For a printer-friendly copy of this announcement, please click the link below.

 

http://www.rns-pdf.londonstockexchange.com/rns/1939N_1-2023-9-21.pdf

 

 

 

Dear Shareholder,

The past year has seen many positive events in your company including significant progress in existing core projects, the addition of a very substantial new opportunity, enhancement of the Company's corporate position and resolution of all legacy and long-standing issues. The Company's primary focus is on carbon reduction and contribution to the energy transition that is currently under way globally. Our strategy has two fundamental components, the production of gas as a key transition energy source and carbon capture and sequestration ("CCS").

In India, important steps leading to the development of the known large gas resource at the Cambay Field are underway, including a farmout / funding plan which is well advanced. In addition, the Company has developed early-stage plans for a CCS scheme in India. In the UK, the Company has been awarded a CCS licence in the Southern North Sea as the result of competitive bidding in an initiative set up by the UK government.

The ability to undertake these projects is underscored by the extensive experience of the management team in the design, construction and operation of UK-based gas production and storage projects. It is further demonstrated by the partnership with Wintershall Dea in the UK CCS licence. Wintershall Dea is among the leading CCS players in the North Sea with four licences in three North Sea countries.

On the corporate side, the Company has delisted from the ASX and is now solely traded on the London AIM market. This brings into alignment the location of our assets and the location of the executive management team. The Company remains an Australian corporation subject to ASIC regulations. Indian operations are managed by an expert team of Indian nationals located in Gujarat, close to the Cambay project. The Company has appointed a new UK-based broker, Panmure Gordon, to assist the Company with achieving its short- and medium-term corporate objectives in reaching out to institutional investors to support the developing projects. Additionally, Panmure Gordon's in-house analyst will provide a third-party review of the Company and its projects.

Closing down of the legacy joint venture in Timor Leste is complete with payment of the final loan instalment now made.

The outlook for the Company is very positive with a focused strategy positioning our in-house expertise with the changing global energy and environmental requirements and opportunities.

The major shareholders of the Company, continue to provide essential support for the Company, and I am very pleased to report that Synergia Energy has a dedicated and highly experienced board of directors working closely with the executive management team who together provide the experience and direction needed for the current re-building stage of the Company.

On behalf of the Board, I wish to thank our staff, contractors, local communities, shareholders, and stakeholders for the ongoing support of the Company and I invite that continued support as we reach for realisation of value in our projects and plans.

 

Mr J Salomon

Non-Executive Chairman

21 September 2023

 

 

Industry Overview

Global governmental energy policies continued to evolve in an attempt to reconcile the tensions between global gas shortages caused by the Ukraine war, sustained tightening of production quotas from OPEC members combined with the overriding need to address climate change by reducing dependence on fossil fuels.

In India, the inability to compete for increasingly costly LNG imports resulted in renewed emphasis on coal-fired power generation. Although global LNG prices eased during H1 2023, the India Directorate General of Hydrocarbons continued to emphasise the need for increased indigenous gas supplies.

The increase in oil and gas prices has caused a surge in oil and gas activity, particularly in the US and Middle East. This increased activity has resulted in global shortages of drilling services and equipment and generally increased costs.

In the UK, the government reversed the previous years' antipathy towards the oil and gas sector by launching the 33^rd round of exploration licensing in recognition of the importance of energy supply self-sufficiency. Conversely, the UK government imposed a windfall tax on oil and gas company profits, further reducing the attractiveness of new field development on the UK Continental Shelf.

The UK government increased its resolve to implement carbon capture and storage schemes by launching the 1^st Carbon Storage Licensing Round and by pledging £20 billion of investment over the next 5 years.

Synergia Energy Strategy

The Company continued to execute two of its three strategic components:

·    Focus on gas production from its Cambay, India gas field

·    Development of CCS projects in the UK and India

The Company has temporarily ceased its attempt to acquire mature producing gas assets in the UKCS due to the reluctance of operators to dispose of producing gas assets in the current high gas price environment.

To reinforce its commitment to CCS activities, the Company launched its Cambay CCS scheme, the first end-to-end CCS scheme in India which has been well received by the Government of India regulators.

Cambay Field, Onshore Gujarat, India

(Synergia Energy: Operator and 100% Participating Interest)

The Cambay licence area is located onshore in the state of Gujarat in the heart of one of India's most prolific hydrocarbon provinces. It is ideally located within a major industrial corridor and approximately 20 km from the existing national gas trunk pipeline grid. India's large energy market is currently dependent on gas imports. The Cambay operation is well-positioned to partially displace the need for imported gas with indigenous gas supplies.

