REG - Jupiter Energy - Final Results <Origin Href="QuoteRef">JPR.AX</Origin> - Part 3
30/09/2016 09:45
- Part 3: For the preceding part double click ID:nRSd3263Lb
for expected credit losses from when financial instruments are first recognised and
to recognise full lifetime expected losses on a more timely basis.Hedge
accountingAmendments to AASB 9 (December 2009 & 2010 editions and AASB 2013-9) issued
in December 2013 included the new hedge accounting requirements, including changes to
hedge effectiveness testing, treatment of hedging costs, risk components that can be
hedged and disclosures.Consequential amendments were also made to other standards as
a result of AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7, AASB
2010-10 and AASB 2014-1 - Part E.AASB 2014-7 incorporates the consequential
amendments arising from the issuance of AASB 9 in Dec 2014.AASB 2014-8 limits the
application of the existing versions of AASB 9 (AASB 9 (December 2009) and AASB 9
(December 2010)) from 1 February 2015 and applies to annual reporting periods
beginning on after 1 January 2015.
AASB 15 Revenue from Contracts with Customers AASB 15 Revenue from Contracts with Customers replaces the existing revenue 1 January 2018 The group has not yet determined the financial impact of the change. 1 July 2018
recognition standards AASB 111 Construction Contracts, AASB 118 Revenue and related
Interpretations (Interpretation 13 Customer Loyalty Programmes, Interpretation 15
Agreements for the Construction of Real Estate, Interpretation 18 Transfers of Assets
from Customers, Interpretation 131 Revenue-Barter Transactions Involving
Advertising Services and Interpretation 1042 Subscriber Acquisition Costs in the
Telecommunications Industry). AASB 15 incorporates the requirements of IFRS 15
Revenue from Contracts with Customers issued by the International Accounting
Standards Board (IASB) and developed jointly with the US Financial Accounting
Standards Board (FASB).AASB 15 specifies the accounting treatment for revenue arising
from contracts with customers (except for contracts within the scope of other
accounting standards such as leases or financial instruments).The core principle of
AASB 15 is that an entity recognises revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. An entity
recognises revenue in accordance with that core principle by applying the following
steps:(a) Step 1: Identify the contract(s) with a customer(b)
Step 2: Identify the performance obligations in the contract(c) Step 3:
Determine the transaction price(d) Step 4: Allocate the transaction price
to the performance obligations in the contract(e) Step 5: Recognise
revenue when (or as) the entity satisfies a performance obligation AASB 2015-8
amended the AASB 15 effective date so it is now effective for annual reporting
periods commencing on or after 1 January 2018. Early application is permitted. AASB
2014-5 incorporates the consequential amendments to a number Australian Accounting
Standards (including Interpretations) arising from the issuance of AASB 15.AASB 2016
-3 Amendments to Australian Accounting Standards - Clarifications to AASB 15 amends
AASB 15 to clarify the requirements on identifying performance obligations, principal
versus agent considerations and the timing of recognising revenue from granting a
licence and provides further practical expedients on transition to AASB 15.
AASB 2015-1 Amendments to Australian Accounting Standards - Annual Improvements to Australian Accounting Standards 2012-2014 Cycle The subjects of the principal amendments to the Standards are set out below: AASB 5 1 January 2016 The group has not yet determined the impact of the change. 1 July 2016
Non-current Assets Held for Sale and Discontinued Operations: • Changes in methods
of disposal - where an entity reclassifies an asset (or disposal group) directly from
being held for distribution to being held for sale (or visa versa), an entity shall
not follow the guidance in paragraphs 27-29 to account for this change. AASB 7
Financial Instruments: Disclosures:• Servicing contracts - clarifies how an entity
should apply the guidance in paragraph 42C of AASB 7 to a servicing contract to
decide whether a servicing contract is 'continuing involvement' for the purposes of
applying the disclosure requirements in paragraphs 42E-42H of AASB 7.•
Applicability of the amendments to AASB 7 to condensed interim financial statements -
clarify that the additional disclosure required by the amendments to AASB 7
Disclosure-Offsetting Financial Assets and Financial Liabilities is not specifically
required for all interim periods. However, the additional disclosure is required to
be given in condensed interim financial statements that are prepared in accordance
with AASB 134 Interim Financial Reporting when its inclusion would be required by the
requirements of AASB 134. AASB 119 Employee Benefits:• Discount rate: regional
market issue - clarifies that the high quality corporate bonds used to estimate the
discount rate for post-employment benefit obligations should be denominated in the
same currency as the liability. Further it clarifies that the depth of the market for
high quality corporate bonds should be assessed at the currency level. AASB 134
Interim Financial Reporting:• Disclosure of information 'elsewhere in the interim
financial report' - amends AASB 134 to clarify the meaning of disclosure of
information 'elsewhere in the interim financial report' and to require the inclusion
of a cross-reference from the interim financial statements to the location of this
information.
