasing by 11% to 24.4 million
barrels, which validates the quality and potential of the Trinidad
assets.
Commencement of waterflood projects: Water injection on two
waterflood projects commenced, which account for the majority of
the Company's reserves. These projects will be crucial to
increasing Trinidad production towards 2,500 bopd target by the end
of 2017.
Significant improvement in HSE performance: During the year, all
key HSE indicators substantially improved, including the Lost Time
Incident frequency rate which decreased by 75%.
Royalty rates reduced in Trinidad: Range signed an agreement to
reduce the overriding royalty rates on the Company's producing
fields in Trinidad, which is particularly encouraging during the
period of lower commodity prices.
Licences: The Company signed an amendment agreement to double
its interest in the Guayaguayare block.
Strengthened technical team: Two new independent Directors and a
Trinidad General Manager appointed, all bringing significant
technical experience and broad industry knowledge.
Refined strategy of acquisition-led growth: The Company
continues to pursue acquisition opportunities of new
transformational assets, whilst continuing implementation of
waterflood projects in Trinidad.
Continued strengthening of the relationship with LandOcean: The
strategic partnership not only allows Range to benefit from
LandOcean's technical expertise and vast experience, but also
provides Range with financial flexibility from the beneficial
credit terms.
Financial:
- Cash outflow from operating activities was significantly lower
than the prior year at US$4.2 million (2015: US$7.0 million). Range
benefits from the credit terms offered by LandOcean which minimises
cash outflow whilst production growth is achieved from
implementation of the waterflood programme and selected development
drilling;
- The Group's revenue was US$7.1 million (2015: US$13.2
million), a decrease of approximately 46%. Group production was
broadly stable for the year and the fall in revenue is due to
reduced average oil price realised of US$36.40/barrel (2015:
US$69.46/barrel);
- This fall in revenues contributed to an increase in the gross
loss of US$7.8 million (2015: US$2.9 million). The other main
factor in the gross loss was an increase for the year overall in
operating costs to US$7.3 million (2015: US$6.4 million);
- General and administrative costs decreased materially by 66%
overall during the year and totaled US$3.4 million (2015: US$9.9
million). This was achieved as a result of stringent cost cutting
measures implemented with significant reduction seen in
discretionary expenditure, lower staff costs and elimination of
corporate management costs;
- During the year Range reduced the carrying value of the
Trinidad assets by US$20.6 million to US$78.8 million, which was
principally due to the substantial, and sustained drop in oil
prices seen throughout the year. The majority of this impairment
was reported during the half-year unaudited results announced in
March and a small further impairment of US$3.4 million has been
adopted to recognise historic wells which are no longer in
production. This valuation does not take into consideration the
inherent value in the exploration acreage and resource potential
with the Trinidad assets and the Company continues to firmly
believe in the long-term prospects of these assets to deliver value
to shareholders;
- Total loss after tax for the year of US$43.9 million (2015:
US$30.3 million). Excluding impairments however, the underlying
loss after tax has improved by 15% to US$17.4 million (2015:
US$20.4 million);
- Despite the impairments during the year and the loss from
operations, the balance sheet overall remains strong with total
assets of US$158.0 million (2015: US$161.9 million) and net assets
of US$72.2 million (2015: US$95.0 million); and
- Total cash (including restricted cash) of US$21.0 million,
together with the remaining funding available from LandOcean for
the Trinidad work programme positions Range in a strong position to
meet its growth ambitions during 2017.
Included with this announcement is a summary of Range's full
year audited annual accounts for the year ended 30 June 2016 as
extracted from the annual report, being:
- Consolidated Statement of Profit or Loss and Other Comprehensive Income;
- Consolidated Statement of Financial Position;
- Consolidated Statement of Changes in Equity;
- Consolidated Statement of Cashflows; and
- Notes to Financial Statements.
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 Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
Statement from the Chairman and Chief Executive Officer
Dear fellow shareholder
2016 has been another year of low oil prices which continue to
impact our industry. Despite this challenging environment, as a
result of ongoing initiatives and a proactive approach to running a
successful company, we have shown that Range is a fundamentally
strong and resilient business.
The actions undertaken during the year were firmly focused on
pursuing new projects, cutting costs, strengthening the balance
sheet, and progressing waterflood projects in Trinidad. We have
achieved a number of significant operational and corporate
milestones, including:
-- Increased 2P reserves in Trinidad by 11% to 24.4 mmbbl;
-- US$30 million equity financing completed at a 50% premium to the share price;
-- Extended credit terms agreed with LandOcean Energy Services Co., Ltd ("LandOcean") for oilfield work undertaken
in Trinidad;
-- Further Board and management restructuring completed, with Mr Zhiwei Gu appointed as a Non-Executive Chairman and
three new Non-Executive Directors appointed to the Board. Mr Lijun Xiu, an oil industry veteran with long and
distinguished career of over 30 years, appointed as Trinidad General Manager;
-- Significant progress on the waterflood programme continued with water injection commencing on two projects;
-- Four development wells successfully drilled during the period, with two further wells drilled subsequently to the
period end;
-- Substantial, positive progress achieved in obtaining acceptable outcomes to a number of historic legal issues;
and
-- Strong cash position of circa US$21 million (including restricted cash of US$8m).
We have ended the financial year with increased reserves in
Trinidad, strengthened technical expertise on the Board, cash
position of circa US$21 million, and a mutually beneficial
relationship with our strategic partner LandOcean. Range is a
leaner, stronger and better organised company than ever before,
ready to take on new opportunities that lie ahead and fulfil our
growth ambitions.
Acquisition-led growth strategy
Following a Board review, our strategy has been refined and can
be summarised as follows:
1. Optimise Trinidad assets by focusing on waterflood projects
and continuing low cost production and reserves growth;
2. Pursue growth opportunities through acquisition of new assets;
3. Build an asset base demonstrating significant production,
reserves and cashflows, whilst maintaining further growth potential
through selective exploration;
4. Continue to evolve through strong technical strategic
partnerships, applying the best talent and the best technologies;
and
5. Maintain financial strength, flexibility and stringent cost control.
During the period, we have actively vetted numerous acquisition
prospects. We are confident in the longer term oil price recovery
and focused on taking advantage of the opportunities presented in
this lower commodity price environment, which is favourable for
acquirers and presents unique opportunities for companies with
strong cash positions, like Range.
We have not limited ourselves to looking at traditional E&P
projects and have expanded our search globally. Those projects that
are in development / production stage, with near term cashflows,
are of particular interest to Range. Attractive valuation is key,
and having reviewed numerous opportunities, we have turned down a
number of potential targets that we believed were overvalued.
We are continuing to actively pursue numerous new projects. We
believe the Company and its team have all the credentials to take
advantage of the current downturn in the industry and maximise
future shareholder value through opportunistic acquisitions.
Realising value from Trinidad
2016 has been a year of record investment into our Trinidad
operations, with over US$16 million incurred during the period. As
a result of this investment, we expect to see a notable increase in
production as we realise the inherent value in these assets from
the successful implementation of the waterflood projects. Our
ongoing commitment in Trinidad is to ensure that the business is
self-sustaining over the long-term, and generates returns for
shareholders particularly in a lower commodity price
environment.
We have been working to reorganise our operations in Trinidad to
cut costs, improve efficiencies and position ourselves for the
future. We have already implemented material and sustainable cost
reductions but there is a lot more to be done, particularly to
reduce operating costs. We will continue to actively work with our
partner LandOcean to drive costs down even further.
Mr Xiu has been appointed as Trinidad General Manager, to
oversee all Trinidad operations and strengthen the local management
team. He has a long and distinguished geological career of over 30
years working for China National Petroleum Corporation, and is a
valuable addition to our management team.
Our assets in Trinidad provide a balance of exploration,
appraisal, development and production activities. We are encouraged
with the increase in our independently audited 2P reserves by 11%
to 24.4 mmbbls during the year, which validates the quality and
potential of the Trinidad assets.
During the period, we produced 193,868 bbls net to Range, which
is broadly unchanged from our production last year. The production
was line with our expectations, given the limited number of wells
drilled during the period and our continued longer term focus on
commencing production from waterflood projects.
During the period, waterflood projects were the biggest
component in our capex programme, with approximately US$13.5
million incurred as follows:
-- Waterflood development work (well workovers, gathering
station, water injection system, power supply, road improvements) -
US$9.4 million;
-- Design work (drilling engineering design, surface facility design) - US$1.2 million;
-- Studies and evaluation reports - US$1.6 million; and
-- Infrastructure (power systems, roads, civil engineering,
communication systems) - US$1.3 million.
As a result of this continued work, initial water injection
commenced on two waterflood projects. Together with LandOcean, we
are continuing to commission the remaining facilities and
infrastructure, in order to increase water supply and achieve
projected production rates towards our goal of 2,500 bopd by the
end of 2017 (calendar year).
The exploration component also gives much to look forward to,
and we are hopeful to commence drilling on the Canari North
exploration prospect early in 2017 once the drilling rig becomes
available.
Our commitment to Health, Safety and Environment ("HSE") is a
number one priority for all our operations and is crucial to our
success as a growing business. During the year, we have seen a
substantial improvement in all key HSE indicators including Lost
Time Incident ("LTI") frequency and environmental incidents, which
is a notable achievement. The Company is proud to have decreased
the LTI frequency rate by 75% to 0.61, which is significantly below
the average of 1.35 reported by the International Association of
Drilling Contractors for the onshore US Oil & Gas Industry.
We are encouraged by the support of Petroleum Company of
Trinidad and Tobago Limited ("Petrotrin") and the Trinidad
government who signed an agreement to reduce the overriding royalty
rates on our producing fields in Trinidad. These incentives are
particularly welcome during the period of lower commodity prices
for producers like Range. We are hopeful that the government will
continue to incentivise operators to invest into growing production
onshore Trinidad through further incentives, such as reduced rates
of Supplemental Petroleum Tax.
Our strategic partners
We always aim to build and maintain high quality long lasting
relationships with our communities, governments and partners. We
are delighted to have the ongoing support from our partner and
oilfield services provider LandOcean, one of the largest listed
oilfield services providers in China.
LandOcean provides an extensive range of services to the oil and
gas industry internationally, from research and development of
software technology to various product sales and the provision of
technical services. Headquartered in Beijing, LandOcean has over
400 employees, and attracts top talent including professors, senior
engineers, post-doctorates, doctors and masters in the fields of
geology, geophysics, and reservoir engineering.
The two companies have been working together since 2014 and
LandOcean has continued to support Range throughout the period
despite the challenging macro-environment.
During the year, Range and LandOcean have focused on
implementing the waterflood projects targeting to bring them into
first production towards the end of 2016, with substantial progress
made to date. The initial water injection has commenced on both
projects as a result of the hard work of both teams, and the main
effort now will be aimed at completing the full schemes and
increasing water injection rates. LandOcean provides Range with
credit terms of 720 days for up to US$50 million which covers work
related to these waterflood projects.
During the period, LandOcean also added four brand new rigs to
its fleet in Trinidad. The addition of these modern rigs has been
extremely beneficial in delivering safe and efficient drilling
operations and continuing Range's drilling campaign. Two of the
rigs are already being successfully used, which has seen wells
being completed ahead of schedule, and in line with high safety
standards.
The strategic partnership not only allows Range to benefit from
LandOcean's technical expertise and vast experience, but also
provides Range with financial flexibility from the generous credit
terms, as it allows the Company to repay LandOcean from future
cashflows once the expected production levels ramp up. In addition,
LandOcean has agreed to further extend its credit terms for
drilling services and earlier work undertaken under the first
purchase order. We look forward to continued strengthening of our
relationship and mutually benefitting from our joint success.
During the year, we were also pleased to have completed funding
with a new cornerstone investor, Beijing Sibo Investment Management
LP ("Sibo"), which invested US$30 million into Range at a
significant premium to the share price at the time of the
transaction. This investment came at a time when securing funding
was particularly challenging for oil juniors, therefore it is a
true testimony of the underlying value of the Company's assets and
the team.
Sibo has played a key role in strengthening our balance sheet
and providing us with financial flexibility to consider new
acquisitions. Sibo currently holds 32% interest in Range's share
capital and has appointed Mr Yu Wang, as a representative Director
during the period.
Platform for growth
During the period, we have appointed two new independent
Non-Executive Directors, Mr Lubing Liu and Dr Yi Zeng, both
bringing significant experience and broad industry knowledge. We
are very fortunate to have attracted such high calibre oil industry
veterans, from which Range will benefit considerably. We have the
right mix of technical and management expertise to further
strengthen Range's prospects and fulfil our growth ambitions.
The Company has gone through a significant investment phase in
Trinidad over the last 12 months and the focus going forward will
be on driving efficiencies to ensure the Trinidad business is
self-sustaining over the long-term. The continued focus in the next
year will be on the waterflood projects which account for the
majority of reserves and is a critical element in our goal of
increasing production and generating returns for shareholders.
We will continue to adapt to changes in the industry and are
determined to maximise shareholder value. The remainder of
2016-2017 holds significant potential to add exciting new projects
to our portfolio and build upon the share price recovery.
We would like to thank all shareholders for your support, and
welcome those who joined during the year. We also thank our fellow
Directors, staff and management team for their hard work over the
past year and look forward to the continuing growth into the
future.
Yours Faithfully
Zhiwei Gu Yan Liu
Chairman Chief Executive Officer
DIRECTORS' REPORT
The Directors of Range Resources Limited ("Range" or "the
Company") and the entities it controls (together, the "Group")
present the financial report for the year ended 30 June 2016.
DIRECTORS
The names of the directors in office and at any time during or
since the end of the year are:
Mr Zhiwei Non-Executive
Gu Chairman appointed 25 May 2016
Non-Executive
Director
Mr Yan Liu Executive Director resigned 31 January 2016,
re-appointed 25 May 2016
Non-Executive appointed 31 January 2016,
Director resigned 25 May 2016
Mr David Non-Executive
Yu Chen Director appointed 25 May 2016
Non-Executive
Chairman resigned 25 May 2016
Ms Juan Non-Executive
Wang Director
Mr Yu Wang Non-Executive appointed 30 September
Director 2015
Mr Lubing Non-Executive
Liu Director appointed 16 June 2016
Dr Yi Zeng Non-Executive
Director appointed 16 June 2016
Directors have been in office since the start of the financial
year to the date of this report unless otherwise stated.
COMPANY SECRETARY
The following persons held the position of company secretary
during the financial year:
Mr Nick Beattie
Ms Sara Kelly
PRINCIPAL ACTIVITIES
The principal activity of the Group during the financial year
was oil and gas exploration, development and production in
Trinidad. The Company holds further interests in non-core oil and
gas projects in Georgia and Guatemala and continues to explore
potential disposal options of its interests.
In line with the growth strategy of the Company to create value
for shareholders, Range continues to evaluate potential
acquisitions of high quality value-generating assets.
FINANCIAL RESULTS
-- The Consolidated Statement of Profit or Loss and Other
Comprehensive Income for the financial year shows a net loss
attributable to owners of US$43,874,885 (2015: net loss of
US$30,279,054).
-- The Group's revenue was US$7,062,226 (2015: US$13,152,954).
The decrease of US$6,090,728 (46% from prior year) was primarily
due to lower oil prices in the 2016 financial year which averaged
US$36.4/bbl. (2015: US$69.5/bbl.).
-- The net loss after tax from continuing operations was
US$38,994,885 (2015: US$22,581,895). The increased loss is
primarily due to an impairment charge against the carrying value of
the Trinidad assets in the current year which totalled
US$20,564,829
-- Net cash outflow from operating activities for the period was
US$4,186,035 (2015: outflow US$6,955,264).
-- General and administrative costs overall decreased by
US$6,548,456 (65% reduction) to US$3,400,038 (2015: US$9,948,494)
as a result of material cost cutting measures implemented across
the Group.
-- The net assets of the Group decreased by US$21,786,324 to
US$72,237,132 (2015: US$95,023,456). This decrease is primarily due
to the loss reported from operations combined with impairments made
in the year to the Group's Trinidad asset (impairment of
US$20,564,829), Georgian asset (US$3,750,000) and Guatemalan asset
(impairment of US$1,000,000).
DIVIDS
No dividends have been declared, provided for or paid in respect
of the financial year ended 30 June 2016 (2015: Nil).
Operations
TRINIDAD
The Company holds 100% interest in three onshore production
licences - Morne Diablo, South Quarry and Beach Marcelle, as well
as interests in two exploration blocks - St Mary's and
Guayaguayare.
Given the continued lower oil price environment and in line with
ongoing cost management, during the period the Company completed a
review of its work programme for 2016 (calendar year). As a result,
the Company identified implementation of its waterflood projects as
the highest priority, which have subsequently been the focus of
operations.
Production
The Company's oil and gas production for the period in Trinidad
was 193,868 bbls (average of 531 bopd) net to Range. Production
during the year was broadly unchanged from the previous year (2015:
average of 562 bopd). This production is in line with internal
expectations, given a limited number of development wells drilled
during the period as well as reduced number of workovers
undertaken.
Range continues with implementation of its waterflood projects
and completion of the development work programme, aiming towards
achieving production guidance of 2,500 bopd by the end of 2017
(calendar year).
Reserves
Range commissioned an independent reserves audit as at 30 June
2016 for the Company's licences in Trinidad. The audit report was
compiled by the independent petroleum consultants, Rockflow
Resources Limited ("Rockflow").
The audit showed an increase in the Company's total 2P reserves
by 11% from the previously reported 22.0 MMBOE (30 June 2015) to
24.4 MMBOE. The reserve increase was a result of the adoption of a
wider range of in-place volumes, and recovery estimates from
waterflooding for the Beach Marcelle licence.
Development and workover programme
During the year, the Company drilled four development wells, as
follows:
Well Field Total Depth Status
(ft)
------- --------------- ------------ -----------------
MD 249 Morne Diablo 2,610 On production
------- --------------- ------------ -----------------
GY 679 Beach Marcelle 2,000 On production
------- --------------- ------------ -----------------
GY 680 Beach Marcelle 1,685 On production
------- --------------- ------------ -----------------
MD 250 Morne Diablo 4,100 Under production
testing
------- --------------- ------------ -----------------
In February 2016, the Company identified five development wells
for drilling, based on their risk and economic returns. The first
of the five wells, the MD 250 well was drilled during the period
(included in the table above).
Subsequently to the period end, the Company drilled two further
wells, the MD 251 and the QUN 159 wells. The MD 251 well is a
follow on well which was drilled to a total depth of 3,900 feet
from the same drilling pad as the MD 250 well. The QUN 159 well was
also successfully drilled to a total depth of 2,600 feet at the
Morne Diablo field.
All three wells (the MD 250, MD 251 and QUN 159) are undergoing
production testing. The remaining scheduled development wells to be
drilled during 2016 (calendar year) include one well in Morne
Diablo and one well in Beach Marcelle.
Given the Company's continued focus on delivery of the
waterflood projects, Range will be scaling back on its other work
programme in Trinidad, with no development wells currently planned
for 2017.
The Company also reduced the number of workovers being
undertaken, which contributed to the production decline during the
period. Range will keep the workover programme under regular review
and intends to continue workover operations on the most profitable
wells.
Waterflood programme
Beach Marcelle South East block
The Company and LandOcean have been making continued progress
with implementing the full waterflood scheme on the South East
block of the Beach Marcelle project during the period, including
workovers on the selected waterflood wells; repair work on these
selected wells; installation of injection stations; engineering
design of the gathering station; and installation of pipeline
network.
Initial water injection commenced during the period at an
average rate of approximately 600 barrels of water per day
("bwpd"). This is the maximum rate that can be achieved based on
one water source well being used and power and infrastructure in
the area. The water source well can produce higher volumes
depending on power availability, which is expected to increase once
power network installation has been upgraded.
In order to achieve the expected average production of 1,600
bopd from this block, Range estimates that approximately 11,000
bwpd of water injection rate is required. The Company will
initially use water from water source wells, which will be
supplemented by produced water as the project progresses. The
number of water source wells will be adjusted as the availability
of surface facilities is increased, and depending on the response
from the aquifer. Water injection volumes will increase accordingly
as additional wells are commissioned.
The Company has been working on the installation of a high
pressure pipeline network, with the majority of work (7,220 m)
already completed. Given that Range's Beach Marcelle field is
located on the eastern side of Trinidad where numerous major
operators have processing facilities and oil and gas pipelines that
pass through the field, Range requires various permissions in areas
where it plans to install the remaining water injection
pipeline.
The Company has been working with the relevant operators to
obtain the necessary approvals and is focused on securing these
approvals as soon as possible. The remaining pipeline network (530
m) is expected to be completed once the agreement is reached with
these operators.
The average production from the field over an 8-year period is
expected to be approximately 1,600 bopd, subject to approvals in
respect of the remaining pipeline installation and access to higher
water injection volumes. Beach Marcelle waterflood production is
estimated to be the largest contributor towards the 2,500 bopd
production target by the end of 2017.
Morne Diablo Expansion project
The initial water injection on the project commenced in December
2015 and is continuing at an average rate of 200 bwpd, which is the
maximum volume of water available at present from Range's producer
wells.
To get access to additional water supply, Range has been
negotiating with Petrotrin to use produced water from Petrotrin's
existing operations, which will increase water injection by 3,000
bwpd. The agreement with Petrotrin has been reached and Range
expects to execute final agreements during the remainder of 2016
(calendar year).
The Company will be constructing a new water pipeline to connect
the gathering and injection stations at the Morne Diablo field to
Petrotrin's water treatment facility. Range is pleased to advise
that the environmental approvals for use of the additional water
and construction of the new water pipeline have been granted by the
regulatory body in Trinidad.
The average production over an 8-year period is expected to be
approximately 200 bopd, and is forecast to be achieved when water
injection is increased to approximately 3,000 bwpd.
Additional waterflooding areas
The Company has identified additional areas around the
previously drilled development wells in the South Quarry and Morne
Diablo fields, which could be suitable for waterflooding. The
Company continues to evaluate these areas and study the field for
waterflooding potential.
Exploration programme
Guayaguayare block
During the period, Range signed an amendment agreement to
acquire the full remaining interest of Niko Resources Ltd. ("Niko")
in the Guayaguayare block. Following completion of the agreement,
Range holds an 80% interest in the Deep PSC and a 65% interest in
the Shallow PSC (subject to final government approvals). Range is
the Operator of the block.
Range also applied for the extension of the PSCs which expired
during July 2015. Following ongoing discussions with the Ministry
of Energy and Energy Industries ("MEEI"), Range is confident that
the extension will be granted once the first shallow commitment
well on the license (Canari North well) completed. The well
location has been prepared with the well expected to spud during
early 2017 once the drilling rig is available.
The Canari North well will be the first exploration well to be
drilled by Range in Trinidad, and any success with the well is
expected to de-risk the Moruga sub-basin and could result in
material potential upside in the Guayaguayare block with multiple
follow-on prospects and leads to be tested by further exploration
drilling. The planned drilling programme is for a vertical well to
be drilled to a target depth of 5,000 ft. The well is expected to
spud once the rig is approved for drilling by the government.