The Cambay field development is centred on the successful exploitation of the gas resources held in the Eocene EP-IV reservoir which extends across the field and has been penetrated by over 30 wells. The EP-IV reservoir comprises low permeability ("tight") siltstones and requires fracture stimulation to provide economic gas production rates.

Having resumed production in April 2022 after a 3.5 year hiatus, the Company has been producing both gas and condensate from two gas wells (C-77H and C-73) in addition to oil from several intermittent legacy oilwells.

Cambay C-77H Well - Trialling New Fracking Methodology and Artificial Lift

The re-fracture of the C-77H well in July 2022 has proven successful with the two new re-fracked zones having been on plateau production since September of 2022 at rates of 140-150 mscfd. This is despite the presence of a c.1500m column of gas condensate in the wellbore that inhibits gas production.

Prior to re-fracturing, the well's four fracked zones would produce for 4 to 5 days before fluid loading in the wellbore would stop production. The well would then have to be shut in for circa 1 week in order for the pressure to re-build after which the cycle was repeated. This intermittent production was an unsatisfactory basis for a full field development and attributed to a combination of less than optimum fracking methodology and absence of artificial lift to remove wellbore fluids.

The first step in installing a jet pump artificial lift solution was commenced in July 2023 to both remove gas condensate and to increase gas production. The jet pump installation is expected to be completed in September 2023. Artificial lift will be implemented on future new wells.

The successful re-fracturing operation gives the Company confidence that new wells can be drilled and fracked with initial production rates of 4-6 mmscfd in conjunction with the jet pump artificial lift.

Cambay Full Field Development

Based on the success of the C-77H well, the Company plans a full field development commencing in calendar quarter Q1 2024, subject to securing funding, to exploit the certified 205 BCF of P50 gas reserves together with the associated gas condensate.

The field development plan comprises an initial 10 new well drilling programme which will be supplemented by additional wells to fully exploit the field's reserves. All wells will be fracked incorporating artificial lift. The initial 10 wells will be drilled from the existing C‑77H drilling pad and will share a common export tie-in point and common processing facilities. Due to the anticipated (greater than 30 mmscfd) gas volumes, a new export pipeline to connect to the high-pressure gas grid will be implemented together with enhanced processing facilities and compression.

Carbon Capture and Storage ("CCS")

UK

The Company applied for two carbon storage licences under the NSTA's 1^st Carbon Storage Licensing Round to complement its Medway Hub CCS project. Under this scheme, the Company plans to transport CO₂ emissions from three large CCGT power stations in liquid form in special marine tankers for permanent storage in depleted fields or aquifers in the Southern North Sea. The CO₂ tankers will offload liquid CO₂ onto a Floating Injection, Storage and Offloading ("FISO") vessel for subsequent injection into the CO₂ store via subsea manifolds. The target is to store c. 7.6 MTa (million tonnes per annum) of CO₂ which would make a major contribution towards the UK's Net Zero goals.

The Company and its joint venture partner, Wintershall Dea, via its UK branch, Wintershall Dea Carbon Management Solutions UK ("Wintershall Dea"), were successful in one of its two licensing round applications, with the award of Licence CS019 covering the now depleted Camelot gas field and the overlying BC18 saline aquifer. The licence was awarded jointly with Wintershall Dea in a 50:50 partnership with Synergia as operator. Wintershall Dea has a strong corporate CCS commitment with existing projects in Norway and Denmark. The carbon storage licence has a work program that incorporates an appraisal phase comprising seismic re-processing, technical evaluations and risk assessment, and a contingent FEED study leading to a potential storage licence application in 2028, following the final investment decision ("FID"). The CS019 licence also includes a contingent appraisal well. First CO₂ injection is anticipated for 2032. The Company's share of the initial work phase and FID is subject to funding, which will be addressed in due course.

India

The Company has developed the Cambay CCS scheme which comprises the transportation of CO₂ from emissions from the many significant gas- and coal-fired power stations surrounding the Cambay gas field, via onshore pipeline, to a CCS hub located at the Cambay field. The CO₂ would then be injected into the regionally extensive Olpad formation which underlies the Cambay Eocene gas reservoir. The initial goal is to provide a "Transportation and Storage" service to the power station emitters to sequester CO₂ emissions which total circa 45 MTa from the currently targeted power stations in the proximity of the Cambay field.

The Cambay CCS scheme has been well received by key Government of India regulators but its viability is contingent on, inter alia, the development of a regulatory framework that incentivises the CO₂ emitter customers. Synergia plans to assist the regulators in the development of such a framework based on its UK CCS experience.

