Mosman Oil And Gas Ltd (LON:MSMN)

Mosman Oil And Gas Ltd (LON:MSMN)


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Mosman Oil And Gas Ltd RNS Release

Half-year Report


RNS Number : 3372U
Mosman Oil and Gas Limited
28 March 2019
 

Mosman Oil and Gas Limited

("Mosman" or the "Company")

 

Half Year Report

 

Mosman Oil and Gas Limited (AIM: MSMN) the oil exploration, development and production company, announces its results for the six months ended 31 December 2018, which have been reviewed by the appointed auditors.

 

Operations Review

 

Strategy

 

Mosman's strategic objective continues to be that of identifying opportunities which will provide operating cash flow and have further development upside, in conjunction with adding value to the Company's existing exploration permits.

 

Four Producing Projects in USA

 

Mosman has Working Interests in four onshore producing projects located in the USA. These projects and Mosman's working interests before royalties (WI) are:

 

Project

Location

Working Interest

Stanley Polk County

Texas

16.50%

Welch Permian Basin

Texas

100.00%

Arkoma Stacked Pay

Oklahoma

27.00%

Strawn

Texas

50.00%

 

Additional Prospective Projects in USA

 

In addition, and as part of the Company's Strategic Alliance with Baja Oil and Gas LLC (Baja) which includes the producing Stanley asset, working interests in two additional projects, Challenger and Champion have also been acquired. These are both prospective and already preliminary drilling targets have been identified.  These projects and Mosman's working interests before royalties (WI) are.

 

Project

Location

Working Interest

Challenger

Texas

46.83%

Champion

Texas

60.00%

 

The Company may consider further potential investment opportunities with Baja which may progress during the coming year. 

 

Acquisition and Development

 

A total of $899,662 was expended on acquisition costs and development expenditure during the six months to 31 December 2018. Development expenditure during the period has included workovers and largely one-off repairs that were identified to increase production and develop individual assets.

 

The Board has been evaluating other potential acquisition opportunities during the period and continues to do so.

 

Sales

 

Net Sales Revenue attributed to Mosman for the six months ended 31 December 2018 was $521,326 which was an increase of some 62 per cent. over the same period in 2017 (and an increase of 24% over the six months to 30 June 2018).

 

That revenue was generated from Net Production attributable to Mosman representing some 6,476 Barrels of Oil Equivalent (BOE).

 

The revenue reported in the Statement of Profit or Loss and Other Comprehensive Income is statutory revenue which includes adjustments for inventory balances at period ends, and other adjustments required by the AASB.

 

This is different from the Revenue for the Producing Assets note (Note 14) being the Revenue for a given specific oil and gas asset, which excludes other items.

 

This also differs from the Net Sales attributable to Mosman figure released to the market via the Regulatory News Service (RNS) on 6 February 2019 as this represents the Net Revenue attributable to the Company prior to adjustments for inventory balances at period ends, and other matters required by the AASB.

 

Several factors including breakdowns at Welch, workovers at other projects, lower commodity prices, and weather delays generally resulted in a reduction of Gross Profit, compared to the same period in 2018. These matters have largely been rectified and 2019 has started on a much stronger basis with January Net Production attributable to Mosman of 2,203 BOE and the resulting Net Sales attributable to Mosman being $102,966.

 

Exploration 

 

Mosman continues to progress the exploration portfolio in Australia and maintains its interest in the 100% owned granted permits EP 145 and one application (EPA 155).

 

During the six months $66,275 was expended on advancing these assets.

 

The permit anniversary date on EP 145 is 21 August 2019, which is the due date for completion of 100km of 2D seismic surveys, seismic processing and interpretation and well planning. If the Company has not fulfilled the above obligations, a negotiation with the Northern Territory Department of Primary Industry and Resources may be commenced to extend the period for completion, or the permit relinquished. There can be no certainty that an extension may be granted.  Mosman continues to pursue farm-in discussions on EP 145 with potential joint venture partners.

 

General

 

In the six months, identified project expenditures on the operating projects increased to resolve short term issues.  Most other costs have been controlled when compared to the same period in 2017.

 

Corporate

 

Funding

In November 2018, Mosman raised £390,000 by way of a placing and subscription of 141,818,182 new ordinary shares at 0.275p per share. Further, the Directors participated in a placement of 40,000,000 new ordinary shares at 0.275 per share contributing £110,000.  The proceeds of the Placing were raised to accelerate the development of the US onshore oil production assets to increase production and cash flow, in addition to the potential acquisition of additional onshore production assets, for general corporate working capital purposes and for the ongoing costs associated with the review and due diligence on other acquisition opportunities being evaluated.

 

The Mosman Board is encouraged by the drilling and production opportunities available to it going forward and is currently considering a range of options to fund the business and deliver growth in production and revenue.

 

 

Gem International Resources Inc

Mosman continues to hold its shareholding in the TSX-V listed GEM International Resources Inc. ("GEM") (TSX-V: GI). GEM shares remain suspended due to the previous board failing to complete the required financial reporting.