St Mary's block
During the period, Range completed a comprehensive evaluation of
all existing data on the block which was presented to Range's
management team. The Company has also been working with the
government of Trinidad and Tobago to obtain high resolution gravity
surveys and additional seismic data for the block. Subsequent to
the period end, this technical data was received. The Company now
intends to conduct further studies utilizing the data provided.
This completed work will guide future work programme to be
undertaken.
Royalty rates reduced
During the period, Range signed an agreement with Petrotrin to
reduce the overriding royalty rates ("ORRs") on the Company's
producing Morne Diablo, Beach Marcelle and South Quarry fields in
Trinidad. The revised ORRs apply when the received oil price is
below US$50 per barrel. The changes took effect from 16 March 2016
and apply retrospectively to sales made from 1 February 2016
onwards.
The reduced ORRs are particularly encouraging for producers like
Range and are a welcome incentive introduced by Petrotrin during
the period of lower commodity prices.
Range is also encouraged by the comments in the 2016 Mid-Year
Budget Review that the government of Trinidad and Tobago intends to
review the level of Supplemental Petroleum Tax on crude oil prices
moderately higher than US$50 per barrel. This review is anticipated
to be completed during 2016.
Strategic partnership
During the period, Range continued its strategic partnership
with LandOcean. LandOcean acts as the preferred oilfield services
contractor to Range in Trinidad, as part of the Integrated Master
Services Agreement entered into during 2014.
During the period, LandOcean added four brand new drilling rigs
to its fleet in Trinidad with drilling capabilities of 13,000 ft.
(4,000 m), 6,500 ft. (2,000 m), 4,900 ft. (1,500 m) and 3,200 ft.
(1,000 m). Two of these rigs (4,000 m and 1,500 m) have been
granted all necessary regulatory and government approvals and were
successfully brought into operations. These rigs are currently
being used for Range's drilling programme. Range continues to
assist RRDSL in obtaining the necessary certification and approvals
for the remaining two new drilling rigs.
During the period, LandOcean agreed to further extend its credit
terms on drilling services to 24 months (previously 12 months). It
is a rolling credit facility and payments will be due after 24
months from the date each invoice is agreed. The terms of the
credit terms have not changed and in line with the previous
agreement announced on 1 May 2015, and interest will be payable by
Range at the rate of 10% per annum.
LandOcean also agreed to defer the outstanding payment of US$2.5
million for work in relation to Purchase Order 1 by a further 12
months. In addition, LandOcean provides Range with credit terms of
720 days for all work undertaken as part of Purchase Order 2 for
US$50 million which covers work relating to waterflooding
projects.
NON-CORE ASSETS
Georgia
During the period, the Company along with the other investors in
Strait Oil & Gas ("SOG") have continued to pursue disposal of
their shareholding in SOG (SOG holds interests in Block VIa in
Georgia). SOG advised Range that the Production Sharing Agreement
("PSA") across Block VIa remains in good standing. Ongoing sale
negotiations continue with a potential interested party.
Guatemala
During the period, the Company was unable to engage with the
Operator of the project, Latin American Resources ("LAR") or obtain
any information with regards to operations. The Company is seeking
legal advice with regards to this matter and will update
shareholders as appropriate.
Corporate
Equity financing completed
During the period, the Company secured a new cornerstone
investor, Sibo. The total investment by Sibo was US$30 million at a
subscription price of GBP0.008 per share - the first tranche of the
proceeds had been received in the previous financial year, and the
remaining US$22.1 million was received during the period. The
Company's Directors and senior management also subscribed for
ordinary shares totalling US$0.3 million at the same subscription
price.
Acquisition strategy
In line with the growth strategy of the Company to create value
for shareholders, and to provide Range with additional production
and revenue, the Board continues to evaluate potential acquisitions
of high quality assets at attractive valuations. During the period,
the Company has witnessed an increase in the available attractive
opportunities, and is hoping to conclude an acquisition in the
coming months. The Board believes the Company is well positioned to
take advantage of this opportune environment for acquirers.
Directorate and management changes
During the period, Mr Zhiwei Gu, who joined the Board in January
2015 as a Non-Executive Director, was appointed to the role of
Non-Executive Chairman. Mr David Chen has stepped down from the
role of Chairman of the Board but continues as a Non-Executive
Director of the Company,
The Company also announced the appointment of three new
Non-Executive Directors to the Board: Mr Yu Wang, a nominee of
Sibo; Mr Lubing Liu and Dr Yi Zeng.
During the period, the Company also appointed Mr Lijun Xiu as
Trinidad Deputy General. Mr Xiu has a long and distinguished
geological career of over 30 years working for Jilin Oilfield
Research Institute of Petroleum Exploration & Development (a
division of China National Petroleum Corporation). Mr Xiu has
extensive experience in oilfield exploration and development
planning, drilling design, research on geological conditions for
oil and gas accumulations and target selection, evaluation of oil
reservoir properties and productivity construction, evaluation of
well logging, and assessment of hydrocarbon reserves.
Unmarketable parcels sale
During the period, Range completed a share sale facility for
holders of unmarketable parcels on ASX. As a result, the Company
has reduced its ASX shareholders by 63% to 1,854 holders at 22
December 2015, which significantly reduced the ongoing
administrative and other share registry costs to the Company
associated with these very small holdings.
Legal proceedings
Lind
During the period, Range was pleased to announce that it reached
a binding agreement with Lind Asset Management LLC ("Lind") to
settle all outstanding claims and disputes between the parties. As
previously announced, Lind initiated legal action in New South
Wales Supreme Court seeking payment of approximately US$600,000 in
respect of interest and legal costs. Lind also sought other damages
for breach of contract. Range filed a defence against the claims
and a cross-claim for damages. Under the terms of the settlement
agreement, Range made a payment to Lind of US$325,000 and Lind
retains the beneficial ownership of the 38 million collateral
shares which were issued by Range in 2014 as part of the original
funding agreement. Range is pleased to have reached a mutually
acceptable settlement agreement with Lind which enables the Company
to draw a line under this long-running dispute.
Mark Patterson
During the period, the Company was involved in an arbitration
hearing with Mr Mark Patterson who had claimed approximately
US$5.8million. In February 2016, the Company received the final
award of the arbitration tribunal who found fully in favour of the
Company (with just an immaterial award of costs being made to Mr
Patterson).
Colombia
During the period, Range received notification from the Agencia
Nacional de Hidrocarburos ("ANH") in Colombia advising that the
licences over three exploration blocks PUT-5, VMM-7, and VSM-1 had
been revoked. The licenses had been awarded to a consortium of
Optima Oil Corporation ("Optima") and the Company in December
2012.
ANH alleges that various obligations and commitments contained
within the exploration licences had not been fulfilled and that
invalid letters of credit had been presented by Optima to support
the minimum work obligations. Under the terms of the JOA it was
agreed between the consortium that it was the sole responsibility
of Optima to complete the minimum work obligations and to provide
all necessary funding, including the provision of valid letters of
credit in favour of ANH. Under the JOA, Range has an indemnity to
recover from Optima any payment incurred by Range for any
contractual obligations under the licences which were not paid by
Optima.
Subsequent to the period end, Range received a demand notice
from ANH addressed to the consortium seeking payment of the full
amount of the outstanding obligations due to ANH totalling up to
approximately US$53 million.
The consortium submitted a comprehensive response to ANH on 7
September 2016. This defence addressed the numerous areas in which
Range and the consortium object to the demand which was received
from ANH.
The Company continues to work with Optima and legal advisers to
defend its position to the maximum extent possible and is
considering what further action can be taken to challenge the
actions taken by ANH.
Geeta Maharaj
Range has received an invoice from Geeta Maharaj, a Trinidad
based attorney seeking payment of approximately US$1.9million. The
invoice purports to relate to legal work undertaken during mid-2014
in the preparation of inter-company loan agreements. Range strongly
refutes the amount of this purported invoice and intends to
vigorously defend its position. Range has engaged Trinidad legal
counsel to assist in this matter. Range considers that that the
amount of the purported invoice is vastly excessive and is not
payable.
Financial
The Group reports a loss after tax for the year of
US$43.9million which compares to a loss for the prior year of
US$30.3million. Despite reporting an increased loss for the year,
Range believes that there continues to be positive overall momentum
seen in the underlying business as we continue to reposition the
group towards sustainable long-term profitability and positive
operating cashflow.
Range has reported consecutive losses for over the last 10 years
and the current Board are focused on, once and for all, turning
around performance and creating value and returns for all
shareholders through the delivery of the strategy outlined in the
report. Range has endured significant losses and expenses in recent
years as a result of legacy issues and non-core assets. Regrettably
this has had an effect once again this year with further
impairments seen for the investments in Georgia, Guatemala and
International Petroleum. Range believes that these legacy issues,
which have proved a drag on financial performance and management
time over recent years, are now under control and the remaining
balance sheet value for these previous projects and investments is
now minimal.
During the year Range reduced the carrying value of the Trinidad
assets on the balance sheet and this was principally due to the
substantial, and sustained drop in oil prices which have been seen
throughout the year. The majority of this impairment was reported
during the half-year unaudited results announced in March and a
small further impairment of US$3.4million has been adopted at this
stage to recognise historic wells which are no longer in
production, and have no likely future use. This valuation does not
take into consideration the inherent value in the exploration
acreage and resource potential with the Trinidad assets and the
Company continues to firmly believe in the long-term prospects of
these assets to deliver value to shareholders.
The following table summarises performance including on a
normalised basis excluding impairments:
Measure Unit 2016 2015 Change %
------------------------ --------- ------------- ------------- ------------- -------
Total production barrels
(Trinidad) of oil 193,868 205,209 (11,341) -5.5%
------------------------ --------- ------------- ------------- ------------- -------
Revenue US$ 7,062,226 13,152,954 (6,090,728) -46.3%
------------------------ --------- ------------- ------------- ------------- -------
Average received
oil price US$/bbl 36.42 64.10 (27.68) -43.2%
------------------------ --------- ------------- ------------- ------------- -------
Reported NPAT
/ (loss) US$ (43,714,086) (29,823,747) (13,890,339) -46.6%
------------------------ --------- ------------- ------------- ------------- -------
Underlying NPAT
/ (loss) US$ (17,429,295) (20,397,109) 2,967,814 14.6%
------------------------ --------- ------------- ------------- ------------- -------
Underlying EBITDAX US$ (5,658,343) (7,461,927) 1,803,584 24.2%
------------------------ --------- ------------- ------------- ------------- -------
Underlying NPAT (Net Profit after Tax) and Underlying EBITDAX
(Earnings before interest, tax, depreciation, amortisation and
exploration expenditure written off) are not defined measures under
Australian Accounting Standards or IFRS, and are not audited. These
measures have been calculated by the Company who believe they
provide meaningful analysis of underlying 'normalised' performance
of the Company.
On an underlying basis, excluding impairments and other asset
write-offs, the underlying NPAT for the year would be a loss of
US$17.4million which is a 15% improvement on prior year (prior year
comparable loss US$20.4million). On an EBITDAX basis, there is a
similar positive trend evident with underlying EBITDAX 24% improved
for the year with a loss of US$5.7million seen (2015: loss of
US$7.5million).
Looking at key areas in the income statement:
-- The Group's revenue was US$7.1 million (2015: US$13.2
million), a decrease of approximately 46%. Group production was
broadly stable for the year and the fall in revenue is due to
reduced average oil price realised of US$36.42/bbl (2015:
US$64.10/bbl);
-- This fall in revenues contributed to an increase in the gross
loss which increased to US$7.8 million (2015: US$2.9 million). The
other main factor in the gross loss was an increase for the year
overall in operating costs to US$7.3million (2015: US$6.4million).
This increase in operating cost is partially reflective of the
first full year following the disposal of Range Resources Drilling
Services Limited in 2015. Following completion of the sale, Range
is now exposed to 3(rd) party rates for a majority of operating
costs, as opposed to previous periods where it was just the
incurred cost which was reflected (with no 3(rd) party margin).
Additionally, certain activities during the year including swabbing
and workovers were completed which did not result in increased
revenue to compensate for the cost incurred. Range is focused on
delivering improvements in this during the current financial year
and the effective cost per barrel will also reduce as production
grows. Production growth is the key to reducing operating costs on
a per barrel basis, given the inherent fixed cost element within
the operations in Trinidad;
-- General and administrative costs decreased materially by 66%
overall during the year and totalled US$3.4 million (2015: US$9.9
million). This was achieved as a result of stringent cost cutting
measures implemented with significant reduction seen in
discretionary expenditure, lower staff costs and elimination of
corporate management costs.
Cash management is an absolutely critical function within Range
and total cash (including restricted cash) at year end was
US$21.0mlllion (2015: US$10.5million). This increase was largely as
a result of the new equity raising completed during the year with
Sibo combined with the effect of lower G&A costs and credit
terms in place.
Importantly, cash outflow from operating activities was
significantly lower than the prior year at US$4.2million (2015:
US$7.0million). Range benefits from the credit terms offered by our
principal service provider (LandOcean Energy Services Co. Ltd.)
which minimises cash outflow whilst production growth is achieved
from implementation of the waterflood programme and selected
development drilling.
As previously announced, LandOcean are providing Range with
credit terms on the work under purchase order 2, of 720 days from
issuance of each invoice. The total value of PO2 is US$50milion and
as detailed in the operations review substantial progress has been
seen during the year in implementation of the waterflood programme.
This work is reflected within the growth seen in long-term
interest-bearing liabilities on the balance sheet which total
US$14.0million (2015: $nil) and accrued expenses of US$9.8million
(2015: $nil); these principally reflect the payable balance to
LandOcean which will be paid on a progressive basis in future
years. Range anticipates that this balance will continue to
increase during the 2017 financial year as the waterflood programme
is further advanced and other planned development drilling is
completed.
Despite the impairments during the year and the loss from
operations, the balance sheet overall remains strong with total
assets of US$158.0million (2015: US$161.9million) and net assets of
US$72.2million (2015: US$95.0million). Total cash (including
restricted cash) of US$21.0million, together with the remaining
funding available from LandOcean for the Trinidad work programme
positions Range in a strong position to meet its growth ambitions
during 2017.
The Board recognise that there is a lot of work to be done to
start generating long-term sustainable profitability. Range is
confident that the right building blocks are now in place and will
remain focused on improving financial performance in the years
ahead.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The following significant changes in the state of affairs of the
Company occurred during the financial year:
-- Equity financing of US$30 million completed with Sibo.
Further details on the above matters can be found in the Review
of Operations.
EVENTS SUBSEQUENT TO REPORTING DATE
Colombia
Subsequently to the period end, Range received a demand notice
from ANH addressed to the consortium seeking payment of the full
amount of the outstanding obligations due to ANH totalling up to
approximately US$53 million.
The consortium submitted a comprehensive response to ANH on 7
September 2016. This defence addressed the numerous areas in which
Range and the consortium object to the demand which was received
from ANH.
The Company continues to work with Optima and legal advisers to
defend its position to the maximum extent possible and is
considering what further action can be taken to challenge the
actions taken by ANH.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Company intends to continue with its work programme in
Trinidad by implementing and bringing into production the secondary
recovery projects (waterflood). In line with the growth strategy of
the Company to create value for shareholders, and to provide Range
with additional production and revenue, the Board continues to
pursue potential acquisitions of new assets.
Please refer to the Review of Operations for full details on
likely developments and future prospects of the Group
Corporate sustainability
Range is committed to operating in a socially responsible way
with the highest standards of Business Ethics, Environmental
Awareness and Health & Safety by:
-- Ensuring the health and safety of its employees and contractors;
-- Preserving and protecting the environment; and
-- Cultivating a harmonious relationship with the local communities and key stakeholders.
Health, Safety and Environment ("HSE")
Range is committed to "Operational Excellence", a core value
that drives achievement of its sustainable growth and financial
performance. The Company's vision of "Zero Harm" is that "no one
gets hurt and nothing gets harmed" and as a result HSE performance
is a critical element of our Operational Excellence goal. It is,
therefore, the Policy of the Company, and far as is reasonably
practicable, to:
-- Implement and maintain HSE management systems to prevent
accidents, occupational injuries, illnesses and environmental
incidence;
-- Meet or exceed compliance with all applicable HSE laws and regulations;
-- Ensure the provision and maintenance of a safe work
environment, safe equipment and work procedures;
-- Foster a culture where all employees and contractors are held
accountable for following all Company Policies and Procedures;
-- Provide appropriate training, re-training and supervision to
maintain the competence levels of all employees to safely perform
their duties;
-- Promote the development of a positive Health and Safety culture;
-- Ensure timely investigation and reporting of all HSE related incidents; and
-- Conduct regular reviews of the Company's Policies and Procedures.
Concern for the environment is of utmost importance to Range
where our policy is to minimise our potential environmental impact
by striving to:
-- Protect the natural environment;
-- Implement a cost effective waste and emissions management
programme to prevent and control pollution;
-- Manage, monitor and communicate our environmental performance; and
-- Integrate environmental considerations into all our business
processes and strive for continuous improvement.
Environmental regulation
The Group's operations are not regulated by any significant
environmental regulation under a law of the Commonwealth or of a
state or territory.
The Directors have considered compliance with the National
Greenhouse and Energy Reporting Act 2007 which requires entities to
report annual greenhouse gas emissions and energy use. The
directors have assessed that there are no current reporting
requirements, but may be required to do so in the future.
Ethics and principles
Range's employees share a responsibility for ensuring that they
conduct business in an open, honest, and ethical manner and
maintain the highest standards of integrity; and through corporate
governance measure, audit and publicly report performance on
Corporate Social Responsibility programmes.
Anti-bribery & corruption ("ABC")
Range has a zero tolerance approach with respect to its
Anti-bribery and Corruption policy, procedures and implementation
and complies with all applicable laws and regulations of the
countries in which it operates. It is the responsibility of all
Range employees to ensure that none of Range's businesses engage in
practices which infringe legal or regulatory requirements or which
fall below the highest standards of ethical business conduct.
Any Range employee engaging in business practices which infringe
legal or regulatory requirements or fall below the highest
standards of ethical business conduct may be subject to
disciplinary action which may lead to dismissal and may face
personal criminal or civil liability.
It is the responsibility of all Range employees to ensure that
they report any infringement or suspected infringement of legal or
regulatory requirements or the highest standards of ethical
business conduct to the management of the Company.
Social responsibility and community involvement
Range strives to grow and strengthen the social and economic
relationships within the communities we operate in, through the
support and employment opportunities, as well as innovative
programmes in local health, education, environment, and cultural
activities. Our people and partners play a key role in creating
value for our shareholders.
We recognise the need for our business to provide direct support
to our local communities which rely on sponsorships and donations
to survive. We will continue our involvement through various
activities and will encourage the participation of our employees in
the relevant events.
Supporting schools and awarding scholarships: educating and
training future talent
Range aims to foster and promote the success of children in the
communities and provide assistance to students from local schools.
During the year, Range partnered with the Mayaro Past Pupils
Association (MPPA) and provided a scholarship grant to a local
primary school in an effort to promote and develop the young people
living in the Mayaro / Guayaguayare area.
Range has also engaged with the Guayaguayare Roman Catholic
Primary School located near the Company's Beach Marcelle field and
provided a scholarship grant and stationery supplies. Range's
employees held workshops at the school, educating students about
prospects of working in the oil and gas industry. This programme is
a concrete example of our commitment to educating, training and
developing young local talent.
Trinidad and Tobago Society of Petroleum Engineers
During the year, Range participated in the Trinidad and Tobago
Section of the Society of Petroleum Engineers. The event included a
meet and greet opportunity, career development session, a young
professional interactive workshop and a resume review session.
This was an excellent opportunity for engineering and geoscience
students, recent graduates and young professionals to learn more
about the energy industry and available career opportunities, as
well as to meet with potential employers and key industry players.
Range's participation in the event introduced the Company to the
young talent and most importantly, allowed the opportunity to
provide guidance and knowledge to those who are seeking to enter
the industry. Range will continue its contribution to training and
development of young local professionals in years to come.
Steel orchestra for youth
Range continues its support for the Morne Diablo Funk-a-delic
steel orchestra in Trinidad. First formed in 2004, the steel
orchestra band consists of around 40 local children between the
ages of 6 and 18. Providing the children with an outlet for team
building and community participation, the programme provides music
lessons up to three times a week, where they learn how to play the
steel pan (Trinidad and Tobago's national musical instrument) and
to read music. The orchestra has performed at a number of
ceremonies, including events hosted by the government of Trinidad
and Tobago.
During the period, Range provided financial assistance to the
Morne Diablo Funk-a-delics to build a pan shelter for the summer
camp, as well as oil drums to be used as steel pans. Range is also
looking to provide a cash donation towards constructing a pan
theatre for orchestra's practice.
Principal risks and uncertainties
The achievement of the business strategy, production growth
outlook and future financial performance is subject to various
risks including the material business risks. Range continually
monitors the effectiveness of the Company's risk management,
internal compliance and control systems. The Board has identified
the following principal business risks and adopted mitigating
strategies as described below. It is not an exhaustive list of all
risks that may affect the Company nor have they been listed in any
particular order of importance.
Risk Description Mitigation
------------------------------------------ ---------------------------- ------------------------------
Exploration and development activities There is a significant The Company aims
element of technical to continuously improve
risk in exploring the quality of its
for and developing operations through
oil and gas fields. rigorous reviews.
Exploration activities Technical work processes
are inherently uncertain are used to ensure
in their outcome. each opportunity
Failure to discover has been thoroughly
and develop hydrocarbons evaluated before
in commercially viable investment decisions
quantities could are made.
have a material adverse Range is focused
effect on the Company's on lowering its exploration
business. risk by applying
disciplined capital
allocation processes
and investing in
technologies such
as seismic.
------------------------------------------ ---------------------------- ------------------------------
Oil and gas reserves Estimations of recoverable Range has established
oil and gas reserves reserves committee
and resources contain which undertakes
significant uncertainties annual audits and
attributable to the evaluations of the
reservoir geology, Company's reserves
seismic data, well and resources consistent
data, operating costs, with the Society
commodity prices of Petroleum Engineers'
etc. Petroleum Resource
Management System.
------------------------------------------ ---------------------------- ------------------------------
Safety and Health Exploration, development Health and safety
and production of are a very high priority
oil and gas involve for Range. The Company
risks which may impact is committed to maintaining
the health and safety robust HSE policies,
of personnel, the and cultivating an
community and the organizational culture
environment. committed to superior
Failure to manage HSE performance.
these risks could The Company maintains
result in injury strict reporting
or loss of life, requirements in respect
damage or destruction of any incidents,
of property, and hazards or near misses.
damage to the environment. Training, procedures
In addition, impacts and competency are
may include reputational performed throughout
damage and fines. the organisation.
Appropriate insurances
are in place.