JPDA 06-103, Timor Sea

In August 2020, on behalf of its Joint Venture Participants, Synergia Energy Ltd announced a Deed of Settlement and Release ("Deed") with the Autoridade Nacional Do Petroleo E Minerais ("ANPM"). Under the terms of the Deed, Synergia Energy committed to a settlement of US$800,000 payable up to the financial year 2024. During the year, the final instalment payable of US$250,000 was made to ANPM on 7 September 2022, thereby fully extinguishing the Group's obligations to ANPM.

To fund the settlement to ANPM, Synergia Energy entered into an unsecured loan facility agreement with two of the JPDA joint venture partners, Japan Energy E&P JPDA Pty Ltd ("JX") and Pan Pacific Petroleum (JPDA 06 103) Pty Ltd ("PPP"). The portion which was owing to PPP was fully repaid in the previous financial year in December 2021. The portion which was owing to JX was repaid in instalments during the year in August 2022, February 2023 and April 2023 with the balance of the loan from JX being US$225,355 at year-end. This balance plus interest was repaid in the Company's final repayment of US$228,324 to JX on 14 August 2023 to settle the balance of the loan to nil. The details and movement in the loan payable during the period are detailed in Note 16 to the consolidated financial statements.

On 13 October 2022, the non-defaulting parties to the JPDA joint venture agreed to terminate the Joint Operating Agreement. Synergia Energy is in the process of progressing the final closure of the joint venture accounts to conclude this matter.

Financial

Treasury Policy

The funding requirements of the Group are reviewed on a regular basis by the Group's Chief Financial Officer and reported to the Board to ensure the Group can meet its financial obligations as and when they fall due. Internal cash flow models are used to review and test investment decisions. Until sufficient operating cash flows are generated from its operations, the Group remains reliant on equity or debt funding, as well as assets divestiture or farmouts to fund its expenditure commitments.

Formal control over the Group's activities is maintained through a budget and cash flow monitoring process with annual budgets considered in detail and monitored monthly by the Board and forming the basis of the Company's financial management strategy.

Cash flows are tested under various scenarios to ensure that expenditure commitments can be met under all reasonably likely scenarios. Expenditures are also carefully monitored against the budget. The Company continues to actively develop funding options in order to meet its expenditure commitments and its planned future discretionary expenditure.

During the year, the following debt and equity capital raisings were completed to provide working capital for the Company's activities:

September 2022 quarter

·    Completion of the May 2022 Placement previously arranged and announced on 4 May 2022 via the issue of 174,831,394 fully paid ordinary shares at £0.002 (A$0.0035) per share; and

March 2023 quarter

·    Issue of convertible notes to the value of £650,000 (6,500 convertible notes at a face value of £100 each). See Notes 16 and 17 to the consolidated financial statements for further information on the convertible notes.

Corporate

The Company maintained a dual listing on the Australian Securities Exchange ("ASX") and the Alternative Investment Market ("AIM") of the London Stock Exchange ("LSE") up until the Company's delisting on the ASX on 30 December 2022. After the Company's delisting on the ASX the Company's shares remain publicly traded on AIM.

As at 30 June 2023 the Company had:

·    Available cash resources of A$938,589;

·    Borrowings (excluding derivative liability component of convertible notes) of A$774,666 (refer to Note 16 to the consolidated financial statements);

·    Derivative liabilities (from convertible notes) of A$1,050,334 (refer to Note 17 to the consolidated financial statements); and

·    Issued capital of 8,417,790,704 fully paid ordinary shares and 449,928,560 unlisted options.

Executive and Board Changes

On 29 June 2023, Mr. Joe Salomon, the previous Executive Chairman, moved into the role of Non-Executive Chairman. There were no other board changes during the year.

Risk Management

The full Board undertakes the function of the Audit and Risk Committee and is responsible for the Group's internal financial control system and the Company's risk management framework. Management of business risk, particularly exploration, development and operational risk is essential for success in the oil and gas business. The Group manages risk through a risk identification and risk management system.

Health, Safety, Security and Environment

Synergia Energy is committed to protecting the health and safety of everybody who plays a part in our operations or lives in the communities where we operate. Wherever we operate, we will conduct our business with respect and care for both the local and global, natural and social environment and systematically manage risks to drive sustainable business growth. We will strive to eliminate all injuries, occupational illness, unsafe practices and incidents of environmental harm from our activities. The safety and health of our workforce and our environmental stewardship are just as important to our success as operational and financial performance and the reputation of the Company.

Synergia Energy respects the diversity of cultures and customs that it encounters and endeavours to incorporate business practices that accommodate such diversity and that have a beneficial impact through our working involvement with local communities. We strive to make our facilities safer and better places in which to work and our attention to detail and focus on safety, environmental, health and security issues will help to ensure high standards of performance. We are committed to a process of continuous improvement in all we do and to the adoption of international industry standards and codes wherever practicable. Through implementation of these principles, Synergia Energy seeks to earn the public's trust and to be recognised as a responsible corporate citizen.