AASB 2015-2 Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments to AASB 101 The Standard makes amendments to AASB 101 Presentation of Financial Statements 1 January 2016 The group has not yet determined the impact of the change. 1 July 2016
arising from the IASB's Disclosure Initiative project. The amendments are designed to
further encourage companies to apply professional judgment in determining what
information to disclose in the financial statements. For example, the amendments
make clear that materiality applies to the whole of financial statements and that the
inclusion of immaterial information can inhibit the usefulness of financial
disclosures. The amendments also clarify that companies should use professional
judgment in determining where and in what order information is presented in the
financial disclosures.
AASB 16 Leases The key features of AASB 16 are as follows: Lessee accounting• Lessees are required 1 January 2019 The group has not yet determined the financial impact of the change. 1 July 2019
to recognise assets and liabilities for all leases with a term of more than 12
months, unless the underlying asset is of low value.• Assets and liabilities
arising from a lease are initially measured on a present value basis. The measurement
includes non-cancellable lease payments (including inflation-linked payments), and
also includes payments to be made in optional periods if the lessee is reasonably
certain to exercise an option to extend the lease, or not to exercise an option to
terminate the lease.• AASB 16 contains disclosure requirements for lessees. Lessor
accounting• AASB 16 substantially carries forward the lessor accounting
requirements in AASB 117. Accordingly, a lessor continues to classify its leases as
operating leases or finance leases, and to account for those two types of leases
differently.• AASB 16 also requires enhanced disclosures to be provided by lessors
that will improve information disclosed about a lessor's risk exposure, particularly
to residual value risk.AASB 16 supersedes:(a) AASB 117 Leases(b) Interpretation 4
Determining whether an Arrangement contains a Lease(c) SIC-15 Operating Leases
-Incentives(d) SIC-27 Evaluating the Substance of Transactions Involving the Legal
Form of a Lease The new standard will be effective for annual periods beginning on or
after 1 January 2019. Early application is permitted, provided the new revenue
standard, AASB 15 Revenue from Contracts with Customers, has been applied, or is
applied at the same date as AASB 16.
AASB 2016-5 Classification and Measurement ofShare-based Payment Transactions[Amendments to AASB 2] This standard amends to AASB 2 Share-based Payment, clarifying how to account for 1 January 2018 The group has not yet determined the financial impact of the change. 1 July 2018
certain types of share-based payment transactions. The amendments provide
requirements on the accounting for:► The effects of vesting and non-vesting
conditions on the measurement of cash-settled share-based payments► Share-based
payment transactions with a net settlement feature for withholding tax obligationsA
modification to the terms and conditions of a share-based payment that changes the
classification of the transaction from cash-settled to equity-settled
AASB 2014-3 Amendments to Australian Accounting Standards - Accounting for Acquisitions of Interests in Joint Operations [AASB 1 & AASB 11] AASB 2014-3 amends AASB 11 Joint Arrangements to provide guidance on the accounting 1 January 2016 The group has not yet determined the financial impact of the change. 1 July 2016
for acquisitions of interests in joint operations in which the activity constitutes a
business. The amendments require: (a) the acquirer of an interest in a joint
operation in which the activity constitutes a business, as defined in AASB 3 Business
Combinations, to apply all of the principles on business combinations accounting in
AASB 3 and other Australian Accounting Standards except for those principles that
conflict with the guidance in AASB 11(b) the acquirer to disclose the information
required by AASB 3 and other Australian Accounting Standards for business
combinationsThis Standard also makes an editorial correction to AASB 11.