------------------------------------------ ---------------------------- ------------------------------
HR Key personnel and The Company identifies
positions are required the key positions
in order to implement and personnel and
the Company's strategy. ensures that the
The risk occurs when incentive package
the appropriate personnel offered reflects
are difficult to the key needs of
recruit and retain. the business.
------------------------------------------ ---------------------------- ------------------------------
Access to funding Range's growth aspirations The Board reviews
require the investment and approves the
of significant capital allocation of cash
to generate returns. resources via the
The ability to explore annual budget. The
for and develop oil Board also considers
and gas reserves longer term cash
is dependent on its forecasts to ensure
ability to generate sufficient funds
and otherwise access to meet its goals.
capital to fund these Range continues to
activities. assess long-term
funding needs and
manage capital efficiently.
------------------------------------------ ---------------------------- ------------------------------
Commodity price change The Company's revenues, Range does not currently
profitability, cash hedge its oil price
flows and rate of exposure.
growth are significantly Price hedging arrangements
impacted by prevailing would be implemented
oil prices. Sustained if deemed appropriate
periods of low oil for financial planning
price may impact and to mitigate commodity
the viability of price risks.
growth projects.
------------------------------------------ ---------------------------- ------------------------------
Exchange rate fluctuations The Company is exposed Range does not currently
to financial market hedge its US Dollar
volatility and fluctuation exposure.
in various foreign Given the proportion
exchange rates. of development capital
expenditure and operating
costs incurred in
currencies other
than the US Dollar,
the Company routinely
reviews potential
hedges and will execute
hedges if necessary
to mitigate foreign
exchange rate risk.
------------------------------------------ ---------------------------- ------------------------------
Political, economic, and regulatory risks A substantial amount Range continuously
of Range's properties monitors the political,
and operations are economic, and regulatory
located in Trinidad environments in which
and Tobago and the it operates and actively
Group's results of cooperates with the
operations and financial government of Trinidad
condition are affected and Tobago on strategies
by policy, taxation that might impact
and other political the Company.
or economic developments
in or affecting Trinidad
and Tobago. Approvals
for Range's projects
may be delayed or
denied, or costs
associated with the
projects may impact
their economic viability.
------------------------------------------ ---------------------------- ------------------------------
Litigation risks The nature of Range's Range and its legal
business means that advisers actively
it is likely to be monitor and manage
involved in litigation potential and actual
or regulatory actions claims, actions and
arising from a wide disputes.
range of matters,
as well as investigations,
inquiries or disputes,
debt recoveries,
commercial and contractual
disputes, environmental
claims, occupational
health and safety
claims etc.
Any of these claims
or actions could
result in delays,
increase costs or
otherwise adversely
impact Range's operations,
and adversely impact
on financial performance
and future financial
prospects of the
Group.
------------------------------------------ ---------------------------- ------------------------------
RESERVES & RESOURCES STATEMENT
For the year ended 30 June 2016
Reserves attributable to Trinidad assets (net to Range)
MMBOE Developed Undeveloped Total
---------------------- ---------- ------------ ------
Proved reserves (1P) 0.5 16.8 17.3
---------------------- ---------- ------------ ------
Proved plus probable
reserves (2P) - 7.1 24.4
---------------------- ---------- ------------ ------
Proved plus probable
plus possible (3P) - 12.5 36.9
---------------------- ---------- ------------ ------
Resources attributable to Trinidad assets (net to Range)
MMBOE Total
----------------------- ------
Contingent resources
(2C) 3.1
----------------------- ------
Prospective resources 14.8
----------------------- ------
Reserves and resources movement
MMBOE 30 June Revisions 30 June %Change
2015 and production 2016
(FY16)
-------------- -------- ---------------- -------- --------
1P reserves 19.4 (2.1) 17.3 (11%)
-------------- -------- ---------------- -------- --------
2P reserves 22.0 2.4 24.4 11%
-------------- -------- ---------------- -------- --------
3P reserves 27.6 9.3 36.9 34%
-------------- -------- ---------------- -------- --------
2C resources 3.2 (0.1) 3.1 (3%)
-------------- -------- ---------------- -------- --------
Prospective
resources 91.3 (76.5) 14.8 (84%)
-------------- -------- ---------------- -------- --------
Notes to the statement
1. During the financial period, Range engaged independent
petroleum consultants, Rockflow Resources Limited, to prepare an
updated reserve report for Range's Trinidad assets for the period
ended 30 June 2016.
2. Range estimates and reports its petroleum reserves and
resources in accordance with the definitions and guidelines of the
SPE Petroleum Resources Management System (SPE-PRMS).
3. The reserve and resource estimates were calculated using
probabilistic method.
4. All estimates of petroleum reserves reported by Range are
reviewed by a qualified petroleum reserves and resources
evaluator.
5. Range reviews and updates its oil and gas reserves position
on an annual basis and reports the updated estimates as of 30 June
each year. Separately, Range reviews and updates its oil and gas
reserves position as frequently as required by the magnitude of the
petroleum reserves and changes indicated by new data.
6. Range's Morne Diablo and South Quarry fields are operated
under farm-out agreements, with rights to production net of
Trinidad government royalties, overriding royalties, and production
taxes.
7. Range's Beach Marcelle field is operated under the terms of
an Incremental Production Service Contract, entitling Range to a
defined portion of the future revenue stream. No oil and gas
reserves are owned by Range.
8. The reserve figures (1P, 2P and 3P) include reserves
associated with the Company's Morne Diablo, South Quarry and Beach
Marcelle licences in Trinidad. The change in reserves from the
previously reported figures is due to the adoption of a different
calculation approach, using a wider range of in-place volumes, and
recovery estimates from waterflooding for the Beach Marcelle
licence.
9. The Central block and the deeper sands of the North East
block of the Beach Marcelle waterflood project were considered
uneconomic at current oil prices and will require further studies.
These have been classified as contingent resources.
10. The reported prospective resources relate solely to the
Guayaguayare licence.
11. The St Mary's exploration licence was not included in any of
the estimates, as further technical studies had not been finalised
at the time of the audit.
Qualified Petroleum Reserves and Resources evaluator
This report contains information on petroleum reserves which is
based on and fairly represents information and supporting
documentation reviewed by Dr Douglas Field. Dr Field is a petroleum
and reservoir engineer who is a suitably qualified person with over
30 years' experience in assessing hydrocarbon reserves, and holds a
PhD in Organic Chemistry. Dr Field is a member of the SPE (Society
of Petroleum Engineers) and the PESGB (Petroleum Exploration
Society of Great Britain). Dr Field holds a role of an Engineering
Consultant with the Company.
Glossary - SPE Definitions
MMBOE stands for Million Barrels of Oil Equivalent.
Proved Reserves are those quantities of petroleum, which by
analysis of geoscience and engineering data, can be estimated with
reasonable certainty to be commercially recoverable, from a given
date forward, from known reservoirs and under defined economic
conditions, operating methods, and government regulations. Probable
Reserves are those additional Reserves which analysis of geoscience
and engineering data indicate are less likely to be recovered than
Proved Reserves but more certain to be recovered than Possible
Reserves. 1P refers to Proved Reserves, 2P refers to Proved plus
Probable Reserves, 3P refers to Proved, plus Probable, plus
Possible Reserves.
Contingent Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations by application of development projects, but
which are not currently considered to be commercially recoverable
due to one or more contingencies. Contingent Resources may include,
for example, projects for which there are currently no viable
markets, or where commercial recovery is dependent on technology
under development, or where evaluation of the accumulation is
insufficient to clearly assess commerciality. Contingent Resources
are further categorized in accordance with the level of certainty
associated with the estimates and may be sub-classified based on
project maturity and/or characterised by their economic status.
Prospective resources are defined as those quantities of
petroleum estimated, as of a given date, to be potentially
recoverable from undiscovered accumulations by application of
future development projects. Prospective resources have both an
associated chance of discovery and a chance of development.
Prospective resources are further subdivided in accordance with the
level of certainty associated with recoverable estimates assuming
their discovery and development and may be sub-classified based on
project maturity. Further exploration appraisal and evaluation is
required to determine the existence of a significant quantity of
potentially moveable hydrocarbons.
DIRECTORS' REPORT (continued)
INFORMATION ON DIRECTORS
Mr Zhiwei Gu Non-Executive Chairman
(appointed 25 May 2016)
Non-Executive Director
Qualifications LL.B, LL.M., MSc
Experience Mr Gu, is an experienced
corporate lawyer, who
has worked with numerous
companies seeking listing
approval on various
stock markets including
Chinese A share, NASDAQ,
TSX and HKSE. He is
currently a partner
of Dentons, which is
one of the largest global
law firms. Mr Gu has
participated in several
Venture Capital and
Private Equity investment
cases by various funds,
such as London Asia
Fund, Warburg Pincus,
Korea Development Bank,
China Venture Investment
Co, and China Cinda
AMC. During his time
with China National
Gold Group Corp., Mr
Gu was in charge of
mineral resource M&A
activities. Mr Gu holds
a LL.B. from the Jilin
University in China;
a LL.M. from the Northeast
University in China;
and a Master of Applied
Finance from the Macquarie
University in Australia.
Mr Gu is a qualified
lawyer and securities
practitioner in China.
Interest in shares and 2,083,333 ordinary shares
options 7,500,000 unlisted options
(GBP0.01, 30 March 2020)
Directorships held in None
other listed entities
during the past three
years
Mr Yan Liu Executive Director (resigned
31 January 2016, re-appointed
25 May 2016)
Non-Executive Director
(appointed 31 January
2016, resigned 25 May
2016)
Qualifications B.Ec, MCom
Experience Mr Liu, has over 19
years of accounting
and corporate advisory
experience in China
and Australia. Mr Liu
was the Chief Financial
Officer with AIM listed
China Rerun Chemical
Group Limited, a China-based
lubricant oil company
and a partner of Agile
Partners, the financial
advisory company based
in China. Previously,
Mr Liu was the Financial
Controller at Legalwise
Seminars Pty in Australia
and he spent 8 years
at Chinatex Corporation
where he worked in project
management positions.
Mr Liu holds a Bachelor
degree in Economics
from Central University
of Finance and Economics,
China, and a Master
degree in Commerce from
the University of New
South Wales, Australia.
Interest in shares and 6,333,333 ordinary shares
options 10,000,000 unlisted
options (GBP0.01, 30
March 2020)
Directorships held in None
other listed entities
during the past three
years
Mr David Yu Chen Non-Executive Director
(appointed 25 May 2016)
Non-Executive Chairman
(resigned 25 May 2016)
Qualifications B.Ec.
Experience Mr Chen has over 18
years of corporate experience,
having served as Chief
Executive and Board
member for companies
listed on US and Hong
Kong stock markets.
He founded Huashan Capital
in 2009 to invest in
the resources sector.
His investment experience
includes the establishment
of a US-listed special
purpose acquisition
fund and venture capital
investments in China.
Mr Chen is currently
the Vice Chairman and
President of Hengxing
Gold, a Hong Kong Stock
Exchange listed gold
mining company. Mr Chen
has served as a director
of several technology
companies in China,
including Payeco, a
leading mobile payment
service provider; Cardvalue,
a data driven online
small business loan
provider; and Freshfresh
eCommerce, an online
fresh produce retailer.
Interest in shares and 18,288,070 ordinary
options shares
42,742,654 unlisted
options (GBP0.01, 14
July 2018)
30,000,000 unlisted
options (GBP0.01, 30
March 2020)
Directorships held in Hengxing Gold Holding
other listed entities Company Limited (from
during the past three March 2013)
years Zhonglu Company Limited
(from May 2009 to November
2014)
Ms Juan Wang Non-Executive Director
Qualifications BA, MBA
Experience Ms Wang is currently
a president of Energy
Prospecting Technology
USA, Inc. and LandOcean
Energy Canada Ltd. where
she is responsible for
overall management work
for the subsidiary companies
of LandOcean Energy
Services Co. Ltd. in
Houston and Calgary.
Prior to the current
position, she was an
investment manager at
Anterra Energy Inc.
responsible for Chinese
investor liaisons. Prior
to joining Anterra,
Ms Wang was manager
of corporate mergers
and acquisitions at
LandOcean Energy Services
Co. Ltd. Ms Wang has
a commercial banking
background, having previously
worked for Deutsche
Bank and Bank of East
Asia.
Interest in shares and 2,083,333 ordinary shares
options 7,500,000 unlisted options
(GBP0.01, 30 March 2020)
Directorships held in Anterra Energy Inc.
other listed entities (from December 2014
during the past three to June 2016)
years
Mr Yu Wang Non-Executive Director
(appointed 30 September
2015)
Qualifications BSc; MSc
Experience Mr Wang has over five
years of corporate experience
in finance and investments,
focusing on energy and
mineral sectors. He
is currently a senior
investment manager at
Shanghai Anjin Investment
Co., Ltd., responsible
for project investments
and management, both
domestically and overseas.
Previously, he worked
as an investment manager
at Weihai International
Economic & Technical
Cooperative Co., Ltd,
specialising in project
analysis and evaluation
of energy and mineral
projects in Africa,
including oil and gas
projects in the Republic
of the Congo. Prior
to that, Mr Wang was
an investment analyst
at Beijing Golden Valley
Investment Management
Co., Ltd. Mr Wang holds
an MSc in Economics
from the University
of Edinburgh, and a
BSc in Financial Economics
from the University
of Dundee.
Interest in shares and Nil
options
Directorships held in None
other listed entities
during the past three
years
Mr Lubing Liu Non-Executive Director
(appointed 16 June 2016)
Qualifications BSc
Experience Mr Lubing Liu, has over
20 years' extensive
global experience in
petroleum exploration,
development, production,
joint venture operations
and new ventures. He
is currently an independent
consultant to MEO Australia
Limited (an ASX listed
company). Prior to that,
he held various subsurface
leader roles, including
Chief Reservoir Engineer
with MEO Australia Limited,
Vice President of Exploration
and Petroleum Technology
with Sinopec East Puffin
Pty Ltd, and other international
E&P and energy service
companies including
ConocoPhillips, CNOOC,
Woodside, RPS and Senergy.
Mr Liu has an extensive
waterflooding experience
having worked at the
Penglai oilfield in
China, the Chinguetti
oilfield in Mauritania
and Block 95 in Peru.
Mr Liu holds a BSc in
Petroleum Engineering
from the Southwest Petroleum
University, China. He
is a Member of the Society
of Petroleum Engineers.
Interest in shares and Nil
options
Directorships held in None
other listed entities
during the past three
years
Dr Yi Zeng Non-Executive Director
(appointed 16 June 2016)
Qualifications BSc; MSc; PhD
Experience Dr Yi Zeng, has over
30 years of experience
in the oil and gas and
mining industries. Dr
Zeng has held various
technical and research
positions with global
companies, including
BHP Billiton and Santos
Asia Pacific. Dr Yi
Zeng holds a PhD in
Geophysics from the
Victoria University
of Wellington, New Zealand;
MSc in Applied Geophysics;
and BSc in Geophysical
Exploration from the
Chengdu University of
Technology, China.
Interest in shares and Nil
options
Directorships held in None
other listed entities
during the past three
years
INFORMATION ON COMPANY
SECRETARIES
Mr Nick Beattie Joint Company Secretary
Qualifications BA (Hons), FCIBS, AMCT
Experience Mr Nick Beattie has
over twenty years of
experience in finance
working with a range
of international banks.
Most recently he was
a Managing Director
in the BNP Paribas Upstream
Oil and Gas team in
London where he was
responsible for leading
the bank relationships
with UK focused independent
E&P companies. Nick
has approximately ten
years' experience specifically
financing the E&P sector
and whilst at BNP Paribas,
he structured and led
numerous reserve based
loans, development financings
and other debt facilities.
Prior to working with
BNP Paribas, Nick worked
as a Director within
the Oil and Gas finance
team at Fortis Bank
covering Europe, Middle
East and Africa and
in a variety of roles
with National Australia
Bank Group. Nick is
an Associate Member
of the Association of
Corporate Treasurers
and a Fellow of the
Chartered Institute
of Bankers in Scotland.
Interest in shares and 2,916,667 ordinary shares
options 25,000,000 unlisted
options (GBP0.01, 30
March 2020)
Directorships held in None
other listed entities
during the past three
years
Ms Sara Kelly Joint Company Secretary
Qualifications B.Com, LLB
Experience Ms Sara Kelly is an
experienced Company
Secretary and Corporate
Lawyer with over 11
years' experience. Sara
has comprehensive knowledge
of and experience in
administering regulatory
frameworks and processes
in a listed company
environment and practised
as a corporate lawyer
specialising in acquisitions,
takeovers, capital raisings
and listing of companies
on ASX and AIM. Sara
has acted as the company
secretary of a number
of ASX listed companies.
Interest in shares and 1 ordinary share
options
Directorships held in None
other listed entities
during the past three
years
Directorships held in None
other listed entities
during the past three
years
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for
each director of Range Resources Limited.
Remuneration Policy
The remuneration policy of Range Resources Limited has been
designed to align director and executive objectives with
shareholder and business objectives by providing a fixed
remuneration component and offering specific long-term incentives
based on key performance areas affecting the Group's financial
results. The Board of Range Resources Limited believes the
remuneration policy to be appropriate and effective in its ability
to attract and retain the best executives and directors to run and
manage the Group, as well as create alignment of goals between
directors, executives and shareholders.
The Board's policy for determining the nature and amount of
remuneration for Board members and senior executives of the Company
is as follows:
The remuneration policy, setting the terms and conditions for
the executive directors and other senior executives, was developed
and approved by the Board.
Non-executive directors, executive directors and senior
executives receive a base salary (which is based on factors such as
length of service and experience), which is calculated on a total
cost basis and includes any FBT charges related to employee
benefits including motor vehicles, as well as employer
contributions to superannuation funds.
Executive and Non-Executive directors can be employed by the
Company on a consultancy basis, on Board approval, with
remuneration and terms stipulated in individual consultancy
agreements.
The Board exercises its discretion in determining remuneration
performance of executives. Given the size and nature of the entity,
the Board does not deem it to be realistic to measure performance
against defined criteria. As such remuneration and performance have
historically not been linked.
All remuneration paid to directors and executives is valued at
the cost to the Company and expensed. Shares given to directors and
executives are valued as the difference between the market price of
those shares and the amount paid by the director or executive.
Unlisted options are valued using the Black-Scholes
methodology.
The Board policy is to remunerate non-executive directors at
market rates for comparable companies taking into consideration
time, commitment and level of responsibility. As approved by
shareholders in 30 November 2011, the aggregate non-executive
remuneration per annum is currently A$350,000 (US$260,555). The
Remuneration and Nomination Committee determines payments to the
non-executive directors and reviews their remuneration annually.
Independent external advice is sought when required. Fees for
non-executive directors are not linked to the performance of the
Group. The directors are not required to hold any shares in the
Company under the Constitution of the Company; however, to align
Directors' interests with shareholder interests, the directors are
encouraged to hold shares in the Company.
Options may be issued to directors and executives as part of
remuneration. Options issued to directors have historically not
been based on performance criteria. However, the options issued to
the current directors on 27 March 2015 and the Key Management
Personnel on 1 September 2015 principally vest upon satisfaction of
set company performance criteria detailed in Note 31.
Under the Company's share trading policy, all employees and
directors of the Company and its related companies are prohibited
from trading in the Company's shares or other securities if they
are in possession of inside information.
The Board believes that it has implemented suitable practices
and procedures that are appropriate for an organisation of this
size and maturity.
Remuneration Committee
A Remuneration Committee was established during the year ended
30 June 2015. One meeting was held during the current year to
undertake annual review of performance remuneration for senior
executives and directors.
Company Performance, Shareholder Wealth and Directors and
Executives Remuneration
No relationship exists between shareholder wealth, director and
executive remuneration and Company performance.
Use of remuneration consultants
During the year ended 30 June 2015, the Group contracted the
service of a remuneration consultant, The Curzon partnership, to
provide market comparison for executive and non-executive
remuneration. The fee for this service was GBGBP480 (US$755). No
such services were contracted in the year ended 30 June 2016.
Voting and comments made at the company's 2015 Annual General
Meeting
Range Resources Limited received 99% of "yes" votes on its
remuneration report for the 2015 financial year. Range notes this
was a significant improvement on the previous year and reflects the
conservative remuneration practices of the company.
Key Management Personnel
Name Position Held Appointment / Resignation
Date
Mr Zhiwei Non-Executive appointed 25 May
Gu Chairman 2016
Non-Executive
Director
Mr Yan Liu Executive Director resigned 31 January
2016
re-appointed 25
May 2016
Non-Executive appointed 31 January
Director 2016
resigned 25 May
2016
Mr David Yu Non-Executive appointed 25 May
Chen Director 2016
Non-Executive resigned 25 May
Chairman 2016
Ms Juan Wang Non-Executive
Director
Mr Yu Wang Non-Executive appointed 30 September
Director 2015
Mr Lubing Non-Executive appointed 16 June
Liu Director 2016
Dr Yi Zeng Non-Executive appointed 16 June
Director 2016
Officers
Mr Nick Beattie CFO & Company appointed 23 May
Secretary 2014 (as CFO) and
30 March 2015 (as
Company Secretary)
Ms Sara Kelly Company Secretary resigned 21 Jul
2014, re-appointed
7 January 2015
Details of Remuneration
The remuneration for the Key Management Personnel of the Group
during the year was as follows:
Short-term benefits Post-employment Share-based
benefits payments
------------- --------------------------------- ----------------- ------------ --------
2016 Cash One-off Termination Super-annuation/ Options Total
salary payment benefits pensions
and
fees
------------- -------- --------- ------------ ----------------- ------------ --------
US$ US$ US$ US$ US$ US$
Directors
& officers
Mr Gu 53,065 - - - 38,317 91,382
Mr Y Liu 113,605 - - 3,052 50,120 166,777
Mr Chen 141,437 - - - 67,058 208,495
Ms Wang 30,000 - - - 16,764 46,764
Mr Wang - - - - - -
Mr L Liu 10,375 - - - - 10,375
Dr Zeng 1,042 - - - - 1,042
Mr Beattie 211,943 15,700 - 21,194 62,165 311,002
561,467 15,700 - 24,246 234,424 835,837
-------- --------- ------------ ----------------- ------------ --------
Short-term benefits Post-employment Share-based
benefits payments
------------------ --------------------------------- ----------------- ------------ ----------
2015 Cash Cash Termination Super-annuation/ Options Total
salary bonus benefits pensions
and fees
------------------ ---------- ------- ------------ ----------------- ------------ ----------
US$ US$ US$ US$ US$ US$
Directors
& officers
Sir Sam
Jonah 37,609 - - - - 37,609
Mr Scott
Russell 103,137 - 150,253 - - 253,390
Mr Beattie 228,342 - - 28,152 - 256,494
Mr Edwards-Jones 37,609 - - - - 37,609
Mr Macliver 5,584 - - - - 5,584
Mr Lyon
(i) 50,093 - - - - 50,093
Dr Bukovics 37,889 - - - - 37,889
Mr Riekie
(ii) 45,836 - - - - 45,836
Mr Olson 21,265 - - - - 21,265
Mr Chen 88,710 - - - 34,186 122,896
Mr Liu 86,418 - - - 34,186 120,604
Ms Wang 19,152 - - - 8,546 27,698
Mr Gu 16,694 - - - 8,546 25,240
---------- ------- ------------ ----------------- ------------ ----------
778,338 - 150,253 28,152 85,464 1,042,207
---------- ------- ------------ ----------------- ------------ ----------
(i) Fees paid to Mr Lyon comprised US$37,299 received in his
capacity as a non-executive director and US$12,794 received for
additional consulting work.