 

 

Qualified Person The technical information contained in the above disclosure has been prepared by or under the supervision of Mr Jonathan Salomon (B App Sc (Geology), GAICD), Non-Executive Chairman employed by Synergia Energy Ltd. Mr Salomon has over 37 years' experience in petroleum geology and is a member of the American Association of Petroleum Geologists, and the Society of Petroleum Engineers. Mr Salomon meets the requirements of and acts as the Qualified Person under the Alternative Investment Market Rules - AIM Note for Mining and Oil & Gas Companies, and consents to the inclusion of this information in this report in the form and context in which it appears.

 

 

PETROLEUM AND CCS PERMIT SCHEDULE - 30 JUNE 2023
ASSET	LOCATION	ENTITY	CHANGE IN INTEREST DURING THE YEAR %	EQUITY %	OPERATOR
Cambay Field PSC	Gujarat, India	Synergia Energy Ltd	-	85	Synergia Energy Ltd
		Oilex N.L. Holdings (India) Limited	-	15
CS019 - SNS Area 4 (Camelot Area) (1)	Southern North Sea (United Kingdom)	Synergia Energy CCS Limited	-	-	Synergia Energy CCS Limited

 

⁽¹⁾   The NSTA granted the CS019 licence for the Camelot area to Synergia Energy CCS Limited and its 50% joint venture partner, Wintershall Dea Carbon Management Solutions UK, with Synergia Energy CCS Limited as operator. The licence was effective from 1 August 2023 (after year-end).

 

 

 

 

For the Year Ended 30 June 2023

The directors of Synergia Energy Ltd present their report (including the Remuneration Report) together with the consolidated financial statements of the group comprising Synergia Energy Ltd (the "Company" or "Synergia Energy") and its subsidiaries (together collectively referred to as the "Group") for the financial year ended 30 June 2023 and the auditors' report thereon. Unless otherwise indicated, the directors' report is presented in Australian dollars ("$" or "A$"), which is the Company's functional and presentation currency (see Note 2(e) of the Notes to the Consolidated Financial Statements).

DIRECTORS

The directors of Synergia Energy Ltd in office at any time during or since the end of the financial year are:

Mr Jonathan Salomon (B App Sc (Geology), GAICD)

(Executive Chairman until moved to Non-Executive Chairman role on 29 June 2023)

Mr Salomon was appointed as a Non-Executive Director in November 2015, Managing Director on 18 March 2016, and Interim Chairman on 5 May 2020. Mr Salomon continued as Managing Director and Interim Chairman until he was appointed as Executive Chairman on 16 June 2021. On 29 June 2023 Mr Salomon moved to a Non-Executive Chairman role.

Mr Salomon has a Bachelor Degree in Applied Science and is a member of the American Association of Petroleum Geologists and the Society of Petroleum Engineers, and has over 37 years of experience working for upstream energy companies. Mr Salomon has worked for a number of oil and gas companies in various senior positions including General Manager Exploration and New Ventures at Murphy Oil Corporation and Global Head of Geoscience at RISC PL, in addition to a number of Executive Director roles including Strategic Energy Resources, Norwest Energy and Nido Petroleum. At several times in his career, Mr Salomon has acted as an independent consultant for various oil and gas companies, including New Standard Energy and Pacrim Energy. Mr Salomon first worked on Indian projects in 1994 while at Ampolex and since that time has maintained a connection with the Indian industry, at various times bidding in India's exploration and field development rounds and working with Indian companies as joint venture partners, both in India and internationally.

During the last three financial years and up to the date of this report, Mr Salomon has not been a director of any other listed companies.

Mr Roland Wessel

(Chief Executive Officer and Director)

Mr Wessel was appointed Chief Executive Officer and Director on 16 June 2021. Mr Wessel is a geologist with over 40 years' experience in all of the world's major oil and gas regions. Further details of Mr Wessel's qualifications and experience can be found in the Executive Management section of the Directors' Report.

During the last three financial years and up to the date of this report, Mr Wessel has not been a director of any other listed companies.

Mr Colin Judd

(Chief Financial Officer and Director)

Mr Judd was appointed as Chief Financial Officer on 1 July 2021 and as Director on 27 January 2022. Mr Judd is a chartered accountant with over 40 years' experience in corporate financial management. Further details of Mr Judd's qualifications and experience can be found in the Executive Management section of the Director's Report.

During the last three financial years and up to the date of this report, Mr Judd has not been a director of any other listed companies.