 

The current Board (which includes Mosman's Executive Chairman) are hopeful that a new transaction will occur shortly to revitalize GEM. At this time a draft Letter of Intent is under negotiation, but it is extremely difficult to predict the chance of completion, or the timetable.

 

Subsequent Events

 

There were no significant events subsequent to the date of statement of financial position.

 

Outlook

 

While the six months to 31 December 2018 have been impacted by factors as set out above, we look forward to the remainder of the financial year and beyond with confidence.

 

Production is anticipated to continue to grow in the next twelve months.

 

We also retain an exciting exploration portfolio with our Amadeus Basin assets where EP 145 is set to benefit from any resulting positive newsflow following Santos' expected drilling of the Dukas Prospect in the near term. Mosman continues to pursue farm-in discussions on EP 145 with potential joint venture partners.

 

We also look forward to further developing our US asset base in conjunction with our Strategic Partner Baja which includes further work to progress the drill targets identified at our Champion and Challenger projects and drilling further prospects identified at our producing Stanley asset.

 

Overall, the expectation for 2019 is for higher revenues and lower costs from the existing producing asset base coupled with further potential production upside from the recompletion at Stanley-1, and the drilling of Stanley 2 and from the potential drilling of other well targets already identified in our US portfolio.

 

Competent Person's Statement

The information contained in this announcement has been reviewed and approved by Andy Carroll, Technical Director for Mosman, who has over 35 years of relevant experience in the oil industry. Mr. Carroll is a member of the Society of Petroleum Engineers.

 

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

Enquiries:

Mosman Oil & Gas Limited

John W Barr, Executive Chairman

Andy Carroll, Technical Director

[email protected]

[email protected]

 

NOMAD and Broker

SP Angel Corporate Finance LLP

Stuart Gledhill / Richard Hail / Soltan Tagiev

+44 (0) 20 3470 0470

 

Gable Communications Limited

Justine James / John Bick

+44 (0) 20 7193 7463

[email protected]

Joint Broker

SVS Securities Plc

Tom Curran / Ben Tadd

+44 (0) 203 700 0078

 

 

Updates on the Company's activities are regularly posted on its website www.mosmanoilandgas.com.
 

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income for

The Half Year Ended 31 December 2018

All amounts are in Australian Dollars

 

 

Notes

Consolidated

6 months to     31 December 2018

$

Consolidated

6 months to  31 December 2017

$

 

 

 

 

Revenue

 

521,326

321,348

Cost of sales

2

(482,849)

(164,826)

Gross profit

 

38,477

156,522

 

 

 

 

Interest income

 

15,001

6,336

Other income

 

8,546

709

 

 

 

 

Administrative expenses

 

(94,095)

(67,195)

Corporate expenses

3

(417,494)

(406,119)

Directors fees

 

(60,000)

(60,000)

Exploration expenses incurred not capitalised

 

(7,987)

(52,163)

Employee benefits expense

 

(46,093)

(47,875)

Evaluation and due diligence

 

(100,020)

(154,077)

Non cash share based payments expense

 

(10,149)

(40,567)

Finance costs

 

(2,250)

-

Depreciation expense

 

(3,135)

(5,599)

Costs associated with abandoned acquisitions

4

(40,214)

(9,815)

Pre-acquisition costs

 

-

(44,775)

Share of net loss from joint operation

 

(11,354)

(6,428)

Loss from ordinary activities before income tax expense

 

(730,767)

(731,046)

 

 

 

 

Income tax expense

 

-

-

 

 

 

 

Net loss for the period

 

(730,767)

(731,046)

 

 

 

 

Other comprehensive loss

 

 

 

Items that may be reclassified to profit or loss

 

 

 

Loss on the revaluation of equity instruments at fair value through other comprehensive income, net of tax

5

-

(190,309)

Foreign currency gain/(loss)

5

60,330

(10,415)

Other comprehensive loss for the period, net of tax

 

60,330

(200,724)

Total comprehensive loss attributable to members of the entity

 

(670,437)

(931,770)

 

 

 

 

Basic and diluted loss per share

 

(0.14) cents

(0.36) cents

 

 

The accompanying notes form part of these financial statements.
 

Condensed Consolidated Statement of Financial Position

As at 31 December 2018

All amounts are in Australian Dollars

 

 

Notes

Consolidated

Balance as at 31 December 2018

Consolidated

Balance as at 30 June      2018

 

 

 

$

$

 

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

 

340,928

1,323,084

Trade and other receivables

6

337,202

161,814

Inventory

 

56,195

106,633

Other assets

7

93,401

5,944

Other financial assets

 

-

-

Total current assets

 

827,726

1,597,475

 

 

 

 

Non-Current Assets

 

 

 

Property, plant & equipment

 

16,663

19,799

Oil and gas assets

8

3,444,901

2,592,814

Loans receivable

 

310,869

276,999

Other receivables

 