(ii) Fees paid to Mr Rieke comprised US$31,416 received in his
capacity as a non-executive director and US$14,420 received for
additional consulting work.
Equity instrument disclosures relating to Key Management
Personnel
Year ended 30 June 2016
i. Share-based payments
The following options were issued to key management
personnel:
Name Number of options Grant date
Mr Nick Beattie 25,000,000 1 September
2015
Mr Yan Liu 20,000,000 25 May 2016
(i)
Mr Kerry Gu 22,500,000 25 May 2016
(i)
(i) Options to be granted on gaining shareholder approval
The options expire on 30 March 2020 with an exercise price of
GBP0.01 per share.
The vesting conditions of these options are as follows:
a) 25% became exercisable on 31 March 2016
b) 25% will become exercisable upon the Company reaching
production of 1,500 barrels of oil per day for a continuous 15 day
period in Trinidad
c) 25% will become exercisable upon the Company reaching
production of 2,500 barrels of oil per day for a continuous 15 day
period in Trinidad
d) 25% will become exercisable upon the Company reaching
production of 4,000 barrels of oil per day for a continuous 15 day
period in Trinidad
Mr Nick Beattie options:
The value per option at the grant date was 0.56 cents,
determined using the Black Scholes option price model using the
following key inputs:
Volatility: 100% Probability of meeting vesting conditions:
100%
Risk free rate: 1.92% Exercise price: GBP0.01
USD/GBP exchange rate: 0.6509 Share price on grant date GBP0.0057
Mr Kerry Gu and Mr Yan Liu options:
The value per option at the grant date was 0.30 cents,
determined using the Black Scholes option price model using the
following key inputs:
Volatility: 100% Probability of meeting vesting conditions:
100%
Risk free rate: 1.92% Exercise price: GBP0.01
USD/GBP exchange rate: 0.7468 Share price on grant date GBP0.0037
Year ended 30 June 2015
On 27 March 2015, the following options were issued to key
management personnel:
Name Number of options
Mr Yan Liu 30,000,000
Mr David Chen 30,000,000
Mr Zhiwei Gu 7,500,000
Ms Juan Wang 7,500,000
All options expire on 30 March 2020 with an exercise price of
GBP0.01 per share.
The vesting conditions of these options are as follows:
a) 25% will become exercisable on the date that is one year from the issue date
b) 25% will become exercisable upon the Company reaching
production of 1,500 barrels of oil per day for a continuous 15 day
period in Trinidad
c) 25% will become exercisable upon the Company reaching
production of 2,500 barrels of oil per day for a continuous 15 day
period in Trinidad
d) 25% will become exercisable upon the Company reaching
production of 4,000 barrels of oil per day for a continuous 15 day
period in Trinidad
The value per option at the grant date was 0.51 cents,
determined using the Black Scholes option price model using the
following key inputs:
Volatility: 100% Grant date: 27 March 2015
Risk free rate: 1.92% Exercise price: GBP0.01
USD/GBP exchange rate: 0.7752 Share price on grant date GBP0.054
ii. Shares provided on exercise of remuneration options
No options issued in prior years affects remuneration in the
current or future financial years.
iii. Fully paid share holdings
The numbers of shares in the company held during the financial
year or at time of resignation by Key Management Personnel of the
Company, including their personally related parties, are set out
below.
2016 Balance Granted Other Balance Balance
at the as compensation changes at the held
start end of indirectly
of the the year
year
Mr Gu - - 2,083,333 2,083,333 -
Mr Chen 10,288,070 - 8,000,000 18,288,070 -
Mr Y Liu - - 6,333,333 6,333,333 -
Ms Wang - - 2,083,333 2,083,333 -
Mr Wang - - - - -
Mr L Liu - - - - -
Dr Zeng - - - - -
Mr Beattie - - 2,916,667 2,916,667 -
----------- ----------------- ----------- ----------- ------------
Total 10,288,070 - 21,416,666 31,704,736 -
----------- ----------------- ----------- ----------- ------------
iv. Options held by key management personnel
The numbers of options in the company held during the financial
year or at time of resignation by Key Management Personnel of the
Company, including their personally related parties, are set out
below:
2016 Balance Granted Other Balance Vested
at the as compensation changes at the and exercisable
start end of
of the the year
year
Mr Gu
(ii) 7,500,000 22,500,000 - 30,000,000 7,500,000
Mr Y Liu
(i)(ii) 30,000,000 20,000,000 (20,000,000) 30,000,000 7,500,000
Mr Chen 72,742,654 - - 72,742,654 50,242,654
Ms Wang 7,500,000 - - 7,500,000 1,875,000
Mr Wang - - - - -
Mr L Liu - - - - -
Dr Zeng - - - - -
Mr Beattie - 25,000,000 - 25,000,000 6,250,000
Mr L Liu - - - - -
Mr Zeng - - - - -
------------ ----------------- ------------- ------------ -----------------
Total 117,742,654 67,500,000 (20,000,000) 165,242,654 73,367,654
------------ ----------------- ------------- ------------ -----------------
(i) During the year 20,000,000 options were cancelled following
Yan Liu's change in position from executive to non-executive
director. An amount of US$22,791 was reversed in the current
year.
(ii) Options to be granted on gaining shareholder approval
Loans to Key Management Personnel
There were no loans made to directors of Range Resources Limited
and other Key Management Personnel of the Group, including their
personally related parties during the 2015 or 2016 financial
years.
Transactions with Key Management Personnel
The following transactions occurred during the year with Key
Management Personnel or their related parties:
Balances at year end due to Key and Former
Key Management Personnel
US$
David Chen and related entities 12,267
Lubing Liu and related entities 10,375
Dr Zeng 1,042
Kiki Wang and related entities 2,500
Kerry Gu and related entities 20,833
Sir Sam Jonah (i) 152,943
Soncer Limited (i) 1,519
(i) These were related parties throughout the prior financial year until 28 November 2014.
Employment contracts of Directors and other Key Management
Personnel
On appointment, Executive Directors and Other Key Management
Personnel enter into an employment contract with the Company (or
another company within the Group). This contract sets out their
duties, remuneration and other terms of employment. These contracts
may be terminated by either the Company or the employee as detailed
below.
All non-executive directors are eligible to receive consulting
fees for services provided to the Company over and above the
services expected from a non-executive director.
Mr Zhiwei Gu as Non-Executive Chairman (appointed as
Non-Executive Chairman on 25 May 2016)
Non-Executive Chairman contract
Contract start date -25 May 2016
Total compensation including executive services - US$250,000 per
annum
Superannuation - no superannuation entitlement
Notice period - 3 months
Termination benefits - payment in lieu of notice at Company
option for termination without cause
Non-executive Director contract
Contract start date -19 January 2015
Base payment - US$30,000 per annum
Superannuation - no superannuation entitlement
Termination benefits - none
Mr Yan Liu as Chief Executive Officer and Executive Director
(resigned as CEO and Executive Director on 31 January 2016,
re-appointed as CEO and Executive Director on 25 May 2016)
Contract start date -25 May 2016
Base payment - AU$215,000 per annum
Superannuation - 10% of base salary
Notice period - 3 months
Termination benefits - payment in lieu of notice at Company
option for termination without cause
Non-Executive Director contract
Contract start date -31 January 2016
Base payment - US$30,000 per annum
Superannuation - no superannuation entitlement
Notice period - none
Termination benefits - none
Prior Executive Director contract
Contract start date -11 December 2014
Base payment - US$155,000 per annum
Superannuation - no superannuation entitlement
Notice period - 3 months
Termination benefits - payment in lieu of notice at Company
option for termination without cause
Mr David Chen as Non-Executive Director (resigned as
Non-Executive chairman on 25 May 2016)
Non-Executive Director contract
Contract start date -25 May 2016
Base payment - US$30,000 per annum
Superannuation - no superannuation entitlement
Notice period - none
Termination benefits - none
Non- Executive Chairman contract
Contract start date -11 December 2014
Total compensation including executive services - US$155,000 per
annum
Superannuation - no superannuation entitlement
Notice period - 3 months
Termination benefits - payment in lieu of notice at Company
option for termination without cause
Ms Juan Wang as Non-Executive Director
Contract start date -19 January 2015
Base payment - US$30,000 per annum
Superannuation - no superannuation entitlement
Termination benefits - none
Mr Yu Wang as Non-Executive Director (appointed 30 September
2015)
No remuneration received
Mr Lubing Liu as Non-Executive Director (appointed 16 June
2016)
Contract start date -16 June 2016
Base payment - US$25,000 per annum
Superannuation - no superannuation entitlement
Termination benefits - none
Consulting services - Mr Liu may provide additional consulting
services over and above services rendered to the Company as a
Non-Executive Director from time to time as required at a rate of
between US$600 and $1,200 per day.
Dr Yi Zeng as Non-Executive Director (appointed 16 June
2016)
Contract start date -16 June 2016
Base payment - US$25,000 per annum
Superannuation - no superannuation entitlement
Termination benefits - none
Mr Nick Beattie as Chief Financial Officer
Contract start date - 23 May 2014
Base payment - GBGBP135,000 per annum, reviewed annually
Pension - 10% of base
Bonus - Eligible to receive bonus at the discretion of the
board
Notice period - 3-6 months
Termination benefits - 6 months' salary
End of Audited Remuneration Report
MEETINGS OF DIRECTORS
During the financial year 5 meetings of the board of directors
were held. Attendances by each director during the year were as
follows:
Board meetings
Director Eligible Attended
to attend
Zhiwei Gu 5 5
Yan Liu 5 5
David Chen 5 5
Juan Wang 5 4
Yu Wang (appointed 30
September 2015) 4 4
Lubing Liu (appointed - -
16 June 2016)
Yi Zeng (appointed 16 - -
June 2016)
INDEMNIFYING OFFICERS OR AUDITOR
In accordance with the constitution, except where prohibited by
the Corporations Act 2001, every director, principal executive
officer and secretary of the Company shall be indemnified out of
the property of the Company against any liability incurred by
him/her in his/her capacity as director, principal executive
officer or secretary of the Company or any related corporation in
respect of any act or omission whatsoever and howsoever occurring
or in defending any proceedings whether civil or criminal.
During the financial year, the Company has paid premiums to
insure the Directors and Officers against certain liabilities
arising out of the conduct of acting as an officer of the Company.
Under the terms and conditions of the insurance contract, the
nature of liabilities insured against and the premium paid cannot
be disclosed.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on
behalf of the Company or to intervene in any proceedings to which
the Company is a party for the purpose of taking responsibility on
behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the
year.
OPTIONS
As at 30 June 2016, the unissued ordinary shares of Range
Resources Limited under option are as follows:
Date of expiry Exercise price Number under
option
11 July 2016 GBP0.037 5,000,000
25 July 2016 GBP0.021 476,190
29 July 2016 GBP0.021 952,381
31 August 2016 GBP0.021 6,714,284
31 August 2016 GBP0.020 9,000,000
30 September 2016 GBP0.019 3,947,368
30 September 2016 GBP0.018 8,666,670
31 October 2016 GBP0.018 694,445
31 October 2016 GBP0.017 2,205,885
31 October 2016 GBP0.016 1,250,000
31 October 2016 GBP0.015 17,333,336
30 November 2016 GBP0.015 3,000,001
30 November 2016 GBP0.013 5,153,846
11 December 2016 A$0.0321 2,000,000
31 December 2016 GBP0.012 2,000,000
31 December 2016 GBP0.011 5,000,000
31 January 2017 GBP0.075 5,180,000
31 January 2017 GBP0.011 23,636,364
9 September 2017 GBP0.03 7,500,000
15 October 2017 GBP0.01203 31,000,000
31 January 2018 A$0.05 1,000,000
14 July 2018 GBP0.01 161,472,247
14 July 2018 GBP0.02 118,729,593
31 August 2018 GBP0.01 14,000,000
3 September 2019 GBP0.01 194,585,862
3 September 2019 GBP0.02 172,557,274
30 March 2020 GBP0.01 80,000,000
Total 883,055,746
During the year ended 30 June 2016 no ordinary shares of Range
Resources Limited were issued on the exercise of options (2015:
49,051,468).
The holders of these options do not have any rights under the
options to participate in any share issues of the Company.
NON-AUDIT SERVICES
The total value of non-audit services provided by a related
practice of BDO Audit (WA) Pty Ltd in respect to the Company's tax
compliance is US$34,149 (2015: US$72,570).
The board of directors has considered the position and is
satisfied that the provision of the non-audit services is
compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors are satisfied
that the provision of non-audit services by the auditor did not
compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
-- all non-audit services have been reviewed by the Board to
ensure they do not impact the impartiality and objectivity of the
auditor; and
-- none of the services undermine the general principles
relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants.
AUDITOR'S INDEPENCE DECLARATION
The auditor's independence declaration, as required under
Section 307C of the Corporations Act 2001, for the year ended 30
June 2016 has been received and can be found on the following
page.
Signed in accordance with a resolution of the Board of
Directors.
Zhiwei Gu
Chairman
30 September 2016
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2016
Note Consolidated
2016 2015
US$ US$
Revenue from continuing
operations 3 7,062,226 13,152,954
Operating expenses (7,266,830) (6,440,734)
Royalties (2,104,894) (4,654,241)
Depreciation, depletion
and amortisation (5,490,676) (4,917,053)
------------- -------------
Cost of sales 4a (14,862,400) (16,012,028)
------------- -------------
Gross loss (7,800,174) (2,859,074)
Other income and expenses
from continuing operations
Other income 3 51,193 428,588
Finance costs 4b (934,321) (4,347,575)
General and administration
expenses 4b (3,400,038) (9,948,494)
Assets written-off 4c (1,000,761) (692,929)
Exploration expenditure
and land fees 4d (4,261,435) (2,202,748)
Impairment of non-current
assets 16,19 (20,564,829) -
Loss on disposal of subsidiary 4e - (1,491,857)
Loss before income tax expense
from continuing operations (37,910,365) (21,114,089)
Income tax expense 6 (1,084,520) (1,467,806)
------------- -------------
Loss after income tax from
continuing operations (38,994,885) (22,581,895)
Loss from discontinued operations,
net of tax 5a (4,880,000) (7,697,159)
------------- -------------
Loss for the year attributable
to equity holders of Range
Resources Limited (43,874,885) (30,279,054)
Other comprehensive income
Items that may be reclassified
to profit or loss
Exchange differences on
translation of foreign operations 26c 160,799 455,307
------------- -------------
Other comprehensive income
for the year, net of tax 160,799 455,307
------------- -------------
Total comprehensive loss
attributable to equity holders
of Range Resources Limited (43,714,086) (29,823,747)
============= =============
Loss per share from continuing operations attributable to the ordinary equity
holders of the Company:
Basic loss per share (cents
per share) 8a (0.54) (0.44)
Diluted loss per share (cents 8b
per share) n/a n/a
Loss per share attributable to the ordinary equity holders of the Company:
Basic loss per share (cents
per share) 8a (0.60) (0.59)
Diluted loss per share (cents 8b
per share) n/a n/a
The above consolidated statement of profit or loss and other
comprehensive income should be read in conjunction with the
accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
Note Consolidated
2016 2015
US$ US$
Assets
Current assets
Cash and cash equivalents 9 13,001,252 10,530,104
Restricted deposits 10 8,000,000 -
Trade and other receivables 11 4,620,266 5,148,978
Other current assets 12 178,158 783,385
-------------- --------------
25,799,676 16,462,467
Assets classified as
held for sale 13 1,250,000 6,000,000
--------------
Total current assets 27,049,676 22,462,467
--------------
Non-current assets
Deferred tax asset 6 3,959,803 286,693
Available for sale financial
assets 14 45,238 446,000
Goodwill 16 28,985,014 46,198,974
Property, plant and
equipment 17 2,329,228 1,502,442
Exploration & evaluation
expenditure 18 645,801 668,951
Producing assets 19 95,077,882 90,350,492
Total non-current assets 131,042,966 139,453,552
-------------- --------------
Total assets 158,092,642 161,916,019
-------------- --------------
Current liabilities
Trade and other payables 20 12,244,873 13,654,195
Current tax liabilities 286,723 296,894
Borrowings 21a - 7,518,077
Option liability 21b 835,714 808,083
Provisions 22 740,268 734,858
-------------- --------------
Total current liabilities 14,107,578 23,012,107
-------------- --------------
Non-current liabilities
Trade and other payables 20 23,764,005 -
Deferred tax liabilities 23 47,561,612 43,359,199
Employee service benefits 24 422,315 521,257
Total non-current liabilities 71,747,932 43,880,456
-------------- --------------
Total liabilities 85,855,510 66,892,563
-------------- --------------
Net assets 72,237,132 95,023,456
============== ==============
Equity
Contributed equity 25 383,882,192 363,205,277
Reserves 26 24,227,125 29,748,880
Accumulated losses (335,872,185) (297,930,701)
-------------- --------------
Total equity 72,237,132 95,023,456
============== ==============
The above consolidated statement of financial position should be
read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2016
Consolidated Foreign
currency Share-based Option
Contributed Accumulated translation payment premium Total
Note equity losses reserve reserve reserve equity
US$ US$ US$ US$ US$ US$
------------ -------------- ------------- ------------ ----------- -------------
Balance at 1
July 2014 352,599,569 (271,166,312) 3,004,632 14,226,861 10,630,513 109,295,263
Other comprehensive
income - - 455,307 - - 455,307
Loss attributable
to members of
the company - (30,279,054) - - - (30,279,054)
------------ -------------- ------------- ------------ ----------- -------------
Total comprehensive
loss for the
year - (30,279,054) 455,307 - - (29,823,747)
Transactions
with owners in
their capacity
as owners:
Issue of share
capital 25 11,044,172 - - - - 11,044,172
Exercise of options 26 923,880 - - - 1,426,850 2,350,730
Cancellation
of partly paid
shares 26 (1,362,344) 1,362,344 - - - -
Expired options
- Reclassified - 2,152,321 - (2,152,321) - -
Cost of share-based
payments - - - 2,157,038 - 2,157,038
------------ -------------- ------------- ------------ ----------- -------------
Balance at 30
June 2015 363,205,277 (297,930,701) 3,459,939 14,231,578 12,057,363 95,023,456
============ ============== ============= ============ =========== =============
US$ US$ US$ US$ US$ US$
------------ -------------- ---------- ------------ ----------- -------------
Balance at 1
July 2015 363,205,277 (297,930,701) 3,459,939 14,231,578 12,057,363 95,023,456
Other comprehensive
income - 160,799 - - 160,799
Loss attributable
to members of
the company - (43,874,885) - - - (43,874,885)
------------ -------------- ---------- ------------ ----------- -------------
Total comprehensive
loss for the
year - (43,874,885) 160,799 - - (43,714,086)
Transactions
with owners in
their capacity
as owners:
Issue of share
capital 25 20,676,915 - - - - 20,676,915
Expired options
- Reclassified - 5,933,401 - (5,933,401) - -
Cost of share-based
payments - 250,847 - 250,847
Balance at 30
June 2016 383,882,192 (335,872,185) 3,620,738 8,549,024 12,057,363 72,237,132
============ ============== ========== ============ =========== =============
The above consolidated statement of changes in equity should be
read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR YEARED
30 JUNE 2016
Note Consolidated
2016 2015
US$ US$
Cash flows from operating
activities
Receipts from customers 7,171,488 13,313,284
Payments to suppliers and
employees (10,790,650) (19,472,258)
Payments for exploration
and evaluation expenditure - (392,219)
Income taxes paid (32,940) (208,536)
Interest received 45,210 3,390
Interest & other finance
costs (449,143) (198,925)
Payments relating to held
for sale asset (130,000) -
Net cash outflow from operating
activities 30 (4,186,035) (6,955,264)
------------- -------------
Cash flows from investing
activities
Payment for property, plant
& equipment (140,474) (1,576,298)
Proceeds from sale of available
for sale financial assets - 450,643
Payment for producing assets (260,888) (3,992,670)
Payments for exploration
and evaluation assets - (145,346)
Proceeds from disposal of
property, plant and equipment 11,799 -
Proceeds from sale of assets
held-for-sale - 5,202,379
Transfer to restricted deposit (8,000,000) -
Receipts from loan repayments/(Loans
to external parties) - 500,000
Net cash (outflow)/inflow
from investing activities (8,389,563) 438,708
------------- -------------
Cash flows from financing
activities
Proceeds from issue of equity
(net of capital raising costs) 22,338,344 8,890,800
Proceeds from borrowings - 5,250,000
Repayment of borrowings (7,225,997) -
Net cash inflow from financing
activities 15,112,347 14,140,800
------------- -------------
Net increase in cash and
cash equivalents 2,536,749 7,624,244
Net foreign exchange differences (65,601) (71,550)
Cash and cash equivalents
at beginning of financial
year 10,530,104 2,977,410
Cash and cash equivalents
at end of financial year 9 13,001,252 10,530,104
============= =============
The above consolidated statement of cash flows should be read in
conjunction with the accompanying notes.
Note 1: Significant accounting policies
These financial statements are general purpose financial
statements that have been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations, other
authoritative pronouncements of the Australian Accounting Standards
Board and the Corporations Act 2001. Range Resources Limited is a
for-profit entity for the purpose of preparing the financial
statements.
The financial statements cover the Group consisting of Range
Resources Limited and its controlled entities. Financial
information for Range Resources Limited as an individual entity is
disclosed in Note 33. Range Resources Limited is a listed public
company, incorporated and domiciled in Australia.
The following is a summary of the material accounting policies
adopted by the Group in the preparation of the financial
statements. The accounting policies have been consistently applied,
unless otherwise stated.
Basis of preparation
Reporting basis and conventions
The financial statements have been prepared on an accruals basis
and are based on historical costs modified by the revaluation of
selected non-current assets, and financial assets and financial
liabilities for which the fair value basis of accounting has been
applied.
Compliance with IFRS
The financial statements of Range Resources Limited also comply
with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB). The
financial statements were approved by the Board of Directors on 29
September 2015.
Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the "Functional
Currency"). The consolidated financial statements are presented in
United States Dollars (USD), which is Range Resources Limited's
functional and presentation currency.
Going concern
The Directors have prepared the financial statements on the
going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and discharge of
liabilities in the normal course of business.