Mr Mark Bolton (B Business)

(Non-Executive Director)

Mr Bolton was appointed Chief Financial Officer and Company Secretary on 3 June 2016, and as Executive Director on 26 March 2020. Mr Bolton continued as Chief Financial Officer until 1 July 2021 transitioning to a Non-Executive Director. Mr Bolton resigned as Company Secretary on 25 August 2021.

Mr Bolton has significant experience in the resource sector in Australia, having worked as Chief Financial Officer and Company Secretary for a number of resource companies since 2003. Prior to this, Mr Bolton worked with Ernst & Young as an Executive Director in Corporate Finance. Mr Bolton has experience in the areas of commercial management and the financing of resource projects internationally. He also has extensive experience in capital and equity markets in a number of jurisdictions including ASX, AIM and the TSX. Mr Bolton has significant experience in the development and financing of new resources projects, particularly in emerging economies.

Mr Bolton is the Managing Director of Panthera Resources PLC (AIM:PAT) and a Non-Executive Director of West Cobar Metals Limited (ASX:WC1). During the last three financial years and up to the date of this report, Mr Bolton has not been a director of any other listed company.

Mr Paul Haywood

(Non-Executive Director)

Mr Haywood was appointed as a Non-Executive Director in May 2017. Mr Haywood has over 19 years of international experience in delivering value for his investment network through a blended skill set of corporate and operational experience, including more than six years in the Middle East, building early stage and growth projects. More recently, Mr Haywood has held senior management positions with UK and Australian public companies in the natural resource and energy sectors including oil and gas exploration and development in UK, EU and Central Asia. Mr Haywood's expertise stretches across UK and Australian public markets, with a cross-functional skill set encompassing research, strategy, implementation, capital and transactional management. Mr Haywood is currently Chief Executive Officer of Block Energy Plc.

Mr Haywood is the Director and CEO of Block Energy plc (AIM:BLOE). During the last three financial years and up to the date of this report, Mr Haywood has not been a director of any other listed companies.

Mr Peter Schwarz (B Sc (Geology), M Sc (Petroleum Geology))

(Non-Executive Director)

Mr Schwarz was appointed as a Non-Executive Director in September 2019. A former director of BG Exploration and Production Limited and CEO of independent exploration company Virgo Energy Ltd, Mr Schwarz is an AAPG Certified Petroleum Geologist and business development professional with over 45 years' experience in the oil and gas industry. Mr Schwarz has previously held various senior management roles with Amerada Hess, BG, and Marubeni and is currently a director of Finite Energy Limited, an oil and gas consultancy business he founded over 15 years ago, specialising in strategy and business development advice in the UK and Europe.

During the last three financial years and up to the date of this report, Mr Schwarz has not been a director of any other listed companies.

COMPANY SECRETARY

Ms Lisa Wynne was the Company Secretary from the beginning of the financial year until 28 September 2022, and Mr Jack Rosagro was the Company Secretary from 28 September 2022 to 8 September 2023. Synergia Energy's current Company Secretary, Ms Anshu Raghuvanshi was appointed on 8 September 2023.

Ms Raghuvanshi leads the company secretarial services for Computershare Governance Services, Melbourne, Australia. She has over 12 years' experience in company secretarial roles, working with listed companies to ensure their compliance with annual and ad-hoc reporting, and to guide them in their governance processes. Ms Raghuvanshi supports clients with the administration of their board, committee, and annual general meetings, including notices, agendas and minutes.

CORPORATE GOVERNANCE STATEMENT

In establishing its corporate governance framework, the Company (during the year up to March 2023) referred to the recommendations set out in the ASX's Corporate Governance Council's Corporate Governance Principles and Recommendations (4^th Edition) ("Principles"). From March 2023, the Company adopted the recommendations of the Quoted Companies Alliance Corporate Governance Code for Small and Mid-Size Quoted Companies ("QCA Code").

To the extent they are applicable to the Company, and to the extent possible, the Board considers that the Company has complied with each recommendation of the Principles and the QCA Code during the year.

The Company's Corporate Governance Statement, which reports on Synergia Energy's key governance principles and practices, and provides detailed information on the Board and committee structure, diversity and risk management, is available on the Synergia Energy website in the "Corporate Governance" section (see https://www.synergiaenergy.com/about-us/corporate-governance).

DIRECTORS' MEETINGS

Directors in office and directors' attendance at meetings during the financial year ended 30 June 2023 are as follows:

	Board Meetings (1)		Remuneration Committee Meetings (1)
	Held (2)	Attended	Held (2)	Attended
Non-Executive Directors
J Salomon (3)	12	12	-	-
M Bolton	12	11	1	1
P Haywood	12	11	1	1
P Schwarz	12	11	1	1
Executive Directors
R Wessel	12	12	-	-
C Judd	12	11	-	-

⁽¹⁾        The full Board performs the role of the Audit and Risk Committee. The Company does not have a Nomination Committee.