1 January 2019
The group has not yet determined the financial impact of the change.
1 July 2019
AASB 2016-5
Classification and Measurement ofShare-based Payment Transactions[Amendments to AASB 2]
This standard amends to AASB 2 Share-based Payment, clarifying how to account for certain types of share-based payment
transactions. The amendments provide requirements on the accounting for:► The effects of vesting and non-vesting
conditions on the measurement of cash-settled share-based payments► Share-based payment transactions with a net
settlement feature for withholding tax obligationsA modification to the terms and conditions of a share-based payment that
changes the classification of the transaction from cash-settled to equity-settled
1 January 2018
The group has not yet determined the financial impact of the change.
1 July 2018
AASB 2014-3
Amendments to Australian Accounting Standards - Accounting for Acquisitions of Interests in Joint Operations [AASB 1 & AASB
11]
AASB 2014-3 amends AASB 11 Joint Arrangements to provide guidance on the accounting for acquisitions of interests in joint
operations in which the activity constitutes a business. The amendments require: (a) the acquirer of an interest in a
joint operation in which the activity constitutes a business, as defined in AASB 3 Business Combinations, to apply all of
the principles on business combinations accounting in AASB 3 and other Australian Accounting Standards except for those
principles that conflict with the guidance in AASB 11(b) the acquirer to disclose the information required by AASB 3
and other Australian Accounting Standards for business combinationsThis Standard also makes an editorial correction to AASB
11.
1 January 2016
The group has not yet determined the financial impact of the change.
1 July 2016
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements of Jupiter Energy Limited and its subsidiaries (as outlined in Note 28). Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:§ Power over the investee (i.e. existing rights that give it the current ability to
direct the relevant activities of the investee);§ Exposure, or rights, to variable returns from its involvement with the investee; and§ The ability to use its power over the investee to affect its returns.When the Group has less than a majority of the
voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:§ The contractual arrangement with the other vote holders of the investee;§ Rights arising from
other contractual arrangements; and§ The Group's voting rights and potential voting rights.The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of
control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year
are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders
of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated on consolidation.A change in the ownership
interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:§ De-recognises the assets (including goodwill) and liabilities of the subsidiary;§ De-recognises the carrying
amount of any non-controlling interests;§ De-recognises the cumulative translation differences recorded in equity;§ Recognises the fair value of the consideration received;§ Recognises the fair value of any investment retained;§ Recognises any surplus or
deficit in profit or loss; andReclassifies the parent's share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Significant accounting estimates and assumptions
Judgments In the process of applying the Group's accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognised in the consolidated financial statements: Production start date
The group assesses each well to determine when the well moves into the production stage. This is when the well is substantially completed and ready for intended use. The group considers various criteria in determining the production start date, including
but not limited to, results of well testing, the ability of the well to sustain ongoing production, installation of the relevant well infrastructure and receiving the relevant regulatory approvals. When the well moves into the production stage the
capitalisation of certain development costs ceases and costs incurred are expensed as a production cost. It also at this point when that the well commences depreciation. Any proceeds received from oil sales prior to the production start date as part of
any well testing, are capitalised to the asset. Impairment of assets In determining the recoverable amount of assets in the absence of quoted markets, judgements are made in determining events that need to occur that affect future cash flows. In the case
of the Group's primary asset, Block 31, the over-riding assumption is that Block 31 reaches the point of export production by January 2018. For this to occur the following matters need to be resolved: - Financing for construction of processing
facilities and drilling of development wells- Approval from the Government for construction of processing facilities and drilling of development wells and ultimately approving of export status. - Contracts signed for the engineering, procurement,
installation and commissioning of the processing facilities and for the drilling of development wells.- An export license being granted.- An agreement reached with MangistauMunaiGas(MMG) over the division of reserves associated with the Akkar
North accumulation Recognition of deferred tax assets Judgement is required in determining whether deferred tax assets are recognised in the statement of financialposition. Deferred tax assets, including those arising from unutilised tax losses, require
the Group to assess the likelihood that the Group will generate sufficient taxable earnings in future periods, in order to utilise recognised deferred tax assets. Judgment is also required in respect of the application of existing tax laws in each
jurisdiction.Assumptions about the generation of future taxable profits depend on management's estimates of future cash flows. These estimates of future taxable income are based on forecast cash flows from operations (which are impacted by production and
sales volumes oil prices, reserves, operating costs, closure and rehabilitation costs, capital expenditure, and other capital management transactions). To the extent that future cash flows and taxable income differ significantly from estimates, the ability
of the Group to realise the net deferred tax assets recorded at the reporting date could be impacted. In addition, future changes in tax laws in the jurisdictions in which the Group operates could limit the ability of the Group to obtain tax deductions in
future periods.
Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may
change due to market change or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.
Exploration and evaluation
The Group's accounting policy for exploration and evaluation is set out in note 2(f). The application of this policy necessarily requires management to make certain judgements, estimates and assumptions as to future events and circumstances, in particular
the assessment of whether economic quantities of reserves may be found. Any such, estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under the Group's policy, management concludes that the
Group is unlikely to recover the expenditure by future exploitation or sale, then the relevant capitalised amount will be written off to the profit and loss.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Provision for restoration
Costs of site restoration are provided over the life of the field and related facilities from when exploration commences and are included in the costs of that stage. Site
restoration costs include the dismantling and removal of plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with
clauses of the permits. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is
uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the
basis that the restoration will be completed within one year of abandoning the site.
Units of production depreciation of oil and gas properties
Oil and gas properties are depreciated using the units of production (UOP) method over total proved and probable hydrocarbon reserves. This results in a
depreciation/amortisation charge proportional to the depletion of the anticipated remaining production from the field/well. Each items' life, which is assessed annually,
has regard to both its physical life limitations and to present assessments of economically recoverable reserves of the field at which the asset is located. These
calculations require the use of estimates and assumptions, including the amount of recoverable reserves. The calculation of the UOP rate of depreciation could be impacted
to the extent that actual production in the future is different from current forecast production based on total proved and probable reserves. Changes to proved and
probable reserves could arise due to changes in the factors or assumptions used in estimating reserves, including: · The effect on proved and probable reserves of
differences between actual commodity prices and commodity price assumptions; or· Unforeseen operational issues. Changes are accounted for prospectively.
Recoverability of oil and gas properties
The Group assesses each asset or cash generating unit (CGU) (excluding goodwill, which is assessed annually regardless of indicators) every reporting period to determine
whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the
higher of the fair value less costs of disposal and value in use. These assessments require the use of estimates and assumptions such as long-term oil prices (considering
current and historical prices, price trends and related factors), discount rates, operating costs, future capital requirements, decommissioning costs, exploration
potential, reserves operating performance (which includes production and sales volumes). These estimates and assumptions are subject to risk and uncertainty. Therefore,
there is a possibility that changes in circumstances will impact these projections, which may impact the recoverable amount of assets and/or CGUs. Management has
assessed Block 31 as being an individual CGU, which is the lowest level for which cash inflows are largely independent.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value measurement
Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. Fair
value is generally determined as the present value of estimated future cash flows arising from the continued use of the assets, which includes estimates such as the cost
of future expansion plans and eventual disposal, using assumptions that an independent market participant may take into account. Cash flows are discounted to their
present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
(e) Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that
are eligible for capitalisation when the cost of replacing the part is incurred. Similarly, when each major inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. All other repairs and maintenance are recognised in profit or loss
as incurred. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: · Plant and equipment - over 3 to 10 years
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Disposal An item of plant and
equipment is derecognised upon disposal or when no further future economic benefits are expected to be derived from its use or disposal on a prospective basis. Any gain
or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the
profit or loss in the year the asset is derecognised.
(f) Exploration and evaluation expenditure
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. A regular review is undertaken of each area of interest to determine the appropriateness of continuing
to carry forward costs in relation to that
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