As disclosed in the financial statements, the Group incurred
losses of US$43.9m for the year ending 30 June 2016 which includes
significant non-cash items of U$32.0m. The Group also had net cash
outflows from operating activities for the year totalling US$4.2m.
Range considers that with anticipated production growth from its
waterflood programme, this cash outflow will be eliminated in the
2017 financial year.
At the reporting date, Range had US$13.0m of unrestricted cash
at bank. Range has net current liabilities (excluding cash,
restricted deposits, option liability and provisions) of US$6.5m.
This cash, net revenue from production, and extended credit terms
of 720 days provided by LandOcean for all oil field work undertaken
in Trinidad is more than sufficient to cover the Group's cash
requirements for the 12 months from date of sign off including any
net current liabilities due.
The Company will seek to rationalise the portfolio of non-core
assets and redeploy capital to maximise current production from its
assets in Trinidad and pursue growth opportunities that enhance
cash generation and returns to shareholders.
Adoption of new and revised accounting standards
In the year ended 30 June 2016, the directors have reviewed all
of the new and revised Standards and Interpretations issued by the
AASB that are relevant to the Company and effective for the current
annual reporting period.
As a result of this review, the directors have determined that
there is no material impact of the new and revised Standards and
Interpretations on the Company and, therefore, no material change
is necessary to Group accounting policies.
(a) Principles of consolidation
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of Range Resources Limited ("Parent
Entity" or "Company") as at 30 June 2016 and the results of all
subsidiaries for the year then ended. Range Resources Limited and
its subsidiaries together are referred to as the "Group".
Subsidiaries are all those entities (including special purpose
entities) over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable
returns from its investment with the entity and has the ability to
affect those returns through its power to direct the activities of
the entity.
Where controlled entities have entered or left the Group during
the year, their operating results have been included/excluded from
the date control was obtained or until the date control ceased. A
list of controlled entities is contained in Note 15 to the
financial statements. All controlled entities have a June financial
year-end.
All inter-company balances and transactions between entities in
the Group, including any unrealised profits or losses, have been
eliminated on consolidation. Accounting policies of subsidiaries
have been changed where necessary to ensure consistencies with
those policies applied by the Company.
Associates are all entities over which the Group has significant
influence but not control or joint control, generally accompanying
a shareholding of between 20-50% of the voting rights. Investments
in associates are accounted for in the consolidated financial
statements using the equity method of accounting, after initially
being recognised at cost.
(b) Income tax
The charge for current income tax expense is based on the profit
for the year adjusted for any non-assessable or disallowed items.
It is calculated using tax rates that have been enacted or are
substantively enacted by the reporting date within each
jurisdiction.
Deferred tax is accounted for using the liability method in
respect of temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial
statements. No deferred income tax will be recognised from the
initial recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or taxable
profit or loss.
Deferred tax is calculated at the tax rates that are expected to
apply to the period when the asset is realised or the liability is
settled. Deferred tax is credited in profit or loss except where it
relates to items that may be credited directly to equity, in which
case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it
is probable that future tax profits will be available against which
deductible temporary differences can be utilised.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and tax bases of
investments in foreign operations where the company is able to
control the timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the
foreseeable future.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same
taxation authority. Current tax assets and liabilities are offset
where the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the asset
and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
The amount of benefits brought to account or which may be
realised in the future is based on the assumption that no adverse
change will occur in income taxation legislation and the
anticipation that the Group will derive sufficient future
assessable income to enable the benefit to be realised and comply
with the conditions of deductibility imposed by the law.
(c) Property, plant and equipment
Owned assets
Plant and equipment are measured on the historical cost basis
less accumulated depreciation and impairment losses.
The cost of fixed assets constructed within the 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 charged to profit
or loss during the financial period in which they are incurred.
Oil and gas assets
These properties represents the accumulation of all exploration,
evaluation and development expenditure, pre-production development
costs and ongoing costs of continuing the develop reserves for
production incurred by or on behalf of the entity in relation to
areas of interests.
Where further development expenditure is incurred in respect of
a property after the commencement of production, such expenditure
is carried forward as part of the cost of that property only when
expected future economic benefits are to be received, otherwise
such expenditure is classified as part of the cost of
production.
Depreciation
The depreciable amount of all fixed assets including capitalised
lease assets is depreciated on a straight-line basis over their
useful lives 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 asset
are:
Class of Fixed Asset Depreciation
Rate
Plant & equipment 11.25% - 33%
Production equipment 10 - 20%
Motor vehicles,
furniture & fixtures 25 - 33%
Leasehold improvements 10 - 12.50%
The asset's residual values and useful lives are reviewed, and
adjusted if appropriate, at each reporting date.
The carrying amount of 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 which 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.
An asset's carrying amount is written down 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 or losses are
included in profit or loss. When revalued assets are sold, amounts
included in the revaluation reserve relating to that asset are
transferred to accumulated losses.
(d) Exploration and evaluation expenditure and the recognition
of assets
Generally, exploration and evaluation expenditure incurred is
accumulated in respect of each identifiable area of interest. These
costs are only carried forward to the extent that they are expected
to be recouped through the successful development of the area or
where activities in the area have not yet reached a stage that
permits reasonable assessment of the existence of economically
recoverable reserves.
Accumulated costs in relation to an abandoned area are written
off in full against profit in the year in which the decision to
abandon the area is made.
A regular review is undertaken of each area of interest to
determine the appropriateness of continuing to carry forward costs
in relation to that area of interest.
The recoverability of the carrying amount of the exploration and
evaluation assets is dependent on the successful development and
commercial exploitation, or alternatively, sale of the respective
areas of interest.
The carrying values of expenditures carried forward are reviewed
for impairment at each reporting date when the facts, events or
changes in circumstances indicate that the carrying value may be
impaired.
Accumulated expenditures are written off to profit or loss to
the extent to which they are considered to be impaired.
Range Resources Limited is applying AASB 6 Exploration for and
Evaluation of Mineral Resources which is equivalent to IFRS 6. The
carrying value of exploration and evaluation expenditure is
historical cost less impairment.
Ongoing exploration costs incurred in respect of the Group's
Trinidadian and Colombian interests are expensed as incurred.
Initial acquisition costs to obtain the right to explore are
capitalised.
(e) Producing assets
Upon the commencement of commercial production from each
identifiable area of interest, the exploration and evaluation
expenditure incurred up to that point is impairment tested and then
reclassified to producing assets.
When production commences, the accumulated costs for the
relevant area of interest are amortised on a units of production
method based on the ratio of actual production to remaining proved
reserves (P1) as estimated by independent petroleum engineers over
the life of the area according to the rate of depletion of the
economically recoverable reserves.
Subsequent costs are included in the asset's carrying amount,
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 charged
to profit or loss during the financial period in which they are
incurred.
The carrying amount of producing assets is reviewed annually by
directors to ensure it is not in excess of the recoverable amount
from these assets. The recoverable amount of an asset is the
greater of its fair value less costs to sell and its value in use.
In assessing value in use, an asset's estimated future cash flows
are discounted to their present value using a post-tax discount
rate that reflects current market assessments of the time value of
money and the risks specific to the asset. Where an asset does not
generate cash flows that are largely independent from other assets
or groups of assets, the recoverable amount is determined for the
cash generating unit to which the asset belongs. For producing
assets, the estimated future cash flows for the value-in-use
calculation are based on estimates, the most significant of which
are 2P hydrocarbon reserves, future production profiles, commodity
prices, operating costs and any future development costs necessary
to produce the reserves. Under a fair value less costs to sell
calculation, future cash flows are based on estimates of 2P
hydrocarbon reserves. Estimates of future commodity prices are
based on the Group's best estimate of future market prices with
reference to external market analysts' forecasts, current spot
prices and forward curves. Future commodity prices are reviewed at
least annually.
An asset's carrying amount is written down 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 or losses are
included in profit or loss. When revalued assets are sold, amounts
included in the revaluation reserve relating to that asset are
transferred to accumulated losses.
The Group records the present value of the estimated cost of
legal and constructive obligations to restore operating locations
in the period in which the obligation arises. The nature of
restoration activities includes the removal of facilities,
abandonment of wells and restoration of affected areas. A
restoration provision is recognised and updated at different stages
of the development and construction of a facility and then reviewed
on an annual basis. When the liability is initially recorded, the
estimated cost is capitalised by increasing the carrying amount of
the related exploration and evaluation/development assets.
Over time, the liability is increased for the change in the
present value based on a post-tax discount rate appropriate to the
risk inherent in the liability. The unwinding of the discount is
recorded as an accretion charge within finance costs. The carrying
amount capitalised in oil and gas properties is depreciated over
the useful life of the related asset.
Costs incurred that relate to an existing condition caused by
past operation and do not have a future economic benefit are
expensed.
(f) Financial instruments
The Group's financial instruments include cash and cash
equivalents, trade and other receivables and available-for-sale
financial assets.
Recognition
Financial instruments are initially measured at cost on trade
date, which includes transaction costs, when the related
contractual rights or obligations exist. Subsequent to initial
recognition, these instruments are measured as set out below.
The Group classifies its financial assets in the following
categories: loans and receivables and available-for-sale
investments. The classification depends on the purpose for which
the investments were acquired. Management determines the
classification of its investments at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market and are stated at amortised cost using the effective
interest rate method.
Available-for-sale financial assets
Available-for-sale financial assets include non-derivative
financial assets designated in this category not included in any of
the other categories. Available-for-sale financial assets are
reflected at fair value. Unrealised gains and losses arising from
changes in fair value are taken directly to the available for sale
investment revaluation reserve in equity. Investments are
designated as available-for-sale if they do not have fixed
maturities and fixed determinable payments and management intends
to hold them for the medium to long term.
Fair value
Fair value is determined based on current bid prices for all
quoted investments. Valuation techniques are applied to determine
the fair value for all unlisted securities held at cost less
impairment, including recent arm's length transactions, reference
to similar instruments and option pricing models.
Changes in the fair value of monetary securities denominated in
a foreign currency and classified as available-for-sale are
analysed between translation differences resulting from changes in
amortised cost of the security and other changes in the carrying
amount of the security. The translation differences related to
changes in the amortised cost are recognised in profit or loss, and
other changes in carrying amount are recognised in the available
for sale investment revaluation reserve in equity. Changes in the
fair value of other monetary and non-monetary securities classified
as available-for-sale are recognised in equity.
Impairment of assets
The Group assesses at each reporting date whether there is
objective evidence that a financial asset or group of financial
assets is impaired. In the case of equity securities classified as
available-for-sale, a significant or prolonged decline in the fair
value of a security below its cost is considered an indicator that
the securities are impaired. If any such evidence exists for
available-for-sale financial assets, the cumulative loss - measured
as the difference between the acquisition cost and the current fair
value, less any impairment loss on that financial asset previously
recognised in profit or loss - is removed from equity and included
in profit or loss. Impairment losses recognised in the statement of
profit or loss and other comprehensive income on equity instruments
classified as available-for-sale are not reversed through profit or
loss.
Recognition and de-recognition
Regular purchases and sales of financial assets are recognised
on trade-date - the date on which the Group commits to purchase or
sell the asset. Investments are initially recognised at fair value
plus transaction costs. Financial assets are de-recognised when the
rights to receive cash flows from the financial assets have expired
or have been transferred and the Group has transferred
substantially all the risks and reward of ownership.
When the securities classified as available-for-sale are sold,
the accumulated fair value adjustments recognised in equity are
included in profit or loss as gains and losses for investment
securities.
(g) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each entity within the Group is
determined using the currency of the primary economic environment
in which that entity operates. The consolidated financial
statements are presented in United States dollars which is the
Company's functional and presentation 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.
Exchange differences arising on the translation of non-monetary
items are recognised directly in equity to the extent that the gain
or loss is directly recognised in equity; otherwise the exchange
difference is recognised in profit or loss.
(h) Provisions
Provisions for legal claims, service warranties and make good
obligations are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation and the amount has been reliably estimated. Provisions
are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be
small.
Provisions are measured at the present value of management's
best estimate of the expenditure required to settle the present
obligation at the reporting date. The discount rate used to
determine the present value reflects the current market assessments
of the time value of money and the risk specific to the liability.
The increase in the provision due to the passage of time is
recognised as interest expense.
(i) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held
at call with banks, other short-term highly liquid investments with
original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to
insignificant risk of changes in value, and bank overdrafts. Bank
overdrafts are shown within short-term borrowings in current
liabilities on the statement of financial position.
(j) Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Trade receivables
are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectible are written off by
reducing the carrying amount directly. An allowance account
(provision for impairment of trade receivables) is used when there
is objective evidence that the Group will not be able to collect
all amounts due, according to the original terms of the
receivables. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments (more than
30 days overdue) are considered indicators that the trade
receivable is impaired. The amount of impairment allowance is the
difference between the asset's carrying amount and the present
value of estimated future cash flows, discounted at the original
effective interest rate. Cash flows relating to short-term
receivables are not discounted if the effect of discounting is
immaterial.
The amount of impairment loss is recognised in profit or loss
within other expenses. When a trade receivable, for which an
impairment allowance had been recognised, becomes uncollectible in
a subsequent period, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off
are credited against other expenses in profit or loss.
(k) Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances, rebates and amounts collected on behalf
of third parties. Revenue is recognised when the amount of revenue
can be reliably measured, and it is probable that future economic
benefits will flow to the Group.
Revenue from the sale of oil and gas and related products is
recognised when the Group has transferred to the buyer the
significant risks and rewards of ownership and the amounts can be
measured reliably. In the case of oil, this usually occurs at the
time of lifting.
Interest revenue is recognised on a time proportion basis taking
into account the interest rates applicable to the financial
assets.
(l) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount
of GST, except where the amount of GST incurred is not recoverable
from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as
part of an item of the expense. Receivables and payables in the
statement of financial position are shown inclusive of GST.
Cash flows are presented in the consolidated statement of cash
flows on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash
flows.
(m) Comparative figures
When required by Accounting Standards, comparative figures have
been adjusted to conform to changes in presentation for the current
financial year.
(n) Fair value estimation
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement for disclosure
purposes.
The fair value of financial instruments traded in active markets
(such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at
the reporting date. The quoted market price used for financial
assets held by the Group is the current bid price.
The fair value of financial instruments that are not traded in
an active market (for example over-the-counter derivatives) is
determined using valuation techniques. The Group uses a variety of
methods and makes assumptions that are based on market conditions
existing at each reporting date.
The carrying value less impairment provision of trade
receivables and payables are assumed to approximate their fair
values due to their short-term nature. The fair value of financial
liabilities for disclosure purposes is estimated by discounting the
future contractual cash follows at the current market interest rate
that is available to the Group for similar financial
instruments.
(o) Investments in associates
Investments in associates are accounted for using the equity
method of accounting in the consolidated financial statements.
Under the equity method, the investment in the associate is
carried in the consolidated statement of financial position at cost
plus post-acquisition changes in the Group's share of net assets of
the associate.
After application of the equity method, the Group determines
whether it is necessary to recognise any additional impairment loss
with respect to the Group's net investment in the associate.
The Group's share of the associate post-acquisition profits or
losses is recognised in the statement of profit or loss and other
comprehensive income. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment. When the
Group's share of losses in the associate equals or exceeds its
interest in the associate, including any unsecured long-term
receivables and loans, the Group does not recognise further losses,
unless it has incurred obligations or made payments on behalf of
the associate.
The reporting dates of the associate and the Group are identical
and the associate's accounting policies conform to those used by
the Group for like transactions and events in similar
circumstances.
(p) Prepayments for investments
Prepayments for acquisitions of financial assets are recorded at
the fair value of consideration to acquire the assets.
On satisfaction of all terms of the acquisition contract have
been satisfied the prepayment is transferred and accounted for as
an investment.
(q) Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of financial year which are
unpaid. The amounts are unsecured and are usually paid within 30
days of recognition unless alternative terms are agreed. The
Group's most material balance is with LandOcean which has credit
payment terms of 720 days.
(r) Dividends
Provision is made for the amount of any dividend declared, being
appropriately authorised and no longer at the discretion of the
entity, on or before the end of the financial year but not
distributed at reporting date.
(s) Contributed equity
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
(t) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit or
loss 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
financial year, adjusted for bonus elements in ordinary shares
issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares.
(u) Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the managing director.
(v) Impairment of assets
Goodwill and intangible assets that have an indefinite useful
life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired. Other assets
are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which they
are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.
(w) Intangible assets (goodwill)
Goodwill is measured at cost less any impairment write downs.
Goodwill on acquisitions of subsidiaries is included in intangible
assets. Goodwill is not amortised but it is tested for impairment
annually or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Gains and losses on the disposal of
an entity include the carrying amount of goodwill relating to the
entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose, identified according to operating segments (note
29).
(x) Share-based payments
The fair value of options granted is recognised as an expense
with a corresponding increase in equity. The total amount to be
expensed is determined by reference to the fair value of the
options granted, which includes any market performance conditions
and the impact of any non-vesting conditions but excludes the
impact of any service and non-market performance vesting
conditions.
(y) Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary
benefits are recognised in current liabilities 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.
Long service benefit
The liability for long service benefit is recognised in current
and non-current liabilities, depending on the unconditional right
to defer settlement of the liability for at least 12 months after
the reporting date. The liability is measured as the present value
of expected future payments to be made in respect of services
provided by employees up to the reporting date using the projected
unit credit method. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of
service.
(z) Leases
The determination of whether an arrangement is or contains a
lease is based on the substance of the arrangement and requires an
assessment of whether the fulfilment of the arrangement is
dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively
transfer from the lessor to the lessee substantially all the risks
and benefits incidental to ownership of leased assets, and
operating leases, under which the lessor effectively retains
substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are
established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are
allocated between the principal component of the lease liability
and the finance costs, so as to achieve a constant rate of interest
on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated
over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty
that the company will obtain ownership at the end of the lease
term.
Operating lease payments, net of any incentives received from
the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.
(aa) Borrowings
Loans and borrowings are initially recognised at the fair value
of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective
interest method.
Where there is an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
(bb) Compound financial instruments
Compound financial instruments issued by the Group comprise
convertible notes that can be converted to ordinary shares at the
option of the holder, when the number of shares to be issued is
fixed.
The liability component of a compound financial instrument is
recognised initially at the fair value of a similar liability that
does not have an equity conversion option. The equity component is
recognised initially at the difference between the fair value of
the compound financial instrument as a whole and the fair value of
the liability component. Any directly attributable transaction
costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a
compound financial instrument is measured at amortised cost using
the effective interest method. The equity component of a compound
financial instrument is not remeasured subsequent to initial
recognition.
Interest related to the financial liability is recognised in
profit or loss. On conversion the financial liability is
reclassified to equity and no gain or loss is recognised.
Convertible notes that can be converted to share capital at the
option of the holder and where the number of shares is variable,
contains an embedded derivative liability. The embedded derivative
liability is calculated (at fair value) first and the residual
value is assigned to the debt host contract. The embedded
derivative is subsequently measured at fair values and movements
are reflected in the profit and loss.
Certain convertible notes issued by the Group which include
embedded derivatives (option to convert to variable number of
shares in the Group are recognised as financial liabilities at fair
value through profit or loss. On initial recognition, the fair
value of the convertible note will equate to the proceeds received
and subsequently the liability is measured at fair value at each
reporting period until settlement. The fair value movements are
recognised on the profit or loss as finance costs.
(cc) Finance costs
Finance costs attributable to qualifying assets are capitalised
as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
(dd) Non-current assets classified as held for sale
Non-current assets are classified as held for sale if their
carrying amount will be recovered principally through a sale
transaction rather than through continuing use. They are measured
at the lower of their carrying amount and fair value less costs to
sell. For non-current assets to be classified as held for sale,
they must be available for immediate sale in their present
condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent
write down of the non-current assets to fair value less costs to
sell. A gain is recognised for any subsequent increases in fair
value less costs to sell of a non-current asset, but not in excess
of any cumulative impairment loss previously recognised.
Non-current assets are not depreciated or amortised while they
are classified as held for sale. Interest and other expenses
attributable to the liabilities of assets held for sale continue to
be recognised.
Non-current assets classified as held for sale are presented
separately on the face of the consolidated statement of financial
position, in current assets. The liabilities of disposal groups
classified as held for sale are presented separately on the face of
the statement of financial position, in current liabilities.
(ee) Discontinued operations
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
- represents a separate major line of business or geographical area of operations
- is part of a single co-ordinated plan to dispose of a separate
major line of business or geographical are of operations
- is a subsidiary acquired exclusively with a view to re-sale.
Classification as a discontinued operation occurs at the earlier
of disposal or when the operation meets the criteria to be
classified as held-for-sale.
When an operation is classified as a discontinued operation, the
comparative consolidated statement of profit or loss and other
comprehensive income is re-presented as if the operation had been
discontinued from the start of the comparative year.
Note 2: Critical accounting estimates and judgements
The directors evaluate estimates and judgements incorporated
into the financial statements based on historical knowledge and
best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and
economic data, obtained both externally and within the Group. Areas
involving a higher degree of judgement or complexity, or areas
where estimations and assumptions are significant to the financial
statements are disclosed here.
Producing asset expenditure
The classification of exploration and evaluation expenditure to
producing assets is based on the time of first commercial
production. Producing asset expenditure for each area of interest
is carried forward as an asset provided certain conditions listed
in Note 1(e) are met and depreciated on a unit of production basis
on P1 reserves. P1 reserves have been determined by an independent
expert.
Producing assets are assessed for impairment when facts and
circumstances suggest that the carrying amount of a production
asset may exceed its recoverable amount. These timings,
calculations and reviews require the use of assumptions and
judgement. The related carrying amounts are disclosed in Note
19.
Reserves and resources
Estimates of reserves requires judgement to assess the size and
quality of reservoirs and their anticipated recoveries. Estimates
of reserves are used to calculate depreciation, depletion and
amortisation charges.
Impairment of goodwill and producing assets
The Group tests annually whether goodwill or the producing
assets has suffered any impairment in accordance with the
accounting policies stated in notes 1(e) and 1(w). The recoverable
amount of the cash-generating unit to which the assets belong is
estimated based on the present value of future cash flows. The
expected future cash flow estimation is always based on a number of
factors, variables and assumptions, the most important of which are
estimates of reserves, future production profiles, commodity prices
and costs. In most cases, the present value of future cash flows is
most sensitive to estimates of future oil price and discount rates.
A change in the modelled assumptions in isolation could materially
change the recoverable amount. Refer to note 16 for details of
these key assumptions.
Deferred tax liability
Upon acquisition of SOCA Petroleum Ltd, in accordance with the
requirement of AASB 112 Income Taxes, a deferred tax liability of
US$46,979,878 was recognised in relation to the difference between
the carrying amount for accounting purposes of deferred development
assets and their actual cost base for tax purposes. The carrying
value of this deferred tax liability has increased to US$47,344,960
at 30 June 2016. In the event that the manner by which the carrying
value of these assets is recovered differs from that which is
assumed for the purpose of this estimation, the associated tax
charges may be significantly less than this amount.