50,000

50,000

Capitalised oil and gas exploration expenditure

9

1,557,294

1,491,019

Total non-current assets

 

5,379,727

4,430,631

 

 

 

 

Total Assets

 

6,207,453

6,028,106

 

 

 

 

Current Liabilities

 

 

 

Trade and other payables

10

449,344

436,586

Provisions

 

21,308

19,000

Total current liabilities

 

470,652

455,586

 

 

 

 

Total Liabilities

 

470,652

455,586

 

 

 

 

Net Assets

 

5,736,801

5,572,520

 

 

 

 

Shareholders' Equity

 

 

 

Contributed equity

11 a)

28,869,373

28,044,804

Reserves

11 b)

893,750

420,860

Accumulated losses

 

(24,014,968)

(22,921,464)

Equity attributable to shareholders

 

5,748,155

5,544,200

Non-controlling interest

 

(11,354)

28,320

 

 

 

 

Total Shareholders' Equity

 

5,736,801

5,572,520

 

 

 

 

 

 

 

The accompanying notes form part of these financial statements.

 

Condensed Consolidated Statement of Changes in Equity

For the Half Year Ended 31 December 2018

All amounts are in Australian Dollars

 

 

Accumulated

Losses

Contributed Equity

Reserves

Non-Controlling Interest

Total

 

$

$

$

$

$

Balance at 1 July 2018

(22,921,464)

28,044,804

420,860

28,320

5,572,520

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

Loss for the period

(719,413)

-

-

(11,354)

(730,767)

Other comprehensive loss for the period

-

-

60,330

-

60,330

Total comprehensive loss for the period

(719,413)

-

60,330

(11,354)

(670,437)

 

 

 

 

 

 

Transactions with owners, in their capacity as owners, and other transfers:

 

New shares issued

-

887,377

-

-

887,377

Cost of raising equity

-

(62,808)

-

-

(62,808)

Reallocation of ARR reserve

(402,411)

-

402,411

-

-

Options issued

-

-

10,149

-

10,149

Total transactions with owners and other transfers

-

824,569

10,149

-

834,718

Balance at 31 December 2018

28,869,373

893,750

16,966

5,736,801

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2017

(19,499,941)

25,286,313

1,058,126

62,041

6,906,539

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

Loss for the period

(724,618)

-

-

(6,428)

(731,046)

Other comprehensive loss for the period

-

-

(200,724)

-

(200,724)

Total comprehensive loss for the period

(724,618)

-

(200,724)

(6,428)

(931,770)

 

 

 

 

 

 

Transactions with owners, in their capacity as owners, and other transfers:

 

New shares issued

-

1,013,376

-

-

1,013,376

Cost of raising equity

-

(72,841)

-

-

(72,841)

Options issued

-

-

40,567

-

40,567

Options expired

646,987

-

(646,987)

-

-

Total transactions with owners and other transfers

646,987

940,535

(606,420)

-

981,102

Balance at 31 December 2017

(19,577,572)

26,226,848

250,982

55,613

6,955,871

 

 

These accompanying notes form part of these financial statements
 

Condensed Consolidated Statement of Cash Flows

For the Half Year Ended 31 December 2018

All amounts are in Australian Dollars

 

 

 

Consolidated

6 months to    31 December 2018

Consolidated

 6 months to 31 December 2017

 

 

$

$

 

 

 

 

Cash flows from operating activities

 

 

 

Receipts from customers

 

540,201

134,839

Interest received & other income

 

23,546

7,040

Payments to suppliers and employees

 

(1,087,329)

(619,075)

Bonds refunded

 

66,735

3,035

Interest paid

 

(2,249)

-

Net cash used in operating activities

 

(459,096)

(474,161)

 

 

 

 

Cash flows from investing activities

 

 

 

Payments for property, plant & equipment

 

-

(4,240)

Payments for exploration and evaluation

 

(174,280)

(284,043)

Deposits paid for acquisition

 

(136,735)

-

Costs associated with abandoned acquisitions

 

(40,214)

(9,815)

Payments for oil and gas acquisitions

 

(690,449)

(656,191)

Payments for oil and gas assets

 

(171,311)

(341,111)

Net cash used in investing activities

 

(1,212,989)

(1,295,400)

 

Cash flows from financing activities

 

 

 

Proceeds from shares issued

 

887,376

1,013,375

Payments for costs of capital

 

(62,808)

(72,841)

Payments for loans to third parties

 

(33,870)

-

Transactions with non-controlling interest

 

(100,769)

(6,427)

Net cash provided by financial activities

689,929

934,107

 

 

 

 

Net decrease in cash and cash equivalents

 

(982,156)

(835,454)

Cash and cash equivalents at the beginning of the financial period

 

1,323,084

1,666,139

Cash and cash equivalents at the end of the financial period

 

 

340,928

830,685

 

 

 

 

 

 

 

The accompanying notes from part of these financial statements

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

1. Summary of Significant Accounting Policies

 

   Statement of Compliance

 

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 'Interim Financial Reporting'. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS34 'Interim Financial Reporting'. The half-year report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the most recent annual financial report.