⁽²⁾        Held indicates the number of meetings available for attendance by the director during the tenure of each director.

⁽³⁾        Mr Salomon moved to a Non-Executive Chairman role from 29 June 2023.

EXECUTIVE MANAGEMENT

Mr Roland Wessel

(Chief Executive Officer and Director)

Mr Wessel was appointed as Chief Executive Officer and Director on 16 June 2021. Mr Wessel is a geologist with over 40 years' experience in all of the world's major oil and gas regions. Mr Wessel founded and built Star Energy, the UK onshore operator of 25 oil and gas fields, through to its listing on AIM in 2004 and its sale to Petronas in 2008. During its evolution, Star Energy grew rapidly through acquisitions and diversification, culminating in it becoming a major gas storage developer and operator. During his career, Mr Wessel has founded and managed a drilling services company and has developed and patented several key oilfield technologies. He has extensive experience in both project and corporate management.

Mr Colin Judd

(Chief Financial Officer and Director)

Mr Judd was appointed as Chief Financial Officer on 1 July 2021 and as Director on 27 January 2022. Mr Judd qualified as a chartered accountant with Price Waterhouse in 1979, where he fulfilled various professional accounting positions in the UK, Europe and the Far East. Mr Judd joined Christian Salvesen plc in 1987, undertaking senior financial management roles culminating in the position of European Financial Controller. In 1994, Mr Judd moved to Aberdeen where he undertook Chief Financial Officer roles for two private-equity-backed oil service businesses. In 1999, Mr Judd joined Star Energy Limited as a founder member and Chief Financial Officer and was instrumental in the company's successful listing on AIM in 2004, various subsequent share placings and the company's ultimate sale to Petronas. Mr Judd cofounded Trans European Oil & Gas Limited, a company backed by KKR, with the strategy to develop a pan-European oil and gas business.

Mr Ashish Khare
(Bachelor of Engineering (BE in Chemical Engineering, including Petroleum Management))

(Head of India Assets)

Mr Khare was appointed Head of India Assets on 8 November 2016 and is based in India. Mr Khare has over 22 years of experience in the petroleum industry. Mr Khare's area of expertise include upstream oil and gas, as well as midstream and downstream project implementation and operations management. Mr Khare originally worked for Synergia Energy Ltd as GM Operations & Business Development; and has experience working for various Indian companies including Cairn India Ltd and Reliance Petroleum.

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the financial year included:

·    exploration for oil and gas;

·    appraisal and development of oil and gas prospects; and

·    production and sale of oil and gas.

The Group is now also focused on carbon-neutral gas production and aims to become a major contributor to CO₂ emission reduction by developing CCS projects, leveraging the extensive management experience in this sector.

There were no other significant changes in the nature of the activities during the year.

OPERATING RESULTS

The Group incurred a consolidated loss after income tax of A$5,382,902 for the year (2022: loss of A$2,061,924)

During the year, production continued on the Cambay field together with oil and gas sales following recommencement of production which happened in the previous financial year in April 2022. Gas sales during the year amounted to A$755,589 (2022: A$141,435) and oil sales amounted to A$540,561 (2022: A$nil), providing total revenues of A$1,296,150 during the year (2022: A$141,435). Cost of sales including production costs incurred during the year amounted to A$2,563,873 (2022: A$754,365), which included re-fraccing costs of A$1,850,924 (2022: A$687,184). This resulted in the Group incurring a gross loss of A$1,267,723 during the year (2022: A$612,930).

The prior year results included care and maintenance expenditure of A$441,338 (which included re‑fraccing costs of A$335,717). There was no care and maintenance expenditure during the current year due to the recommencement of production in April 2022.

During the year, A$34,853 of expected credit losses ("ECLs") was reversed (2022: A$3,131,282 reversed). The 2022 ECLs reversed included A$3,187,168 of ECLs relating to the share of balances directly receivable from the Cambay operation to the Group, which were reversed as part of the Cambay Acquisition which occurred during the previous financial year ended 30 June 2022.

Net finance costs of A$769,981 (2022: A$377,812) includes interest from the unwinding of discount on the Group's site restoration provision which increased to A$289,540 (2022: A$76,753), interest expense from the Group's loan from JX which increased to A$54,525 (2022: A$19,836), interest expense from the Group's convertible note (debt component) of A$19,178 (2022: A$nil) and a loss of A$227,668 (2022: A$nil) resulting from the fair value revaluation of the derivative liability component of the Group's convertible note.