Assets held-for-sale
As part of the Company's strategy to rationalise non-core
assets, the Company committed to a plan to dispose its shares in
Strait Oil & Gas Limited ("Strait"). The company is in advanced
discussions and negotiations surrounding the sale of this asset
which is currently anticipated to complete in the 2017 financial
year. Given current market conditions around exploration assets,
the Company anticipates that part of any consideration will be
deferred or contingent. The asset is therefore recognised at fair
value being the expected recoverable value on sale in relation to
non-contingent or deferred aspects of that sale. No value is
assigned to the contingent or deferred aspect.
An impairment loss in respect of assets held-for-sale is
generally measured at the lower of their carrying amount and fair
value less costs to sell. Impairment losses on initial
classification as held-for-sale and subsequent gains and losses on
re-measurement are recognised in profit or loss.
Share based payments transactions
The Group measures the cost of equity-settled share-based
payment transactions with employees by reference to the fair value
of the equity instruments at the grant date. The fair value is
determined using a Black-Scholes model. The accounting estimates
and assumptions relating to equity-settled share-based payments
would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact
expenses and equity.
Classification of operations to discontinued
The assets classified as discontinued operations represent
separate major lines of business and geographical areas of
operations.
Note 3: Revenue Consolidated
2016 2015
US$ US$
From continuing operations
Revenue from sale of oil 7,062,226 13,152,954
Other income
Interest income 45,210 3,390
Other income 5,983 425,198
----------------------------- -----------
51,193 428,588
----------------------------- -----------
Note 4: Expenses Consolidated
2016 2015
US$ US$
Loss before income tax
includes
the following specific
expenses:
(a) Cost of sales
Costs of production 4,944,478 3,125,464
Royalties 2,104,894 4,654,241
Staff costs 2,322,352 3,315,271
Oil and gas properties depreciation,
depletion and amortisation 5,490,676 4,917,052
---------------- ------------------------
Total cost of sales 14,862.400 16,012,028
---------------- ------------------------
(b) Finance costs
Interest and premium paid
on financial liabilities
at fair value 370,983 2,550,028
Fair value movement of option
liability (1,643,570) (127,883)
Facility fees settled in
shares - 1,575,637
Foreign exchange loss 1,507,714 -
Interest expense 667,839 349,793
Other finance expenses 31,355 -
---------------- ------------------------
Total finance costs 934,321 4,347,575
---------------- ------------------------
General and administration
expenses
Equity based payments - 2,157,037
Directors' and officers'
fees and benefits 601,413 999,571
Share based payments - employee,
director and consultant options 250,849 580,455
Other expenses 2,547,776 6,211,431
Total general and administration
expenses 3,400,038 9,948,494
---------------- ------------------------
(c) Asset values written-down
Impairment of current receivables 600,000 17,937
Impairment of non-current
receivables - 20,992
Impairment of investment
in available for sale financial
assets 400,761 654,000
---------------- ------------------------
Total assets written-down 1,000,761 692,929
---------------- ------------------------
During the current year the Group chose to
fully write down a current receivable due to
uncertainty over its recoverability. In addition
to this, the Group also fully wrote down its
investment in International Petroleum by US$346,000
due to the continued suspension of trading
of its shares and inability to therefore calculate
an appropriate carrying value. A further available
for sale asset was also written down by US$54,761,
being Range's estimate of its recoverable value
at the balance sheet date.
(d) Exploration
Expenditure
Puntland 1,812 314,982
Trinidad (i) 4,123,048 1,810,529
Colombia 136,575 77,237
Total exploration expenses 4,261,435 2,202,748
---------------- ------------------------
(i) Amounts expensed in the year in Trinidad
relate to land fees in relation to Guayaguayare
and St Mary's for which the company policy
is to expense.
(e) Loss on
disposal of
subsidiary
Range Resources Drilling
Limited - 1,491,857
Total loss on disposal - 1,491,857
---------------- ------------------------
Details of loss on sale of subsidiaries
Consideration received - 4,870,000
Carrying amount of net
assets sold - 6,319,358
------- ----------------
Loss on sale - (1,449,358)
Reclassification of FX
reserve - (42,499)
Income tax expense on gain - -
------- ----------------
Total loss on sale - (1,491,857)
------- ----------------
Note 5: Discontinued operations
In 2013, the Company indicated that it was in the process of
disposing of the Company's North Chapman Ranch and East Texas
Cotton Valley assets hence the transfer from producing assets to
assets classified as held-for-sale in that accounting period. As
announced on 23 December 2014 a sale of Range's 100% equity
interest in Range Australia (US) Ltd (holder of Texas assets) was
agreed with Citation Resources Limited. It completed on 24 March
2015.
The Company is committed to a plan to dispose of its 45%
interest in the unlisted company Strait Oil & Gas Limited
(Strait).
2016 2015
US$ US$
(a) Results of discontinued
operations
Revenue - 238,194
Cost of sales - (104,799)
Asset write off (4,750,000) (6,779,476)
Other expenses (130,000) (949,169)
------------ ------------
Results from operating
activities (4,880,000) (7,595,250)
Income tax (expense)/benefit - -
------------ ------------
Results from operating
activities, after tax (4,880,000) (7,595,250)
------------ ------------
Loss on sale of subsidiary
asset - (101,909)
------------ ------------
Loss from discontinued
operations (4,880,000) (7,697,159)
------------ ------------
The loss from the discontinued operations
of US$4,880,000 (2015: US$7,697,159)
is attributable entirely to the owners
of the Company.
(b) Cash flows gained from/(used
in) discontinued operations
Net cash used in operating
activities (130,000) (801,003)
------------ ------------
Net cash flow for the
year (130,000) (801,003)
------------ ------------
Note 6: Income tax expense
Consolidated
2016 2015
US$ US$
(a) Income tax expense
Current tax - 624,618
Deferred tax 1,070,852 843,188
Adjustments for
current tax of
prior periods 13,668 -
1,084,520 1,467,806
------------- -------------
Income tax expense/(benefit)
is attributable
to:
Profit/(loss) from
continuing operations 1,084,520 1,467,806
Profit/(loss) from
discontinued operations - -
------------- -------------
Aggregate income
tax expense 1,084,520 1,467,806
------------- -------------
(b) The prime facie
tax on profit from
ordinary activities
before income tax
is reconciled to
the income tax
as follows:
Loss from continuing
operations before
income tax (37,910,365) (21,114,089)
Loss from discontinuing
operations before
income tax (4,880,000) (7,697,159)
------------- -------------
(42,790,365) (28,811,248)
------------- -------------
Prime facie tax
payable on profit
from ordinary activities
before income tax
at 30% (2015: 30%)
Group (12,837,110) (8,643,374)
------------- -------------
(12,837,110) (8,643,374)
------------- -------------
Add tax effect
of:
Other taxes 13,668 477,852
Expenses not deductible
for tax 18,518,390 7,752,706
Income not assessable
for tax (6,010,578) (3,757,145)
Tax losses not
brought to account 10,650,658 1,938,572
Benefit of tax
losses not previously
recognised - 3,608,262
Deferred tax assets
not brought to
account (242,740) 2,315,848
Differences in
tax rates (9,007,770) (2,224,915)
1,084,520 1,467,806
------------- -------------
Unrecognised Deferred
tax asset
Capital losses 985,528 1,084,219
Revenue losses 9,462,107 10,033,815
Other 4,942,534 3,265,732
------------- -------------
15,390,169 14,383,766
------------- -------------
Deferred tax assets not brought to account, the benefits of
which will only be realised if the conditions for deductibility set
out in Note 1(b) occur.
Consolidated
2016 2015
US$ US$
(c) Recognised deferred tax assets
Temporary differences 3,959,803 286,693
3,959,803 286,693
------------ ------------
Recognised deferred tax liabilities
Accelerated depreciation (17,515,407) (11,039,440)
DTL arising on business
combination (30,046,205) (32,319,759)
Net deferred tax
liabilities (47,561,612) (43,359,199)
------------ ------------
Deferred tax assets not brought to account, the benefits of
which will only be realised if the conditions for deductibility set
out in Note 1(b) occur.
Note 7: Auditors' remuneration
Consolidated
2016 2015
US$ US$
Remuneration of the auditor of
the Parent Entity for:
Auditing or reviewing the financial
report by BDO Audit (WA) Pty Ltd 84,726 216,866
Non-audit services provided by
a related entity of BDO Audit (WA)
Pty Ltd in respect to Parent Entity's
tax compliance. 34,149 72,570
-------- ---------------
Total remuneration for the Parent
Entity 118,875 289,436
-------- ---------------
Remuneration of the auditors of
the subsidiaries:
Auditing or reviewing the financial
report by BDO UK 3,707 3,933
Auditing or reviewing the financial
report by BDO Barbados 17,743 13,030
Auditing or reviewing the financial
report by BDO Trinidad 25,188 40,530
Total remuneration for the subsidiaries 46,638 57,493
-------- ---------------
Note 8: Earnings per share
Consolidated
2016 2015
US cents US cents
(a) Basic loss per share
(Loss) per share from continuing
operations attributable to the
ordinary equity holders of the
company (0.54) (0.44)
(Loss) per share attributable
to the ordinary equity holders
of the company (0.60) (0.59)
(b) Diluted loss per share
(Loss) per share from continuing
operations attributable to the
ordinary equity holders of the
company n/a n/a
(Loss) per share attributable
to the ordinary equity holders
of the company n/a n/a
(c) Reconciliation of loss used
in calculating earnings per
share
Basic/ Diluted loss per share
Loss from continuing operations
attributable to the ordinary
equity holders of the company (38,994,885) (22,581,895)
Loss attributable to the ordinary
equity holders of the company (43,874,885) (30,279,054)
(d) Weighted average number of shares
used as the denominator 2016 No. 2015 No.
Weighted average number of ordinary
shares used as the denominator
in calculating basic EPS 7,266,100,594 5,095,406,444
Effect of dilutive securities
Options on issue at reporting date could potentially
dilute earnings per share in the future. The effect
in the current year is to reduce the loss per
share hence they are considered anti-dilutive.
Accordingly the diluted loss per share has not
been disclosed.
Note 9: Cash and cash equivalents
Consolidated
2016 2015
US$ US$
Cash at bank and on hand 13,001,252 10,530,104
Risk exposure
Information about the Group's exposure to credit risk, foreign
exchange risk and price risk is provided in Note 34.
Note 10: Restricted cash
Consolidated
2016 2015
US$ US$
Cash held in secured
account 8,000,000 -
Total 8,000,000 -
---------- -----
Restricted cash is held in a deposit account that is secured
against a bank guarantee given in respect of the Group's work
commitments on the St Mary's block in Trinidad. The funds are
freely transferrable but alternative collateral acceptable to the
bank, would need to be put in place to replace the cash
security.
Note 11: Trade and Other Receivables
Consolidated
2016 2015
US$ US$
Current
Trade receivables
(i) 375,348 672,331
Taxes receivable 3,960,541 3,820,265
Other debtors (ii) 3,373,820 3,145,825
Less provision for
impairment (3,089,443) (2,489,443)
------------- ------------
4,620,266 5,148,978
------------- ------------
Fair value approximates the carrying value of trade and other
receivables at 30 June 2016 and 30 June 2015.
(i) Trade receivables are generally due for settlement within 30
days. They are presented as current assets unless collection is not
expected for more than 12 months after the reporting date. Trade
receivables are neither past due nor impaired.
(ii) Other debtors are comprised primarily of advances to
unrelated third parties. Given the uncertainty over the likelihood
of repayment these advances have been included within the provision
for impairment raised at 30 June 2016 and 30 June 2015.
Risk exposure
Information about the Group's exposure to credit risk, foreign
exchange risk and price risk is provided in Note 34.
Note 12: Other current assets
Consolidated
2016 2015
US$ US$
Current
Prepayments 178,158 352,724
Other assets - 430,661
178,158 783,385
-------- --------
Note 13: Assets held-for-sale
Assets classified as held for sale are as follows:
Consolidated
2016 2015
US$ US$
Strait Oil & Gas Limited - 45%
equity interest 1,250,000 5,000,000
Latin American Resources - 20%
equity interest - 1,000,000
---------- ----------
Total 1,250,000 6,000,000
---------- ----------
Movements in assets classified as held for sale are as
follows:
Opening net book amount 6,000,000 11,000,000
Transfer from investment in associate - 2,179,358
Sold in period - (1,000,000)
Impairment loss relating to discontinued
operations (4,750,000) (6,179,358)
------------ ------------
Closing net book amount 1,250,000 6,000,000
------------ ------------
Impairment losses of US$4,750,000 for write-downs of the
disposal group to the lower of its carrying amount and its
recoverable amount have been included in 'loss on discontinued
operations' (see note 5 and note 36). The impairment losses have
been applied to reduce the carrying amount of the assets
held-for-sale within the disposal group. There is no cumulative
income or expenses included in other comprehensive income relating
to the disposal group.
Note 14: Financial assets available-for-sale
Consolidated
2016 2015
US$ US$
Interest in other
corporations 45,238 446,000
-------------- ----------
Total available-for-sale
financial assets 45,238 446,000
-------------- ----------
Movement in financial assets available-for-sale
Opening balance 446,000 876,347
Shares received on settlement of loan
receivable - 171,254
Shares sold in period - (947,601)
Transferred from other
current assets - 1,000,000
Impairment recognised
in profit and loss (400,762) (654,000)
---------- ----------
Closing balance 45,238 446,000
---------- ----------
Available-for-sale financial assets comprise investments
in the ordinary share capital of various entities.
There are no fixed returns or fixed maturity date
attached to these investments.
Risk exposure
Information about the Group's exposure to credit risk, foreign
exchange risk and price risk is provided in Note 34.
Note 15: Controlled Entities
The consolidated financial statements incorporate
the assets, liabilities and results of the following
subsidiaries in accordance with accounting policy
described in Note 1(a).
Controlled Entities Consolidated Country of Incorporation Percentage Owned (%)
----------------------------------- -------------------------- -----------------------
30 June 30 June
2016 2015
----------------------------------- -------------------------- ----------- ----------
Subsidiaries of Range Resources
Limited:
Range Resources (Barbados) Limited Barbados 100 100
SOCA Petroleum Limited Barbados 100 100
West Indies Exploration Company
Limited Trinidad 100 100
Range Resources Trinidad Limited Trinidad 100 100
Range Resources (Barbados) GY
Limited Barbados 100 100
Range Resources St. Mary's Limited Trinidad - 100
Range Resources GY Shallow Limited Trinidad 100 100
Range Resources GY Deep Limited Trinidad 100 100
Range Resources (Cayman) Limited Cayman Islands - 100
Range Resources HK Limited Hong Kong 100 -
Range Resources Upstream Services
Limited United Kingdom 100 100
----------------------------------- -------------------------- ----------- ----------
Note 16: Goodwill
Goodwill is measured as described in note 1(v). Goodwill on
acquisition of subsidiaries is included in intangible assets.
Goodwill is not amortised but it is tested for impairment annually
or more frequently if events or changes in circumstances indicate
that it might be impaired, and is carried at cost less accumulated
impairment losses.
The Group reported goodwill of US$28,985,014, which was derived
from the acquisition of SOCA Petroleum Limited through the parent's
subsidiary Range Resources (Barbados) Ltd.
Goodwill
2016 2015
US$ US$
At 1 July 2015
Cost 46,198,974 46,198,974
Impairment write down (17,213,960) -
------------- -------------
Net book amount 28,985,014 46,198,974
------------- -------------
Year ended 30 June 2016
Opening net book amount 46,198,974 46,198,974
Additions-acquisition - -
Impairment charge (17,213,960) -
------------- -------------
Closing net book amount 28,985,014 46,198,974
------------- -------------
(a) Impairment tests for goodwill
During the year ending 30 June 2016, the Group recorded an
impairment of US$17,213,960 with respect to goodwill. The
impairment principally arose due to the lower oil price
environment.
Goodwill has been allocated for impairment testing purposes to a
single cash-generating unit (CGU), identified according to
operating segments, being Trinidad.
Estimates of the recoverable amount is based on an asset's value
in use using a discounted cash flow method and is most sensitive to
the following key assumptions:
- Obtaining all required approvals and permissions to undertake waterflood development
- Obtaining lease extensions until 2030
- P1 and P2 Recoverable reserves
- Commodity price of between US$43 and US$81 per barrel dependent on the year.
- Operating costs at 12%-43% of revenue, depending on oil price and production at that time.
- Post-tax discount rate of 11.1%
Economical recoverable reserves represent management's
expectations at the time of completing the impairment testing and
based on the reserves statements and exploration and evaluation
work undertaken by appropriately qualified persons. A summary of
the Company's Trinidad reserves and resources are published on the
company's website.
The commodity price for oil was based on mean WTI forecast oil
price data from a variety of different analysts and other sources.
Estimates are US$43/bbl in 2016, US$57/bbl in 2017, US$66/bbl in
2018, US$66/bbl in 2019, US$67/bbl in 2020 and then escalating at
2% per annum for the remainder of the project.
Operating cost assumptions were based on FY17 budgets, actual
costs incurred in FY16 and estimates of additional operating costs
for waterflood activities received from LandOcean.
(b) Sensitivity to change of assumptions
An individual movement of 20% against any one key assumption
would cause the carrying value of the cash generating unit to
materially exceed its recoverable amount. An adverse movement of
20% in reserves and resources, commodity prices, operating costs,
discount rate or capex would lead to an additional impairment of
US$6.6million, US$34.4million, US$17.1million, US$8.3million and
$10.1million respectively.
Any impairment charge in excess of the goodwill value would be
applied against producing assets.
Note 17: Property, plant & equipment
Consolidated Production Gathering Leasehold Motor Total
equipment station improvement vehicle,
and access and field furniture,
roads office fixtures
US$ & fittings US$
US$ US$ US$
Year ended
30 June
2015
Opening
net book
amount 10,105,359 139,269 384,816 624,825 11,254,269
Foreign
currency
movement 143,202 (29,878) (116,584) 2,167 (1,093)
Additions 1,413,411 23,543 24,181 115,163 1,576,298
Disposals - (3,100) (3,100)
Disposal
of subsidiary (10,030,580) - - (245,780) (10,276,360)
Depreciation
charge (793,660) (15,844) (45,098) (192,970) (1,047,572)
------------- ----------- ------------- ------------ -------------
Closing
net book
amount 837,732 117,090 247,315 300,305 1,502,442
At 30 June
2015
Cost 5,206,843 529,326 556,333 1,235,929 7,528,431
Accumulated
depreciation (4,369,111) (412,236) (309,018) (935,624) (6,025,989)
------------- ----------- ------------- ------------ -------------
Net book
amount 837,732 117,090 247,315 300,305 1,502,442
Year ended
30 June
2016
Opening
net book
amount 837,732 117,090 247,315 300,305 1,502,442
Foreign
currency
movement (35,321) (4,687) (8,370) (9,521) (57,899)
Additions 1,140,919 - - 68,887 1,209,806
Disposals - - - (11,799) (11,799)
Depreciation
charge (173,165) (14,284) (24,645) (101,228) (313,322)
------------- ----------- ------------- ------------ -------------
Closing
net book
amount 1,770,165 98,119 214,300 246,644 2,329,228
------------- ----------- ------------- ------------ -------------
At 30 June
2016
Cost 6,111,168 505,510 534,020 1,135,223 8,285,921
Accumulated
depreciation (4,341,003) (407,391) (319,720) (888,579) (5,956,693)
------------- ----------- ------------- ------------ -------------
Net book
amount 1,770,165 98,119 214,300 246,644 2,329,228
------------- ----------- ------------- ------------ -------------
Note 18: Exploration and evaluation expenditure
Consolidated
2016 2015
US$ US$
Opening net book
amount 668,951 523,605
Additions - 145,346
Foreign exchange (23,150) -
Closing net book
amount 645,801 668,951
------------- ----------------
At 30 June 2016, the US$645,801 (30 June 2015 - US$668,951)
capitalised exploration and evaluation expenditure relates to the
interests of the Group in the Guayaguayare and St Mary's Blocks in
Trinidad.
Exploration and evaluation expenditure incurred is accumulated
in respect of each identifiable area of interest. These costs are
only carried forward to the extent that they are expected to be
recouped through the successful development of the area or where
activities in the area have not yet reached a stage that permits
reasonable assessment of the existence of economically recoverable
reserves.
The recoverability of the carrying amount of exploration assets
is dependent on the successful development and commercial
exploitation or sale of the respective mining permits.
No capitalised costs (2015: US$145,346) have been included in
the statement of cash flows from investing activities.
Note 19: Producing assets
Consolidated
2016 2015
US$ US$
Cost 134,697,008 122,141,667
Accumulated amortisation (39,619,926) (31,791,175)
Net book value 95,077,082 90,350,492
----------------- -----------------
Opening net book amount 90,350,492 82,517,820
Foreign currency movement (1,747,957) 395
Additions 15,007,723 11,392,667
Impairment charge (3,350,869) -
Amortisation charge (5,181,507) (3,560,390)
Closing net book amount 95,077,882 90,350,492
----------------- -----------------
Note 20: Trade and other payables
(a) Current
Consolidated
2016 2015
US$ US$
Trade payables 1,048,601 4,991,035
Interest bearing
trade payables 1,556,463 -
Sundry payables and
accrued expenses 9,639,809 8,663,160
12,244,873 13,654,195
----------- -----------
(a) Non- current
Consolidated
2016 2015
US$ US$
Interest bearing
trade payables 13,998,006 -
Accrued expenses 9,765,999 -
23,764,005 -
----------- -----
Risk exposure
Trade payables are non-interest bearing with the exception of
debt due to LandOcean classed under interest bearing trade
payables.
Information about the Group's exposure to credit risk, foreign
exchange risk and price risk is provided in Note 34.
Note 21: Borrowings at fair value
(a) Borrowings
at fair value Consolidated
2016 2015
US$ US$
Opening balance 7,518,077 -
Proceeds from borrowings - 5,500,000
Face value premium - 2,250,000
Interest due on
outstanding balance 137,920 330,577
Cash repayment (7,655,997) -
Repayment via equity - (562,500)
Closing net book
amount - 7,518,077
-------------- -----------
All amounts due to Lind were repaid during the year.
(b) Option liability
Consolidated
2016 2015
US$ US$
Option liability at fair
value through profit or
loss 835,714 808,083
-------- --------
835,714 808,083
-------- --------
During 2016, no options were exercised prior to year-end and
367,143,136 options with a fair value of US$1,661,430 were issued
to Beijing Sibo Investment Management LP under the share placement
(refer Note 25). These options are recognised as a financial
liability given the exercise price is stated in GPB. Total fair
value movement recognised in P&L was a gain of US$1,633,799
(2015: US$127,883).
During the prior year 49,051,468 options with a face value of
US$1,426,883 were exercised prior to year-end and 31,000,000
options with a fair value of US$172,926 were issued.