 

Basis of preparation

The condensed consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts presented in Australian dollars, unless otherwise noted.

 

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Group's 2018 annual financial report for the financial year ended 30 June 2018, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

 

Going Concern
 

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

 

As disclosed in the half-year interim financial report, the Group incurred a net loss for the period of $730,767 and had net cash outflows from operating activities of $459,096 for the half year ended 31 December 2018.  As at that date the Group had net current assets of $357,075.

 

The Directors believe that there are reasonable grounds to believe that the Group will be able to continue as a going concern, after consideration of the following factors:
 

·      The Company has $337,202 in current trade receivables which the directors believe will be sufficient to fund short term working capital needs;

·      The inventory balance as at 31 December 2018 was $56,196; 

·      The Directors are of the opinion that existing shareholders and financiers will continue to fund the company in the short term, and if required additional share capital or debt funding can be sourced to develop the projects further.

 

However, should the Group activities not eventuate as planned or be unable to obtain sufficient funding as advised above, there is a significant uncertainty which may cast doubt as to whether or not the Group will be able to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.

 

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.

 

Accordingly, the Directors believe that the Group will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report.

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

1.   Summary of Significant Accounting Policies (Continued)

 

New and revised accounting requirements applicable to the current half- year reporting period

 

The following Accounting Standards and Interpretations are most relevant to the consolidated entity:

 

AASB 9 Financial Instruments

The consolidated entity has adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest.

 

A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value.

 

All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI').

 

Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch).

 

New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available. The Group has not recognised an ECL in the current period as the group has not recognised a bad debts expense since operations began. This can be attributed to the Group's customer profile and credit policies in place.

 

AASB 9 was adopted using the modified retrospective approach and as such comparatives were not restated.

 

AASB 15 Revenue from Contracts with Customers

The consolidated entity has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period.

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

1.   Summary of Significant Accounting Policies (Continued)

 

The consolidated entity's main source of income is royalties, where the adoption of AASB 15 has been determined to not have a significant impact on the consolidated entity's accounting policies or the amounts recognised in the financial statements. There is therefore no impact on opening retained profits as at 1 July 2018.

 

Exploration and Evaluation Costs

 

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are carried forward in respect of an area for which the rights to tenure are current and that has not at reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or relating to, the area of interest are continuing.

 

Impairment of Exploration and Evaluation Assets

 

The ultimate recoupment of the value of exploration and evaluation assets, is dependent on the successful development and commercial exploitation, or alternatively, sale, of the exploration and evaluation assets.

 

Impairment tests are carried out when there are indicators of impairment in order to identify whether the asset carrying values exceed their recoverable amounts. There is significant estimation and judgement in determining the inputs and assumptions used in determining the recoverable amounts.

 

The key areas of judgement and estimation include:

 

·      Recent exploration and evaluation results and resource estimates;

·      Environmental issues that may impact on the underlying tenements;

·      Fundamental economic factors that have an impact on the operations and carrying values of assets and liabilities.

 

Revenue Reporting

 

Revenue for the Company is reported in a number of sections of the financial report. The revenue reported in the Statement of Profit or Loss and Other Comprehensive Income is statutory revenue which includes adjustments for inventory balances at period ends, intercompany management fee eliminations and other accounting adjustments required by the AASB. Revenue for the Producing Assets note (Note 14) is taken as being the Revenue for that specific oil and gas assets, which excludes, among others, the intercompany management fee adjustment. The Net Sales attributable to Mosman figure released to the market via the Regulatory News Service (RNS) on 6 February 2019 is the Net Revenue attributable to the Company prior to adjustments for inventory balances at period ends, and other adjustments required by the AASB.

 

Oil and Gas assets

 

The cost of oil and gas producing assets and capitalised expenditure on oil and gas assets under development are accounted for separately and are stated at cost less accumulated amortisation and impairment losses. Costs include expenditure that is directly attributable to the acquisition or construction of the item as well as past exploration and evaluation costs.

 

When an oil and gas asset commences production, costs carried forward are amortised on a units of production basis over the life of the economically recoverable reserves. Changes in factors such as estimates of economically recoverable reserves that affect amortisation calculations do not give rise to prior financial period adjustments and are dealt with on a prospective basis.

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

1.   Summary of Significant Accounting Policies (Continued)

 

Segment Reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance.