FINANCIAL POSITION

The net assets of the Group totalled A$10,337,516 at 30 June 2023 (2022: A$14,583,598) and included the following balances:

·    Cash and cash equivalents of A$938,589 (2022: A$4,838,459);

·    Borrowings (excluding derivative liability component of convertible notes) of A$774,666 (2022: A$451,355); and

·    Derivative liabilities (from convertible notes) of A$1,050,334 (2022: A$nil).

DIVIDENDS

No dividend was paid or declared during the year and the directors do not recommend the payment of a dividend.

REVIEW OF OPERATIONS

A review of the operations of the Group during the financial year and the results of those operations are set out in the Review of Operations on pages 3 to 7 of this report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

The Review of Operations details those changes that have had a significant effect on the Group.

Other than those matters, there have been no other significant changes in the state of affairs of the Group that occurred during the financial year.

LIKELY DEVELOPMENTS

Additional comments on expected results on operations of the Group are included in the Review of Operations on pages 3 to 7.

Further disclosure as to likely developments in the operations of the Group and expected results of those operations have not been included in this report as, in the opinion of the Board, these would be speculative and as such, disclosure would not be in the best interests of the Group.

ENVIRONMENTAL ISSUES

The Group's oil and gas exploration and production activities are subject to environmental regulation under the legislation of the respective states and countries in which they operate. The majority of the Group's activities involve low level disturbance associated with its drilling programmes and production from existing wells. The Board actively monitors compliance with these regulations and as at the date of this report is not aware of any material breaches in respect of these regulations.

The Group also has an active program of education, monitoring and reporting within the Group's business to identify and mitigate any other environmental risks.

SIGNIFICANT EVENTS AFTER BALANCE DATE

On 27 July 2023, the Group submitted a bank guarantee of US$124,000 relating to the Cambay field. A further US$124,000 is expected to be submitted in calendar Q1 2024. See Note 19 to the notes to the consolidated financial statements for further details on the bank guarantee.

Effective on 1 August 2023, the NSTA granted the CS019 licence for the Camelot area to Synergia Energy CCS Limited and its 50% joint venture partner, Wintershall Dea, with Synergia Energy CCS Limited as operator.

On 7 August 2023, the Company issued 704,545,454 shares at £0.0011 (A$0.0021) per ordinary share pursuant to the placement announced on 25 July 2023. As part of this placement, the Company will also be issuing 13,636,363 unquoted options (exercisable at £0.0011 and expiring on 31 July 2026) to Novum Securities Limited ("Novum"), pursuant to the capital raising advisory agreement relating to this placement. These options are expected to be issued in the coming months.

On 10 August 2023, the Company made its final repayment to JX of US$228,324, settling the Company's liability payable to JX to nil.

There were no other significant subsequent events occurring after the year-end.

CAPITAL STRUCTURE AND TREASURY POLICY

As at 30 June 2023 the Group had unsecured loans, excluding the derivative liability component of convertible notes, at face value A$774,666 (2022: A$451,355). Refer to Note 16 of the Consolidated Financial Statements for details of the carrying amount, terms and conditions, repayment schedule, and options attached to the loans.

The Group's balance of the derivative liability component of convertible notes at 30 June 2023 is A$1,050,334 (refer to Note 17 to the consolidated financial statements).

Details of transactions involving ordinary shares during the financial year are as follows:

	Number of Shares Issued	Gross Amount Raised (A$)
July/August 2022 ·    Share Placements (approved at GM 13 July 2022)	174,831,394	608,378
Total	174,831,394	608,378

 

As at the date of this report the Company had a total issued capital of 9,122,336,158 ordinary shares (following a placement completed in August 2023) and 449,928,560 unlisted options exercisable at weighted average price of £0.0019 (A$0.0037) per option.

DIRECTORS' INTERESTS

The relevant interest of each director in shares and unlisted options issued by the Company at the date of this report is as follows:

	Number of Ordinary Shares		Number of Unlisted Options Over Ordinary Shares
	Direct Interest	Indirect Interest	Direct Interest	Indirect Interest
Non-Executive Directors
J Salomon	-	14,987,013	-	96,626,905(1)
M Bolton	-	-	-	-
P Haywood	12,933,513	-	-	-
P Schwarz	10,611,250	10,611,250	-	-
Executive Directors
R Wessel	-	-	163,636,363(2)	-
C Judd	-	-	118,200,000(3)	-

⁽¹⁾        88,311,688 options exercisable at £0.0022, expiring 12 August 2027. Two thirds (2/3) of these options were exercisable at reporting date; and

8,315,217 options exercisable at nil cost, expiring 1 April 2028. All of these options were exercisable at reporting date.