Note 22: Provision for rehabilitation
The Group records the present value of the estimated cost of
legal and constructive obligations to restore operating locations
in the period in which the obligation arises. The nature of
restoration activities includes removal of facilities, abandonment
of wells and restoration of affected areas.
Consolidated
2016 2015
US$ US$
Provision for rehabilitation 740,268 734,858
------------- ----------
Movement in the provision for rehabilitation during the
financial year are set out below:
Carrying amount at the
start of the year 734,858 696,224
Additional provision recognised 5,410 38,634
Carrying amount at the
end of the year 740,268 734,858
-------- --------
Note 23: Deferred tax liability
Fair value Accelerated
uplift depreciation Total
on business
combination
US$ US$ US$
Movements
Year ended 30 June 2015
Opening balance 35,010,572 9,365,461 44,376,033
Foreign currency movement (1,041) (32,147) (33,188)
Disposal of subsidiary (723,359) (1,189,198) (1,912,557)
Charged/(credited)
* to profit or loss (1,966,411) 2,895,322 928,911
------------- -------------- ------------
Closing net book amount 32,319,761 11,039,438 43,359,199
------------- -------------- ------------
Year ended 30 June 2016
Opening balance 32,319,761 11,039,438 43,359,199
Foreign currency movement - (669,950) (669,950)
Charged/(credited)
* to profit or loss (2,273,556) 7,145,919 4,872,363
Closing net book amount 30,046,205 17,515,407 47,561,612
------------- -------------- ------------
As a result of business combination, at the date of acquisition
a deferred tax liability has been recognised in relation to the
difference between the carrying amount of the deferred exploration
and development costs for accounting purposes and the cost base of
the asset for tax purposes in accordance with the requirements of
Australian Accounting Standard AASB 112 Income Taxes. The Group
does not have a tax payable in relation to the deferred tax
liability at 30 June 2016 and it is anticipated that the deferred
taxation liability will be reduced in the future as the deferred
exploration and development costs are amortised in future
periods.
Note 24: Other non-current liabilities
Consolidated
2016 2015
US$ US$
Employee service benefits 422,315 521,257
-------- --------------
422,315 521,257
-------- ----------------
Risk exposure
Information about the Group's exposure to credit risk, foreign
exchange risk and price risk is provided in Note 34.
Note 25: Contributed equity
Consolidated
2016 2015
US$ US$
7,589,790,100 (2015: 5,767,169,188)
fully paid ordinary shares 404,874,079 382,535,744
Share issue costs (20,991,887) (19,330,467)
------------- -------------
383,882,192 363,205,277
------------- -------------
Consolidated
2016 2016 2015 2015
No. US$ No. US$
(a) Fully paid ordinary
shares
At the beginning
of reporting
period 5,767,169,188 382,535,744 4,521,201,870 364,567,692
Shares issued
during year 1,822,620,912 22,338,335 1,245,967,318 17,968,052
Total contributed
equity 7,589,790,100 404,874,079 5,767,169,188 382,535,744
-------------- ------------ -------------- --------------
Ordinary shares entitle the holder to participate in dividends
and the proceeds on winding up of the Company in proportion to the
number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a
meeting of the Company, in person or by proxy, is entitled to one
vote, and upon a poll each share is entitled to one vote.
(b) Unissued Fully Paid Ordinary 2016 2015
Shares
No. No.
Opening balance (i) 30,000,000 386,188,780
Issued in year (ii) - (356,188,780)
Cancelled in year (i) (30,000,000) -
------------- --------------
Total contributed equity - 30,000,000
------------- --------------
(i) Under the terms of an agreement between shareholders in
Strait, the Company was required to issue 30,000,000 shares to
other investors in Strait upon the completion of the next well in
the Georgia drilling programme or upon disposal of Range's
shareholding in Strait. The obligation to issue shares to Strait
has expired.
(ii) During the 2013 financial year, the company entered into a
US$12 million financing facility with a Hong Kong based private
institutional investor, Abraham Ltd. Under the terms of the
subscription agreement, Abraham was to subscribe for shares in the
Company in two US$6 million tranches, with the first tranche issued
during the year, whilst the second tranche was to be issued
following shareholder approval. Shareholder approval for the issue
of shares for the US$6 million second tranche was sought and
obtained at the General Meeting of the Company on 11(th) July
2014.
c) Movements in fully paid ordinary share capital
Issue
Details Number price US$
of shares US$
1 July
2015 Opening balance 5,767,169,188 382,535,744
(Tranche 2) Share
placement to Beijing
Sibo Investment Management
LP (i) 1,797,620,912 0.012 22,033,080
Share placement to
directors and employees 25,000,000 0.012 305,255
30 June
2016 Closing balance 7,589,790,100 404,874,079
--------------- -------------- --------------
1 July
2014 Opening balance 4,521,201,870 364,567,692
Transfer from unissued 356,188,780 0.017 6,000,000
Shares issued as
loan repayment 58,440,891 0.010 562,500
Shares issued upon
option conversion 49,051,468 0.010-0.024 923,880
Shares issued as
Collateral Shares 38,000,000 0.008 300,979
Shares issued to
employees 19,987,481 0.013-0.040 580,458
Shares issued in
lieu of corporate
advisory/ capital
raising and loan
commencement fees 74,298,698 0.009-0.037 1,633,315
Issued to Beijing
Sibo Investment Management
LP 650,000,000 0.012 7,966,920
30 June
2015 Closing balance 5,767,169,188 382,535,744
--------------- -------------- --------------
(i) Under the share placement, the following options were issued (refer Note 21):
Date of Exercise Number
Expiry Price Under Option
3 Sept
Tranche 1 2019 GBP0.01 194,585,862
3 Sept
Tranche 2 2019 GBP0.02 172,557,274
Consolidated
2016 2015
No. No.
(d) Options
At the beginning of reporting
period 788,998,289 453,203,084
Options issued during year (refer
Notes 21 and 31) 406,143,136 394,701,840
Options expired (312,085,678) (9,855,166)
Options exercised during year - (49,051,469)
Total options 883,055,747 788,998,289
-------------- -------------
At 30 June 2016, the unissued ordinary shares of Range Resources
Limited under option are as follows:
Date of Expiry Exercise Number
Price Under Option
11 July 2016 GBP0.037 5,000,000
25 July 2016 GBP0.021 476,190
29 July 2016 GBP0.021 952,381
31 August 2016 GBP0.021 6,714,284
31 August 2016 GBP0.020 9,000,000
30 September
2016 GBP0.019 3,947,368
30 September
2016 GBP0.018 8,666,670
31 October 2016 GBP0.018 694,445
31 October 2016 GBP0.017 2,205,885
31 October 2016 GBP0.016 1,250,000
31 October 2016 GBP0.015 17,333,336
30 November
2016 GBP0.015 3,000,001
30 November
2016 GBP0.013 5,153,846
11 December
2016 A$0.0321 2,000,000
31 December
2016 GBP0.012 2,000,000
31 December
2016 GBP0.011 5,000,000
31 January 2017 GBP0.075 5,180,000
31 January 2017 GBP0.011 23,636,364
9 September
2017 GBP0.03 7,500,000
15 October 2017 GBP0.01203 31,000,000
31 January 2018 A$0.05 1,000,000
14 July 2018 GBP0.01 161,472,247
14 July 2018 GBP0.02 118,729,593
31 August 2018 GBP0.01 14,000,000
3 September
2019 GBP0.01 194,585,862
3 September
2019 GBP0.02 172,557,274
30 March 2020 GBP0.01 80,000,000
--------------
Total number
under option 883,055,746
--------------
The holders of these options do not have any rights under the
options to participate in any share issues of the company.
During the year ended 30 June 2016, no ordinary shares of Range
Resources Limited were issued on the exercise of options (2015:
49,051,468).
Note 26: Reserves
Consolidated
2016 2015
US$ US$
(a) Share-based payment reserve
Balance 1 July 14,231,578 14,226,861
Share based payment expenses (refer
note 31) 250,847 2,157,038
Expired options reclassified to retained
earnings (5,933,401) (2,152,321)
Balance 30 June 8,549,024 14,231,578
------------ ------------
The share based payment reserve records items recognised as
expenses on the fair valuation of shares and options issued as
remuneration to employees, directors and consultants.
(b) Option premium reserve
Balance 1 July 12,057,363 10,630,513
Fair value movement of exercised options
that were originally classified as
a derivative liability - 1,426,850
Balance 30 June 12,057,363 12,057,363
----------- -----------
The option premium reserve is used to recognise the grant date
fair value of options.
(c) Foreign currency translation reserve
Balance 1 July 3,459,939 3,004,632
Currency translation differences arising
during the year 160,799 455,307
Balance 30 June 3,620,738 3,459,939
---------- ----------
The foreign currency translation reserve is used to record
exchange differences arising from the translation balances of
foreign subsidiaries.
Balance 30 June 24,227,125 29,748,880
----------- -----------
Note 27: Commitments
Expenditure and Capital commitments
Consolidated
2016 2015
US$ US$
Not later than 1 year 30,614,669 211,000
30,614,669 211,000
=========== ========
Expenditure commitments for 2016 include the remaining
expenditure due under Purchase Order 2.
Note 28: Contingent Liabilities and Contingent Assets
Colombian exploration licences
In January 2016, Range received notification from Agencia
Nacional de Hidrocarburos ("ANH") in Colombia advising that the
E&P licences over three exploration blocks (PUT-5, VSM-1 and
VMM-7) had been revoked. The licences had been awarded to a
Consortium of Optima Oil Corporation ("Optima") and the Company in
December 2012. ANH alleges that various obligations and commitments
agreed within the exploration licences have not been complied with
and also that invalid letters of credit had been presented to ANH
by Optima to support the minimum work obligations. The effect of
revocation of the licences by ANH is: (i) expiry of the contracts,
(ii) Range would be unable to enter into any further agreement with
Colombian State for a period of 5 years, (iii) final settlement and
liquidation of the licences, and (iv) joint and several liability
of the Consortium partners to ANH for all sums due to ANH and for
potential damages claim of up to the aggregate financial value of
the work commitments of the Consortium for the three licences which
totalled approximately US$53million. The value of the allegedly
invalid letters of credit provided was approximately
US$11million.
On 1 September 2016, Range received a demand notice from ANH
addressed to the Consortium seeking payment of the full amount of
the outstanding obligations due to ANH totalling up to
approximately US$53million. The deadline for making the payment, or
otherwise responding to ANH with a defence against the action, was
7 September 2016. A comprehensive response was subsequently
submitted to ANH by the consortium on this date. This response
addressed the numerous areas in which Range and the consortium
object to the demand which was received from ANH.
A Joint Operating Agreement ("JOA") is in place amongst the
Consortium partners. Under the terms of the JOA it was agreed
between the Consortium that it was the sole responsibility of
Optima to complete the minimum work obligations and to provide all
necessary funding, including the provision of valid letters of
credit in favour of ANH. Under the JOA, Range has an indemnity to
recover from Optima any payment incurred by Range for any
contractual obligations under the licences which were not paid by
Optima. Range has engaged legal advisers in Colombia.
Range has no material assets in Colombia.
In addition to the ongoing work with legal advisers in Colombia,
Range has sought advice from its Australian advisers regarding the
ability of ANH to try and enforce a claim against Range in
Australia (where Range is incorporated). The Company's legal
advisers confirm that there is no provision in Australian law to
enable either judgments of Colombian courts, or administrative
orders of ANH to be recognised in Australia. If ANH did seek to
make any claim in Australia it would be required to commence court
proceedings in the Australian courts and to prove its entitlement
to such claim. Range would have the right to defend such claim.
Range has not received any claim from ANH in Australia and would
defend itself against any such claim if ever received.
The Company continues to work with Optima and legal advisers to
defend its position to the maximum extent possible and is
considering what further action can be taken to challenge the
actions taken by ANH. At this time Range cannot provide any
indication of the likely timeline for any resolution to this
matter, nor any likely financial impact.
Geeta Maharaj
Range has received an invoice from Geeta Maharaj, a Trinidad
based attorney seeking payment of approximately US$1.9million. The
invoice purports to relate to legal work undertaken during mid-2014
in the preparation of inter-company loan agreements. Range strongly
refutes the amount of this purported invoice and intends to
vigorously defend its position. Range has engaged Trinidad legal
counsel to assist in this matter. Range considers that that the
amount of the purported invoice is vastly excessive and is not
payable.
Guayaguayare licence
On 21 May 2015, Range announced that it had signed an amendment
agreement in respect of its interest in the Guayaguayare Block in
Trinidad. As a result of the amended agreement, Range acquired the
full interest of Niko Resources Ltd. (Niko), which is 32.5% in the
Shallow and 40% in the Deep Production Sharing Contracts (PSCs).
Following completion of the agreement, Range holds 80% interest in
the Deep PSC and 65% interest in the Shallow PSC.
The consideration payable for the increased interest is
contingent upon commercial discovery and subsequent production,
whereby Range will pay Niko upon certain production milestones
being achieved from the two PSCs, with the maximum payable of US$19
million based on production in excess of 10 million barrels. Range
is currently unable to assess the likelihood of these milestones
being met, and consequently, no provision has been raised.
The Directors are not aware of any further contingent
liabilities or contingent assets as at 30 June 2016
Note 29: Segment reporting
30 June 2016 Trinidad Unallocated Total
US$ US$ US$
Segment revenue
Revenue from
continuing operations 7,062,226 - 7,062,226
Revenue from - -
discontinued
operations
Other income 5,983 45,210 51,193
------------------- ---------------- -------------------
Total revenue 7,068,209 45,210 7,113,419
Segment result
Segment expenses (43,323,546) (6,580,238) (49,903,784)
------------------- ---------------- -------------------
Loss before
income tax (36,255,337) (6,535,028) (42,790,365)
Income tax (1,084,520) - (1,084,520)
Loss after income
tax (37,339,857) (6,535,028) (43,874,885)
Segment assets
Segment assets(i) 144,249,237 13,843,405 158,092,642
------------------- ---------------- -------------------
Total assets 144,249,237 13,843,405 158,092,642
Segment liabilities
Segment liabilities 81,191,617 4,663,893 85,855,510
------------------- ---------------- -------------------
Total liabilities 81,191,617 4,663,893 85,855,510
30 June 2015 Trinidad Unallocated Total
US$ US$ US$
Segment revenue
Revenue from
continuing operations 13,152,954 - 13,152,954
Revenue from
discontinued
operations - 238,194 238,194
Other income - 428,588 428,588
------------------------- ----------------------- ---------------------
Total revenue 13,152,954 666,782 13,819,736
Segment result
Segment expenses (23,162,985) (19,467,998) (42,630,983)
------------------------- ----------------------- ---------------------
Loss before
income tax (10,010,031) (18,801,216) (28,811,247)
Income tax (1,467,806) - (1,467,806)
------------------------- ----------------------- ---------------------
Loss after income
tax (11,477,837) (18,801,216) (30,279,053)
Segment assets
Segment assets(i) 144,457,523 17,458,496 161,916,019
------------------------- ----------------------- ---------------------
Total assets 144,457,523 17,458,496 161,916,019
Segment liabilities
Segment liabilities 49,846,696 17,045,866 66,892,562
------------------------- ----------------------- ---------------------
Total liabilities 49,846,696 17,045,866 66,892,562
(i) Unallocated assets
Segment assets
30 June 2016 30 June
2015
US$ US$
Cash 12,189,822 9,868,592
Assets held for
sale 1,250,000 6,000,000
Other 403,583 1,589,904
-----------------------
Total segment assets 13,843,405 17,458,496
Note 29: Segment reporting (continued)
(a) Other segment information
Consolidated
2016 2015
US$ US$
Segment other revenue - all other
segments
Other income 45,210 428,588
45,210 428,588
Segment result - all other segments
Equity based payments - 2,157,037
Directors' and officers' fees and benefits 500,229 999,571
Impairment of available for sale asset 400,762 496,958
Share based payments - employee and consultant shares 188,969 580,455
Discontinued operations 3,880,000 7,935,352
Other expenses 1,610,278 7,298,625
6,580,238 19,467,998
Accounting policies
AASB 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker in order
to allocate resources to the segment and to assess its performance.
The chief operating decision maker is the Chief Executive Officer
and through this role the Board of Directors.
Following the adoption of AASB 8, the identification of the
Group's reporting segments remain consistent with prior periods,
with management allocating resources to segments on a geographical
basis.
Information regarding these segments is presented above. The
accounting policies of the reportable segments are the same as
those of the Group. Segment information is prepared in conformity
with the accounting policies of the entity as disclosed in Note
1.
Segment revenues and expenses are those directly attributable to
the segments and include any joint revenue and expenses where a
reasonable basis of allocation exists. Segment assets include all
assets used by a segment and consist principally of cash,
receivables, plant and equipment, exploration expenditure
capitalised and development assets net of accumulated depreciation
and amortisation. While most such assets can be directly attributed
to individual segments, the carrying amount of certain assets used
jointly by two or more segments is allocated to the segments on a
reasonable basis. Segment disclosures do not include deferred
income taxes.
Revenue from discontinued operations from Texas of nil (2015:
US$238,194) was derived from several customers who each account for
greater than 10% of this amount. Revenue from Trinidad of
US$7,062,226 (2015: US$13,152,954) is derived from the subsidiary's
sole customer, which is Petroleum Company of Trinidad and Tobago
Limited.
Intersegment transfers
Segment revenues, expenses and results do not include any
transfers between segments.
Note 30: Cash flow information Consolidated
2016 2015
US$ US$
Reconciliation of cash flow from operations with loss after income tax
Loss after income tax (43,874,885) (30,279,054)
Non-cash flows in profit
Depreciation 5,490,676 4,766,581
Share based payment- consultants and employees 250,847 2,737,443
Impairment of non-current assets 20,564,829 -
Finance costs (non-cash) (1,633,799) 2,107,281
Impairment of available for sale assets 400,762 654,000
Loss on sale of subsidiary - 1,593,766
Loss on sale of PPE - 3,100
Foreign exchange (gain)/loss 1,768,479 (124,789)
Impairments recognised on held for sale assets 4,750,000 6,779,476
Share of net loss of associate - -
Net loss on sale of available for sale financial assets - 496,958
Other non-cash items -
Decrease in other current assets 605,227 375,820
Decrease/(increase) in trade and other receivables 528,712 (608,228)
(Increase)/decrease in deferred tax asset (3,673,112) 175,634
(Decrease)/increase in trade and other payables (1,409,322) 162,554
Increase in accrued interest - 2,830,577
Decrease in income tax payable (10,170) (13,442)
Increase in deferred tax liabilities 4,202,416 1,097,078
(Decrease)/increase in provisions (93,532) 289,981
Increase in non-current operating payables 7,946,837 -
Net cash (outflow)/inflow from operations (4,186,035) (6,955,264)
Non-cash investing and financing activities Consolidated
2016 2015
US$ US$
Repayment of borrowings:
Through issue of shares - 562,500
Share issued as share based payments or finance or capital raising costs 1,661,430 4,844,724
Note 31: Share-based payments
The following share-based payment arrangements occurred during
the financial year ended at 30 June 2016.
Quantity Security US$ Value Purpose
81,500,000(i) Unlisted options 106,278 Options issued to employees
(i) Includes 42,500,000 options to be granted once shareholder approval obtained
The value of options have been expensed to the profit and loss
on a proportionate basis for each financial year from grant to
vesting date.
The following share-based payment arrangements occurred during
the financial year ended at 30 June 2015.
Quantity Security US$ Value Purpose
19,987,481 Fully paid ordinary shares 580,406 Shares issued to employees and consultants
42,742,654 Unlisted options 1,176,524 Options issued in lieu of consulting fee
75,000,000 Unlisted options 85,464 Options issued to Directors in period
7,500,000 Unlisted options 895,049 Options issued in lieu of consulting fees
The fair value at grant date of unlisted options is
independently determined using a Black Scholes option pricing model
that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the
option.
Employee option plan
Current year
The following options were issued to key management personnel,
employees and consultants:
Name Number of options Grant date Expiry Date
Key management 25,000,000 1 September 2015 30 March 2020
personnel
Employees and 14,000,000 1 September 2015 31 August 2018
consultants
Key management 42,500,000 25 May 2016 30 March 2020
personnel (i)
(i) options to be granted once shareholder approval obtained
The options have an exercise price of GBP0.01 per share.
The vesting conditions of the options issued to key management
personnel are as follows:
(a) 25% became exercisable on 31 March 2016
(b) 25% will become exercisable upon the Company reaching
production of 1,500 barrels of oil per day for a continuous 15 day
period in Trinidad
(c) 25% will become exercisable upon the Company reaching
production of 2,500 barrels of oil per day for a continuous 15 day
period in Trinidad
(d) 25% will become exercisable upon the Company reaching
production of 4,000 barrels of oil per day for a continuous 15 day
period in Trinidad
The vesting conditions of the options issued to employees and
consultants are as follows:
(a) 33% will become exercisable upon the Company reaching
production of 1,500 barrels of oil per day for a continuous 15 day
period in Trinidad
(b) 33% will become exercisable upon the Company reaching
production of 2,500 barrels of oil per day for a continuous 15 day
period in Trinidad
(c) 34% will become exercisable upon the Company reaching
production of 4,000 barrels of oil per day for a continuous 15 day
period in Trinidad
Options granted 1 September 2015
The value per option at the grant date was 0.56 cents for key
management personnel options and 0.45 cents for employee options,
determined using the Black Scholes option price model using the
following key inputs:
Volatility: 100% Probability of meeting vesting conditions:
100%
Risk free rate: 1.92% Exercise price: GBP0.01
USD/GBP exchange rate: 0.6509 Share price on grant date GBP0.0057
Options granted 25 May 2016
The fair value of options to be granted have been estimated at
30 June 2016 at 0.30 cents using the Black Scholes options pricing
model using the following key inputs:
Volatility: 100% Probability of meeting vesting conditions:
100%
Risk free rate: 1.92% Exercise price: GBP0.01
USD/GBP exchange rate: 0.7468 Share price on grant date GBP0.0037
Year ended 30 June 2015
During the previous year the following options were issued to
Directors and employees:
Name Number of options
Mr Yan Liu 30,000,000
Mr David Chen 30,000,000
Mr Zhiwei Gu 7,500,000
Ms Juan Wang 7,500,000
The vesting conditions of these options are as follows:
(a) 25% will become exercisable on the date that is one year
from the issue date (27 March 2016)
(b) 25% will become exercisable upon the Company reaching
production of 1,500 barrels of oil per day for a continuous 15 day
period in Trinidad
(c) 25% will become exercisable upon the Company reaching
production of 2,500 barrels of oil per day for a continuous 15 day
period in Trinidad
(d) 25% will become exercisable upon the Company reaching
production of 4,000 barrels of oil per day for a continuous 15 day
period in Trinidad
During the year 20,000,000 options were cancelled following Yan
Liu's change in position from executive to non-executive director.
An amount of US$22,791 was reversed in the current year.