 

 

 

Consolidated

6 months to 31 December 2018

Consolidated

     6 months to 31 December 2017

 

$

$

2.    Cost of sales

 

Cost of sales

305,427

38,168

Lease operating expenses

129,846

120,123

Oil and gas assets amortisation charge

47,576

6,535

 

482,849

164,826


3.    Corporate costs

 

Accounting, Company Secretary and Audit fees

92,933

100,252

Consulting fees - Board

221,750

225,385

Consulting fees - Other

56,538

52,207

Legal and compliance fees

46,273

28,275

 

417,494

406,119


4.    Costs associated with abandoned acquisitions

 

 

Costs Incurred 

40,214

9,815

 

40,214

9,815

 

5.    Other comprehensive loss

 

 

Loss on the revaluation of equity instruments at fair value through other comprehensive income, net of tax

-

190,309

Foreign currency (gain)/loss

(60,330)

10,415

 

(60,330)

200,724

 

 

 

 

 

 

 

 

 

6.    Trade and other receivables

 

 

Deposits

15,072

81,808

GST receivable

47,301

32,574

Cash calls receivable

125,827

47,432

Cash calls paid in advance

136,735

-

Other receivables

12,267

-

 

337,202

161,814

 

 

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

 

Consolidated

Balance as at 31 December 2018

Consolidated

     Balance as at 30 June

2018

 

$

$

           

 

7.    Other assets

 

 

Prepayments

93,401

5,944

 

93,401

5,944

       

 

8.    Oil and gas assets

 

 

Cost brought forward

2,592,814

749,619

Acquisition of oil and gas assets

690,450

1,278,583

Capitalised equipment workovers

209,212

587,060

Amortisation

(47,575)

(22,448)

Carrying value at end of the period

3,444,901

2,589,814

 

 

 

 

 

9.    Capitalised oil and gas expenditure

 

 

Costs brought forward

1,491,019

4,073,115

Exploration costs incurred during the period

17,276

144,316

Exploration expenditure previously capitalised,

written off in the period

-

(2,752,115)

FX movement

48,999

25,703

Carrying value at the end of the period

1,557,294

1,491,019

 

 

 

 

10.    Trade and other payables

 

 

Trade creditors

189,075

273,844

Other creditors and accruals

260,269

162,742

 

449,344

436,586

 

11.    Contributed Equity

 

 

Ordinary Shares

 

 

Total shares at 31 December 2018: 635,810,968 (30 June 2018: 453,992,787) ordinary shares fully paid

28,869,373

28,044,804

 

 

 

a) Shares movements during the half-year

Value of shares

$

No. of shares

 

Balance at 30 June 2018

28,044,805

453,992,787

 

Shares issued

887,376

181,818,181

 

Cost of issued shares

(62,808)

-

Balance at 31 December 2018

28,869,373

635,810,968

 

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

 

Consolidated

Balance as at 31 December 2018

Consolidated

     Balance as at 30 June

2018

12.    Reserves

 

 

Options reserve

481,968

471,818

Asset revaluation reserve

-

(402,411)

Foreign currency translation reserve

411,782

351,453

 

893,750

420,860

 

a) Options Reserve

 

 

         

 

Options Reserve at the beginning of the period

471,818

1,063,440

Options issued

10,150

55,365

Options expired

-

(646,987)

Options Reserve at the end of the period

481,968

471,818

 

 

b) Asset Revaluation Reserve

 

 

 

Asset Revaluation Reserve at the beginning of the period

(402,411)

(215,793)

Revaluation of AFS shares

-

(186,618)

Reallocation of Asset Revaluation Reserve to Retained Earnings due to AASB 9 introduction

402,411

-

Asset Revaluation Reserve at the end of the period

-

(402,411)

 

 

c) Foreign Currency Translation Reserve

 

 

 

Foreign Currency Translation Reserve at the beginning of the period

351,453

210,479

Current movement in the period

60,329

140,974

Foreign Currency Translation Reserve at the end of the period

411,782

351,453

 

 

13        Segment Information

 

The Group has identified its operating segments based on the internal reports that are reviewed and used by the board to make decisions about resources to be allocated to the segments and assess their performance.

 

Operating segments are identified by the board based on the Oil and Gas projects in Australia the United States and New Zealand. Discrete financial information about each project is reported to the board on a regular basis.

 

The reportable segments are based on aggregated operating segments determined by the similarity of the economic characteristics, the nature of the activities and the regulatory environment in which those segments operate.

 

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

13        Segment Information (continued)

 

The Group has three reportable segments based on the geographical areas of the mineral resource and exploration activities in Australia, the United States and New Zealand. Unallocated results, assets and liabilities represent corporate amounts that are not core to the reportable segments.

 

 

(i)       Segment performance

 

 

 

 

 

 

New Zealand

$

United States

$

Australia

$

Total

$

Period ended 31 December 2018

 

 

 

 

Revenue

 

 

 

 

Revenue

-

500,503

20,823

521,326

Interest income

-

14,525

477

15,001

Foreign exchange gain

-

-

7,622

7,622

Gain on sale of non-current assets

924

-

-

924

Segment revenue

924

515,027

28,922

544,873

 

 

 

 

 

Segment Result

 

 

 

 

Loss

 

 

 

 

Allocated

 

 

 

 

-      Corporate costs

-

(11,177)

(406,316)

(417,493)

-      Administrative costs

(469)

(43,620)

(50,005)

(94,094)

-      Lease operating expenses

-

(353,003)

-

(353,003)

-      Cost of sales

-

(129,846)