Expenses recognised in the profit & loss
During the year, share-based payments recognised in profit and
loss amounts to US$250,847 (2015: US$2,157,037)
2016 2015
Number Average Number Average
exercise exercise
price US$ price US$
As at 1 July 788,998,289 0.047 453,203,083 0.060
Granted during year:
Under employee option plan 39,000,000 0.013 75,000,000 0.016
Other options issued 367,143,136 0.019 319,701,840 0.019
Exercised - - (49,051,468) 0.017
Forfeited (312,085,678) 0.045 (9,855,166)
As at 30 June 883,055,747 0.019 788,998,289 0.023
Vested and exercisable at 30 June 823,055,747 0.019 713,998,289 0.047
Weighted average remaining contractual life options outstanding 682 days 673 days
at end of period
Note 32: Related party transactions
(a) Parent entity
The ultimate Parent Entity and ultimate Australian Parent Entity within the Group is Range
Resources Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 15.
(c) Transactions with Key Management Personnel
The following transactions occurred during the year with Key
Management Personnel or their related parties:
2016 2015
US$ US$
Consulting fees paid or payable to Soncer Limited, a company owned by Mr Graham Lyon, for
the provision of corporate advisory and capital raising services (i) - 12,794
Consulting fees paid or payable to DNR Consulting, a company owned by Mr David Rieke, for
the provision of corporate advisory and services (ii) - 13,486
Balances at year end to related parties:
David Chen and related entities 12,267 -
Lubing Liu and related entities 10,375 -
Dr Yi Zeng 1,042 -
Kiki Wang and related entities 2,500 -
Kerry Gu and related entities 20,833 -
Sir Sam Jonah (i) 152,943 191,440
Marcus Edwards-Jones (i) - 33,566
Soncer Limited (i) 1,519 18,442
(i) These were related parties throughout the prior financial year until 28 November 2014.
(ii) David Rieke was a related party throughout the prior financial year until 11 December 2014.
(d) Key Management Personnel compensation
Consolidated
2016 2015
US$ US$
Short-term benefits 561,467 778,338
One-off payment 15,700 -
Post-employment benefits 24,246 28,152
Termination benefits - 150,253
Share based payments 234,424 85,464
Total 835,837 1,042,207
Note 33: Parent entity information
The following details information related to the Parent Entity
Range Resources Limited, at 30 June 2016. The information presented
here has been prepared in accordance using consistent accounting
policies as presented in Note 1.
2016 2015
US$ US$
Current assets 17,142,499 15,290,123
Non-current assets 59,743,582 97,208,375
Total assets 76,886,081 112,498,498
Current liabilities 4,648,918 15,333,201
Total liabilities 4,648,918 15,333,201
Contributed equity 383,882,182 363,205,245
Accumulated losses (335,088,153) (295,165,636)
Reserves 23,443,134 29,125,688
Total equity 72,237,163 97,165,297
Loss for the year from continuing operations (40,975,917) (29,028,556)
Loss for the year from discontinued operations (4,880,000) (7,355,641)
Total loss for the year (45,855,917) (36,384,197)
Other comprehensive loss for the year - -
Total comprehensive loss for the year (45,855,917) (36,384,197)
The contingent liabilities of the parent are included within
those of the Group as disclosed in Note 28.
The contractual commitments of the parent are included within
those of the Group as disclosed in Note 27.
Note 34: Financial risk management
The Group has exposure to the following risks from their use of
financial instruments:
-- Credit risk
-- Liquidity risk
-- Market risk
This note presents information about the Group's exposure to
each of the above risks, their objectives, policies and processes
for measuring and managing risk, and the management of capital.
Further quantitative disclosures are included throughout these
financial statements.
The Board of Directors has overall responsibility for the
establishment and oversight of the risk management framework.
Risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed to reflect changes in
market conditions and the Group's activities. The Group, through
training and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all
consultants and agents understand their roles and obligations.
Credit risk
Credit risk is the risk of financial loss to the Group if
counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group's
investments, receivables and cash held at financial
institutions.
Credit risk is managed on a group basis. Individual risk limits
are set based on internal or external ratings in accordance with
limits set by the board. There are no significant concentrations of
credit risk, whether through exposure to individual customers,
specific industry sectors and/or regions.
The credit quality of financial assets that are neither past due
or impaired can be assessed by reference to external credit ratings
(if available) or to historical information about counterparty
default rates.
Consolidated
2016 2015
Cash at bank, restricted deposits and short-term bank deposits (S&P ratings) US$ US$
AAA 155,801 -
AA- 4,635,076 9,868,592
A+ 719,460 -
BBB+ 95,205 661,512
BBB- 7,382,980 -
Not rated 8,012,730 -
21,001,252 10,530,104
Exposure to credit risk
The carrying amount of the Group's financial assets represents
the maximum credit exposure. The Group's maximum exposure to credit
risk at the reporting date was:
Consolidated
2016 2015
US$ US$
Trade and other receivables (i) 4,620,266 5,148,978
Cash and cash equivalents 13,001,252 10,530,104
Restricted deposits 8,000,000 -
25,621,518 15,679,082
(i) Counterparties without an external credit rating
Loans and receivables
The Group's exposure to credit risk is influenced mainly by the
individual characteristics of each debtor. No collateral was held
in relation to these receivables.
Impairment losses
Impairment loss US$600,000 was recognised in relation to other
receivables respectively in the year. During the prior year, an
impairment of US$17,937 on trade and other receivables were
recognised.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group's reputation.
The Group uses activity-based costing to cost its activities,
which assists in monitoring cash flow requirements and optimising
its cash return on investments. Typically, the Group ensures that
it has sufficient cash on demand to meet expected operational
expenses for a period of 12 months; this excludes the potential
impact of extreme circumstances that cannot reasonably be
predicted, such as natural disasters.
The following are contractual maturities of financial
liabilities, including estimated interest payments and excluding
the impact of netting agreements:
Group
2016
Carrying Contractual 6 months or 6 - 12 months 1-2 years 2-5 years
amount cash flows less
Financial
liabilities
at amortised
cost
Trade and
other
payables 36,008,878 38,540,925 8,906,905 3,493,614 15,397,807 10,742,599
36,008,878 38,540,925 8,906,905 3,493,614 15,397,807 10,742,599
Group
2015
Carrying amount Contractual 6 months or 6 - 12 months 1-2 years 2-5 years Over 5 years
cash flows less
Financial
liabilities at
amortised cost
Trade and other
payables 11,998,340 11,998,340 11,998,340 - - - -
Borrowings 7,518,077 7,518,077 7,518,077 - - - -
19,516,417 19,516,417 19,516,417 - - - -
Market risk
Market risk is the risk that changes in market prices, such as
interest rates and equity prices will affect the Group's income or
the value of its holdings of available for sale assets. The
objective of market risk management is to manage and control market
risk exposures within acceptable parameters, while optimising the
return.
Equity price risk
The Group is exposed to equity securities price risk. This
arises from investments held by the Group and classified on the
statement of financial position as available for sale as well as
from the option liability held as a current liability.
A 10% increase in Range's share price would result in an
increase to the option liability of US$190,323. A decrease would
have had the equal but opposite effect.
Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the US dollar, AU dollar, TT Dollar and British
pound.
Foreign exchange risk arises from future commercial transactions
and recognised assets and liabilities denominated in a currency
that is not the entity's functional currency. The risk is measured
using sensitivity analysis and cash flow forecasting.
The Group's treasury risk management policy is to closely
monitor exchange rate fluctuations. To date, the Group has not
sought to hedge its exposure to fluctuations in exchange rates,
however this policy will be reviewed on an ongoing basis.
The Group's exposure to foreign currency risk at the reporting
date was as follows:
Consolidated Consolidated
2016 2015 2016 2015
AUD AUD GBP GBP
Cash 209,285 272,621 585,596 242,304
Amount payable to other entities (119,549) (1,159,133) (44,725) (362,135)
89,736 (886,512) 540,871 (119,831)
Sensitivity
Based upon the amounts above, had the Australian dollar
strengthened by 10% against the US dollar with all other variables
held constant, the Group post-tax loss for the year on current
amounts receivable/payable would have been US$35,798 higher (2015:
US$67,885 higher), mainly as a result of foreign exchange
gains/losses on translation of AUD denominated payables as detailed
in the table above. A 10% weakening of the Australian dollar
against the above currencies at 30 June would have had the equal
but opposite effect, on the basis that all other variables remain
constant.
The Trinidad entities are minimally exposed to foreign exchange
risk arising from various currencies, primarily with respect to the
United States Dollar.
Note 34: Financial risk management (continued)
Interest rate risk
The group's main interest rate risk arises from non-current
receivables. Non-current receivables issued at fixed rates expose
the group to fair value interest rate if the loans are carried at
fair value. During 2016 and 2015, the group loan receivables were
denominated in Australian Dollars, British Pounds and US
Dollars.
Profile
At the reporting date, the interest rate profile of the Group's
financial instruments which exposes the group to cash flow interest
rate risks are:
Weighted Floating Interest Fixed Interest Non-interest bearing Total
Average Maturing
Effective Rate
Interest Rate
2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
% % US$ US$ US$ US$ US$ US$ US$ US$
Financial
Assets:
Cash and
cash
equivalents 0.35% 0.10% 13,001,252 10,530,104 - - - - 13,001,252 10,530,104
Restricted
deposits 0.25% - 8,000,000 - - - - - 8,000,000 -
Trade and
other
receivables - - - - - - 4,620,266 5,148,978 4,620,266 5,148,978
Available
for sale
financial
assets - - - - - - 45,238 446,000 45,238 446,000
Non-current
receivables - - - - - - - - -
Total
Financial
Assets 0.10% 21,001,252 10,530,104 - - 4,665,504 5,594,978 25,666,756 16,125,082
Financial
Liabilities:
Trade and other
payables 10% - -25,320,468 10,688,410 11,998,340 36,008,878 11,998,340
Borrowings - 35% -- 7,518,077 - - - 7,518,077
Total Financial
Liabilities 35% -25,320,468 7,518,077 10,688,410 11,998,340 36,008,878 19,516,417
Note 34: Financial risk management (continued)
Sensitivity analysis for variable rate instruments
The sensitivity on interest rates for 2016 and 2015 assumes a
change of 100 basis points in the interest rates at the reporting
date and would have increased / (decreased) profit and loss by the
amounts shown. Both analyses for each year assume that all other
variables, in particular foreign currency rates, remain
constant.
2016 2016 2015 2015
Weighted Average Weighted Average
Interest Rate +100 bps -100 bps Interest Rate +100 bps -100 bps
Group % US$ US$ % US$ US$
Variable rate
instruments
Financial assets (cash
and cash equivalents) 0.31% - - 0.10% - -
Financial assets (loan - -
and receivables) - - - -
Fair values versus carrying amounts
The fair value of financial assets and liabilities, together
with the carrying amounts shown in the statement of financial
position, are as follows:
Group 30 June 2016 30 June 2015
US$ US$
Fair
Carrying amount Fair value Carrying amount value
Available-for-sale financial assets 45,238 45,238 446,000 446,000
Trade and other receivables 4,620,266 4,620,266 5,148,978 5,148,978
Cash and cash equivalents 13,001,252 13,001,252 10,530,104 10,530,104
Restricted deposits 8,000,000 8,000,000 - -
Trade and other payables (36,008,878) (36,008,878) (11,998,340) (11,998,340)
Borrowings - - (7,518,077) (7,518,077)
(10,342,122) (10,342,122) (3,391,335) (3,391,335)
The basis for determining fair value is disclosed in Note
1(n).
Other price risk
The Group is not exposed to any other price risks.
Capital management
The entity's objectives when managing capital is to safeguard
its ability to continue as a going concern, so that it can continue
to provide returns for shareholders and to maintain an optimal
capital structure to reduce the cost of capital.
The entity's overall strategy remains unchanged from 2015.
The capital structure of the group consists of cash and cash
equivalents and equity attributable to equity holders of the
Company, comprising issued capital, reserves and accumulated losses
as disclosed in Notes 25 and 26 respectively. None of the entities
within the group are subject to externally imposed capital
requirements.
Gearing ratio
The Board reviews the capital structure on an annual basis. As a
part of this review the Board considers the cost of capital and the
risks associated with each class of capital
Consolidated
2016 2015
US$ US$
Financial assets
Cash and cash equivalents 13,001,252 10,530,104
Financial liabilities
Trade and other payables (36,008,878) (11,998,340)
Borrowings - (7,518,077)
Net assets / (debt) (23,007,626) (8,986,313)
Equity 72,237,132 95,023,456
Net debt to equity ratio 31.9% 9.5%
Categories of financial instruments
Consolidated
2016 2015
US$ US$
Financial assets
Cash and cash equivalents 13,001,252 10,530,104
Trade and other receivables 4,620,266 5,148,978
Available-for-sale financial assets 45,238 446,000
17,666,756 16,125,082
Financial liabilities
Trade and other payables 36,008,878 11,998,340
Borrowings - 7,518,077
Option liability 835,714 808,083
36,844,592 20,324,500
The carrying amount reflected above represents the Group's
maximum exposure to credit risk for such loans and receivables.
Note 35: Fair value measurement of financial Instruments
(a) Fair value hierarchy
AASB 13 requires disclosure of fair value measurements by level
of the following fair value measurement hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1),
(b) Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly or
indirectly (level 2), and
(c) Inputs for the asset or liability that are not based on
observable market data (unobservable inputs (level 3).
The following table presents the Group's financial assets and
financial liabilities measured and recognised at fair value at 30
June 2016 and 30 June 2015 on a recurring basis:
Level 1 Level 2 Level 3 Total
At 30 June 2016 US$ US$ US$
Assets
Available for sale financial assets
Equity securities - - 45,238 45,238
Total assets - - 45,238 45,238
Liabilities
Option liability at fair value through profit or loss - 835,714 - 835,714
Total liabilities - 835,714 - 835,714
Level 1 Level 2 Level 3 Total
At 30 June 2015 US$ US$ US$
Assets
Available for sale financial assets
Equity securities - - 446,000 446,000
Total assets - - 446,000 446,000
Liabilities
Option liability at fair value through profit or loss - 808,083 - 808,083
Borrowings - 7,518,077 - 7,518,077
Total liabilities - 8,326,160 - 8,326,160
The fair value of financial instruments in active markets such
as available for sale securities is based on quoted market bids at
the end of the reporting period. The quoted market price used for
financial assets held by the Group is the current bid price. These
instruments are included in Level 1.
The Group's policy is to recognise transfers into and transfers
out of fair value hierarchy levels as at the end of the end of the
reporting period. There were no transfers between the levels of the
fair value hierarchy during the year ended 30 June 2016.
(b) Fair values of other financial instruments
The Group has no financial instruments which are not measured at
fair value in the consolidated statement of financial position.
Due to their short term nature, the carrying amounts of the
current receivables, current payables, current borrowings, and
current other financial liabilities is assumed to approximate their
fair value.
Note 36: Fair value measurement of non-financial instruments
(a) Non-recurring fair value measurements
Assets classified as held for sale at 30 June 2016 were measured
at fair value less costs to sell in accordance with the Group's
accounting policy.
Fair value less costs to sell has been determined based upon
offers received from independent third parties to acquire the
assets. Due to the way the third party offers are structured, the
fair values of assets held for sale has been assessed as a Level 3
measurement as per the fair value hierarchy set out above.
Significant estimates made in determining the fair value of held
for sale assets are as follows:
Strait Oil & Gas Limited
The Group made the decision to divest its interest in Strait in
June 2014 and the Group is in the process of marketing its equity
interest in Strait. The Group is optimistic that a buyer will be
found for this asset. In the absence of a fully executed sale
agreement at the report date the Group has chosen to write down the
value of its interest in Strait to US$1.25million which is
considered by the Company to be a fair market value for the level
of cash consideration which may be received upon closing of a sale.
This valuation is based upon expressions of interest received and
negotiations which have taken place with potential purchasers.
(b) Fair value hierarchy
AASB 13 requires disclosure of fair value measurements by level
of the following fair value measurement hierarchy:
(d) Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1),
(e) Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly or
indirectly (level 2), and
(f) Inputs for the asset or liability that are not based on
observable market data (unobservable inputs (level 3).
The Group's policy is to recognise transfers into and transfers
out of fair value hierarchy levels as at the end of the end of the
reporting period. There were no transfers between the levels of the
fair value hierarchy during the year ended 30 June 2016.
The following table presents the Group's non-financial
instruments measured and recognised at fair value at 30 June 2016
on a non-recurring basis:
Level 1 Level 2 Level 3 Total
At 30 June 2016 US$ US$ US$
Assets
Assets classified as held for sale
Strait Oil & Gas Limited - - 1,250,000 1,250,000
Total assets - - 1,250,000 1,250,000
Level 1 Level 2 Level 3 Total
At 30 June 2015 US$ US$ US$
Assets
Assets classified as held for sale
Strait Oil & Gas Limited - - 5,000,000 5,000,000
Latin American Resources 2,179,358 2,179,358
Total assets - - 7,179,358 7,179,358
Note 37: Events after the reporting date
On 1 September 2016, Range received a demand notice from ANH
addressed to the Consortium of Optima Oil Corporation and Range
Resources Limited seeking payment of the full amount of the
outstanding obligations due to ANH in relation to Range's Colombian
assets totalling up to approximately US$53million. For further
details on this matter, please refer to Note 28.
Note 38: New accounting Standards and interpretations
Australian accounting Standards/amendments released but not yet
effective: 30 June 2016 year end
Certain new accounting Standards and Interpretations have been
published that are not mandatory for 30 June 2016 reporting periods
and have not been early adopted by the Group. The Group's
assessment of the impact of these new Standards and Interpretations
is set out below. In all cases the Group intends to apply these
standards from the application date as indicated in the table
below.
Reference Title Standard Group Key Requirements Impact
application application
date date
AASB 9 Financial 1 January 1 July 2018 AASB 9 addresses the classification, measurement and There will be
Instruments 2018 derecognition of financial assets and no
financial liabilities and introduces new rules for hedge significant
accounting. impact on the
Group on the
In December 2014, the AASB made further changes to the adoption of
classification and measurement rules this
and also introduced a new impairment model. These latest standard.
amendments now complete the financial
instruments standard.
AASB 15 Revenue 1 January 1 July 2018 The AASB has issued a new standard for the recognition of Management is
from 2018 revenue. This will replace AASB currently
Contracts 118 which covers contracts for goods and services and assessing the
with AASB111 which covers construction contracts. impact of the
Customers new rules.
The new standard is based on the principle that revenue is At this
recognised when control of a good stage, the
or service transfers to a customer, so the notion of Group is not
control replaces the existing notion able to
of risks and rewards. estimate the
impact of the
The standard permits a modified retrospective approach for new rules on
the adoption. Under this approach the Group's
entities will recognise any applicable transitional financial
adjustments in retained earnings on the statements.
date of the initial application without restating the The Group
comparative period. will make
more detailed
Entities will only need to apply the new rules to assessments
contracts that are not completed as of the of the impact
date of initial application. over the
next 12
months.
AASB Amendments 1 January 1 July 2016 There will be
2015-2 to 2016 This standard makes amendments to AASB 101 Presentation no
Australian of Financial Statements arising from significant
Accounting the IASB's Disclosure Initiative Project. The amendments impact on the
Standards - are designed to further encourage Group on the
Disclosure companies to apply professional judgment in determining adoption of
Initiative: what information to disclose in the this
Amendments financial statements. standard.
to AASB The Group is
101 The amendments also clarify that companies should use currently
professional judgment in determining conducting an
where and in what order in formation is to be presented exercise of
in the financial disclosures. reviewing
financial
report
disclosures.
AASB 16 Leases 1 January 1 July 2019 The key features of AASB 16 are as follows: To the extent
2019 Lessee accounting that the
* Lessees are required to recognise assets and entity, as
liabilities for all leases with a term of more than lessee, has
12 months, unless the underlying asset is of a low significant
value. operating
leases
outstanding
* A lessee measures right-of-use assets similarly to at
other non-financial assets and lease liabilities the date of
similarly to other financial liabilities. initial
application,
1 July 2019,
* Assets and liabilities arising from a lease are right-of-use
initially measured on a present value basis. The assets will
measurement includes non-cancellable lease payments, be recognised
and also includes payments to be made in optional for the
periods if the lessee is reasonably certain to amount of the
exercise an option to extend the lease, or not to unamortised
exercise an option to terminate the lease. portion of
the useful
life, and
* AASB 16 contains disclosure requirements for leases. lease
liabilities
will be
recognised
Lessor accounting at the
* AASB 16 substantially carries forward the lessor present value
accounting requirements in AASB 117. Accordingly, a of the
lessor continues to classify its leases as operating outstanding
leases or finance leases, and to account for those lease
two types of leases differently. payments.
Thereafter,
earnings
* AASB 16 also requires enhanced disclosures to be before
provided by lessors that will improve information interest,
disclosed about a lessor's risk exposure, depreciation,
particularly to residual value risk. amortisation
and tax
(EBITDA) will
increase
because
operating
lease
expenses
currently
included in
EBITDA will
be recognised
instead as
amortisation
of the
right-of-use
asset, and
interest
expense on
the lease
liability.
However,
there will be
an overall
reduction in
net profit
before tax in
the early
years of a
lease
because the
amortisation
and interest
charges will
exceed the
current
straight-line
expense
incurred
under AASB
117 Leases.
This trend
will reverse
in the later
years.
There will be
no change to
the
accounting
treatment for
short-term
leases less
than 12
months
and leases of
low value
items, which
will continue
to be
expensed on a
straight-line
basis.
AASB Amendments 1 January 1 July 2017 This standard amends AASB 112 Income Taxes to clarify the There will be
2016-1 to 2017 requirements on recognition of deferred no
Australian tax assets for unrealised losses on debt instruments significant
Accounting measured at fair value. impact on the
Standards - Group's
Recognition results on
of Deferred the adoption
Tax Assets of this
for standard.
Unrealised
Losses
(AASB 112)
AASB Amendments 1 January 1 July 2017 This standard amends AASB 107 Statement of Cash Flows to There will be
2016-2 to 2017 require entities preparing financial no
Australian statements in accordance with Tier 1 reporting significant
Accounting requirements to provide disclosures that enable impact on the
Standards - users of financial statements to evaluate changes in Group's
Disclosure liabilities arising from financing activities, results on
Initiative: including both changes arising from cash flows and the adoption
Amendments non-cash changes. of this
to AASB standard.
107
There are no other standards that are not yet effective and that
would be expected to have a material impact on Range in the current
or future period and on foreseeable future transactions.
Note 39: Company details
The registered office of the company is:
Ground Floor, BGC Centre
28 The Esplanade
Perth WA 6000
Australia
Telephone: +61 8 6205 3012
Facsimile: +61 8 6316 2211
The principal place of business is:
Ground Floor, BGC Centre
28 The Esplanade
Perth WA 6000
Australia
Telephone: +61 8 6205 3012
Facsimile: +61 8 6316 2211
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GMGFLZGZGVZM
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