-

(129,846)

-      Share of net loss of joint operation

-

(11,354)

-

(11,354)

Segment net loss before tax

455

(33,972)

(427,399)

(460,916)

 

 

 

 

 

Reconciliation of segment result to net loss before tax

 

 

 

 

Amounts not included in segment result but reviewed by the Board

 

 

 

 

-      Exploration expenditure incurred not capitalised

(7,987)

-

-

(7,987)

-      Evaluation and due diligence

-

-

(100,020)

(100,020)

-      Projects abandoned

(1,930)

-

(38,284)

(40,214)

Unallocated items

 

 

 

 

-      Employee benefits expense

 

 

 

(106,093)

-      Share based payments

 

 

 

(10,149)

-      Finance costs

 

 

 

(2,251)

-      Depreciation

 

 

 

(3,135)

Net Loss before tax from continuing operations

 

 

 

(730,764)

             

 

 

 

 

 

 

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

(i)       Segment performance (continued)

 

 

 

 

New Zealand

$

United States

$

Australia

$

Total

$

 

Period ended 31 December 2017

 

 

 

 

 

Revenue

 

 

 

 

 

Revenue

-

302,113

19,235

321,348

 

Interest income

-

-

709

709

 

Share of net profit of joint operation

-

-

1,529

1,529

 

Other income

4,775

32

-

4,807

 

Segment revenue

4,775

302,145

21,473

328,393

 

 

 

 

 

 

 

Segment Result

 

 

 

 

 

Loss

 

 

 

 

 

Allocated

 

 

 

 

 

-      Corporate costs

-

(1,187)

(404,932)

(406,119)

 

-      Administrative costs

(4,905)

-

(62,290)

(67,195)

 

-      Cost of sales

-

(38,169)

-

(38,169)

 

-      Lease operating expenses

-

(126,657)

-

(126,657)

 

-      Share of net joint operating loss

-

(6,428)

-

(6,428)

 

Segment net (loss)/profit before tax

(130)

129,704

(445,749)

(316,175)

 

 

 

 

 

 

 

Reconciliation of segment result to net loss before tax

 

 

 

 

 

Amounts not included in segment result but reviewed by the Board

 

 

 

 

 

-      Exploration expenses incurred, not capitalized

(52,163)

-

-

(52,163)

 

-      Evaluation and due diligence

-

(9,819)

(144,258)

(154,077)

 

-      Projects abandoned

(9,815)

-

-

(9,815)

 

-      Pre-acquisition costs

-

-

(44,775)

(44,775)

 

Unallocated items

 

 

 

 

 

-      Employee Benefits Expense

 

 

 

(107,875)

 

-      Share-based payments

 

 

 

(40,567)

 

-      Depreciation

 

 

 

(5,599)

 

Net Loss before tax from continuing operations

 

 

 

(731,046)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

 

13     Segment Information (continued)

 

 

 

 

 

(ii)       Segment assets

 

 

 

 

 

 

New Zealand

$

United States

$

Australia

$

Total

$

 

As at 31 December 2018

 

 

 

 

 

Segment assets as at 1 July 2018

197,020

2,831,215

2,999,781

6,028,106

 

Segment asset increases/(decreases) for the year

 

 

 

 

 

-      Exploration and evaluation

(246,019)

(2,831,215)

3,605,321

528,087

 

-      Foreign exchange impact

48,999

-

-

48,999

 

-      Exploration expenditure previously capitalised, written off in financial year

-

-

(5,047,898)

(5,047,898)

 

 

-

-

1,557,294

1,557,294

 

 

 

 

 

 

 

Reconciliation of segment assets to total assets:

 

 

 

 

 

Other assets

142,200

3,935,956

572,004

4,650,160

 

Total assets from continuing operations

142,200

3,935,956

2,129,298

6,207,453

 

               

 

 

New Zealand

$

United States

$

Australia

$

Total

$

 

As at 30 June 2018

 

 

 

 

 

Segment assets as at 1 July 2017

392,510

953,669

6,072,294

7,418,472

 

Segment asset increases/(decreases) for the year

 

 

 

 

 

-      Exploration and evaluation

(418,211)

(953,669)

466,623

(905,257)

 

-      Foreign exchange impact

25,701

-

-

25,701

 

-      Exploration expenditure previously capitalised, written off in financial year

-

-

(5,047,898)

(5,047,898)

 

 

-

-

1,491,019

1,491,019

 

 

 

 

 

 

 

Reconciliation of segment assets to total assets:

 

 

 

 

 

Other assets

197,020

2,831,215

1,508,852

4,537,087

 

Total assets from continuing operations

197,020

2,831,215

2,999,871

6,028,106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                           

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

13     Segment Information (continued)

 

(iii)     Segment liabilities

 

 

 

 

 

New Zealand

$

United States

$

Australia

$

Total

$

As at 31 December 2018

 

 

 

 

Segment liabilities as at 1 July 2018

146,071

136,374

173,141

455,586

Segment liability (decreases) for the year

(146,071)

78,902

82,234

15,066

 

-

215,276

255,375

470,652

Reconciliation of segment liabilities to total liabilities:

 

 

 

 

Other liabilities

-

-

-

-

Total liabilities from continuing operations

-

215,276

255,375

470,652

 

 

 

 

 

As at 30 June 2018

 

 

 

 

Segment liabilities as at 1 July 2017

162,478

69,679

279,777

511,934

Segment liability (decreases) for the year

(16,407)

66,695

(106,636)

(56,348)

 

146,071

136,374

173,141

455,586

Reconciliation of segment liabilities to total liabilities:

 

 

 

 

Other liabilities

-

-

-

-

Total liabilities from continuing operations

146,071

136,374

173,141

455,586

           

 

 

 

 

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

14        Producing assets

 

The Group currently has 4 producing assets, which the Board monitors as separate items to the geographical and operating segments. The Arkoma, Stanley, Strawn and Welch are Oil and Gas producing assets in the United States. It should be noted that the Strawn Project is a 50% joint operation with Blackstone Oil and Gas and as a result the amounts below are only the apportionment of the Mosman ownership right. Project performance, assets and liabilities and acquisition costs are all monitored by the line items below.

 

 

 

 

 

 

 

 

 

 

Arkoma

$

Stanley

$

Strawn

$

Welch

$

Total

$

 

Half-Year Ended 31 December 2018

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

Oil and gas project related revenue

41,621

 8,223

 34,843

 415,815

 500,503

 

Other income

 -  

 -  

 43,620

 -  

 43,620

 

Producing assets revenue

41,621

 8,223

78,463

 415,815

544,122

 

 

 

 

 

 

 

 

Project-related expenses

 

 

 

 

 

 

-     Cost of sales

-

-

13,606

115,108

128,714

 

-     Lease operating expenses

39,336

4,490

 65,943

 212,674

322,441

 

Project cost of sales

39,336

4,490

 79,548

 327,781

451,155

 

 

 

 

 

Project gross profit

 

 

 

 

 

 

Gross profit

2,285

3,734

 (1,085)

 88,034

92,967

 

 

 

 

 

Overhead costs

 

 

 

 

 

 

-     Administrative costs

778

-

-

4,038

4,816

 

-     Employee benefits

-

-

10,936

-

10,936

 

Project net profit/(loss) before tax

1,507

3,734

 (12,021)

 83,996

77,216

 

 

 

 

 

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

 

14        Producing assets (continued)

 

 

 

 

 

 

 

 

 

Arkoma

$

Stanley

$

Strawn

$

Welch

$

Total

$

 

Half-Year Ended 31 December 2017

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

Oil and gas project related revenue

2,965

-

75,003

224,145

302,113

 

Other income

32

-

-

-

32

 

Producing assets revenue

2,997

-

75,003

224,145

302,145

 

 

 

 

 

 

 

 

Project-related expenses

 

 

 

 

 

 

-     Cost of sales

-

-

11,596

26,573

38,169

 

-     Lease operating expenses

-

-

57,667

81,710

139,377

 

Project cost of sales

-

-

69,263

108,283

177,546

 

 

 

 

 

Project gross profit

 

 

 

 

 

 

Gross profit

2,997

-

5,740

115,862

124,599

 

 

 

 

 

Overhead costs

 

 

 

 

 

 

-     Employee benefits

-

-

12,836

-

12,836

 

Project net profit/(loss) before tax

2,997

-

(7,096)

115,862

111,763

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

14        Producing assets (continued)

 

 

 

 

 

 

 

 

 

Arkoma

$

Stanley

$

Strawn

$

Welch

$

Total

$

 

As at 31 December 2018

Project assets as at 1 July 2018

19,424

-

127,256

370,051

516,731

 

Project assets for the year

 

 

 

 

 

 

-     Cash

17,488

-

5,836

27,145

50,470

 

-     Cash calls receivable

-

-

142,829

-

142,829

 

-     Loans receivable

54,146

33,359

-

403,091

490,777

 

-     Inventory

-

-

9,647

46,548

56,196

 

-     Bonds receivable

-

-

319

-

319

 

 

71,634

33,539

 158,632

 476,785

740,591

 

Unallocated assets

 

 

 

 

 

 

-     Other assets

 

 

 

 

1,417

 

Total project assets

 

 

 

 

742,007

 

 

 

 

 

 

 

 

As at 30 June 2018

Project assets as at 1 July 2017

-

                                               -

204,119

-

204,119

 

Project assets for the year

 

 

 

 

 

 

-     Cash

283

-

2,384

140,249

142,916

 

-     Cash calls receivable

-

-

83,963

-

83,963

 

-     Loans receivable

19,141

-

8,909

154,865

182,915

 

-     Inventory

-

-

31,696

74,937

106,633

 

-     Bonds receivable

-

-

304

-

304

 

 

19,424

-

127,256

370,051

516,731

 

Unallocated assets

 

 

 

 

 

 

-     Other assets

 

 

 

 

1,353

 

Total project assets

 

 

 

 

518,084

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2018

All amounts are Australian Dollars

 

 

14        Producing assets (continued)

 

(iii)       Project liabilities

 

 

 

 

 

 

Arkoma

$

Stanley

$

Strawn

$

Welch

$

Total

$

As at 31 December 2018

Project liabilities as at 1 July 2018

2,584

-

101,105

156,608

260,297

Project liabilities for the year

 

 

 

 

 

-     Accounts payable

 -  

 19,552

 84,285

 143,052

 246,889

-     Accrued expenses

 38,451

 -  

 -  

 -  

 38,451

-     Loans payable

14,002

 10,154

 59,305

 23,974

107,435

 

52,452

 29,706

 143,590

 167,026

392,774

 

 

 

 

 

Unallocated liabilities

 

 

 

 

-     Other liabilities

 

 

 

-

Total project liabilities

 

 

 

392,774

 

 

 

 

 

(iii)       Project liabilities

 

 

 

 

As at 30 June 2018

Project liabilities as at 1 July 2017

-

-

83,217

-

83,217

Project liabilities for the year

 

 

 

 

-     Accounts payable

-

-

80,057

115,897

195,954

-     Loans payable

2,584

-

21,048

40,711

64,343

 

2,584

-

101,105

156,608

260,297

 

 

 

 

 

Unallocated liabilities

 

 

 

 

-     Other liabilities

 

 

 

-

Total project liabilities

 

 

 

260,297

                         

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2017

All amounts are Australian Dollars

 

15                    Expenditure Commitments

 

(a)       Exploration

 

The Company has certain obligations to perform minimum exploration work on Oil and Gas tenements held.  These obligations may vary over time, depending on the Company's exploration programs and priorities.  At 31 December 2018, the Company has estimated the monetary value of the total exploration commitments for the next 12 months are as follows:

 

Entity

Tenement

$

 

 

 

 

 

 

 

 

 

Trident Energy Limited1

EP 145

1,500,000

 

Oilco Pty Ltd2

EPA 155

-

 

Oilco Pty Ltd3

EP 156

-

 

Mosman Texas, LLC4

Various

-

 

 

 

1,500,000

 

 

1 The permit anniversary date is 21 August 2019, which is the due date for completion of 100km of 2D seismic surveys, seismic processing and interpretation and well planning. If the Company has not fulfilled the above obligations, a negotiation with the Northern Territory Department of Primary Industry and Resources may be commenced to extend the period for completion, or the permit relinquished. There can be no certainty that an extension may be granted.

 

2 This application has not currently been granted and as such no obligation exists.

 

3 This tenement has been surrendered resulting in no further obligations.

 

4 The permits held by Mosman Texas, LLC are all held by production with no minimum expenditure obligations.

 

 

(b)       Capital Commitments

 

The Company had no capital commitments at 31 December 2018 (2017 - $Nil).

 

 

16        Subsequent Events

 

There were no significant events subsequent to balance date.

 

17        Dividends

 

No dividends have been paid or proposed during the half year ended 31 December 2018.

 

 

 

 

 

 

 

Directors' Declaration

 

The Directors of the Company declare that:

 

1.          The financial statements and notes, as set out on pages 6-24, are in accordance with the Australian Corporations Act 2001:

 

(a)       comply with Accounting Standards, which, as stated in Note 1 - Statement of Accounting Policies to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and

 

(b)       give a true and fair view of the financial position as at 31 December 2018 and of the performance for the year ended on that date of the Group.

 

2.      In the Directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

 

This declaration is made in accordance with a resolution of the Board of Directors and is signed by authority for and on behalf of the Directors by:

 

 

 

 

 

John W Barr

Executive Chairman

 

Dated this 28 March 2019

 

 

Company Directory

 

Directors

 

John W Barr

Andy R Carroll

John A Young

Registrars

 

In Australia:

Computershare Investor Services Pty Ltd

Level 2, 45 St Georges Terrace

Perth Western Australia 6000

 

In the UK:

Computershare Investor Services plc

The Pavilions

Bridgewater Road

Bristol BS99 6ZY

 

 

Company Secretary

 

Jarrod White

 

 

Head and Registered Office
 

C/-Traverse Accountants Pty Ltd

Suite 305, Level 3, 35 Lime Street

Sydney NSW Australia NSW 2000

 

 

Company Website

 

www.mosmanoilandgas.com

 

 

Stock Exchange

 

AIM Market of the London

Stock Exchange plc (AIM)

Stock Symbol: LON: MSMN

 

Bankers

 

In Australia:

National Australia Bank

 

Joint Broker

 

SVS Securities Plc

 

 

Auditors

 

Greenwich & Co Audit Pty Ltd

 

Nominated Adviser & Broker

 

SP Angel Corporate Finance LLP

 

 

Lawyers

 

As to English law

Druces LLP

 

 

As to Australian law

DLA Piper

 

 

 


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