⁽²⁾        136,363,636 options exercisable at £0.0022, expiring 12 August 2027. Two thirds (2/3) of these options were exercisable at reporting date; and

27,272,727 options exercisable at nil cost, expiring 1 April 2028.  All of these options were exercisable at reporting date.

⁽³⁾        100,000,000 options exercisable at £0.0022, expiring 12 August 2027. Two thirds (2/3) of these options were exercisable at reporting date; and

18,200,000 options exercisable at nil cost, expiring 1 April 2028.  All of these options were exercisable at reporting date.

SHARE OPTIONS

Unissued Shares under Option

At the date of this report, unissued ordinary shares of the Company under option (with an exercise price) are:

Expiry Date	Number of Shares	Exercise Price
Unlisted Options
Granted and Issued in 2022:
31 May 2024	25,210,084	£0.00238 (A$0.0045)
Granted and Issued in 2023:
30 April 2024	30,000,000	£0.00200 (A$0.0034)
12 August 2027	324,675,324	£0.00220 (A$0.0037)
1 April 2028	70,043,152	£0.00000 (A$0.0000)
Total	449,928,560

These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.

Unissued Shares under Option that Expired

During or since the end of the financial year, the following unlisted options expired:

Date Lapsed	Number	Exercise Price
31 December 2022	711,295,152	£0.0028 (A$0.0052)
Total	711,295,152	£0.0028 (A$0.0052)

Shares Issued on Exercise of Unlisted Options

No ordinary shares were issued, during or since the end of the financial year, as a result of the exercise of unlisted options.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

During the financial year, the Group paid a premium in respect of insurance cover for the directors and officers of the Group. The Group has not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors' liability and legal expense insurance contracts, as such disclosure is prohibited under the terms of the insurance contract.

PROCEEDINGS ON BEHALF OF THE COMPANY

No proceedings have been brought on behalf of the Company, nor has any application been made in respect of the Company under Section 237 of the Corporations Act 2001.

NON-AUDIT SERVICES

The Company may decide to employ the Auditor on assignments additional to their statutory audit duties where the Auditor's expertise and experience with the Group is important.

The Board has considered the non-audit services provided during the year and is satisfied that the provision of the non-audit services is compatible with, and did not compromise, 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, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

·    all non-audit services were subject to the corporate governance procedures adopted by the Group and these have been reviewed by the Board to ensure they do not impact the impartiality and objectivity of the auditor; and

·    the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.

Refer Note 28 of the Consolidated Financial Statements for details of the amounts paid to the auditors of the Group, PKF Perth and their network firms for audit and non-audit services provided during the year.

ROUNDING OF AMOUNTS

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest dollar, unless otherwise indicated.

LEAD AUDITOR'S INDEPENDENCE DECLARATION

The Lead Auditor's Independence Declaration for the year ended 30 June 2023 has been received and can be found on page 29.

 

 

 

REMUNERATION REPORT - AUDITED

On 24 November 2021, the Board established a Remuneration Committee, in accordance with the Company's Remuneration Committee Charter, comprising Messrs Paul Haywood (Independent Chair), Peter Schwarz (Independent Non-Executive Director) and Mark Bolton (Non-Independent Non-Executive Director).The Remuneration Committee is responsible for the review and recommendation to the Board, of the Company's Remuneration Policy, senior executives' remuneration and incentives, the remuneration framework for directors, superannuation arrangements, incentive plans and remuneration reporting.

1.   PRINCIPLES OF COMPENSATION

Remuneration is referred to as compensation throughout this report. The Remuneration Report explains the remuneration arrangements for directors and senior executives of Synergia Energy Ltd who have authority and responsibility for planning, directing and controlling the activities of the Group (key management personnel). 

The compensation structures explained below are designed to attract, retain and motivate suitably qualified candidates, reward the achievement of strategic objectives and achieve the broader outcome of the creation of value for shareholders. The compensation structures take into account:

·    the capability and experience of the key management personnel;

·    the ability of key management personnel to control the performance of the relevant segments;

·    the current downturn and uncertainty within the resources industry;

·    the Company's performance including:

o the Group's earnings; and

o the growth in share price and delivering constant returns on shareholder wealth;

·    exploration success; and

·    development of projects.

Compensation packages include a mix of fixed compensation and long-term performance-based incentives. In specific circumstances, the Group may also provide short-term cash incentives based upon the achievement of Company performance hurdles or in recognition of specific achievements.

1.1 Fixed Compensation

Fixed compensation consists of base compensation and employer contributions to superannuation funds. Compensation levels are reviewed annually through a process that considers individual, sector and overall performance of the Group. In addition, reviews of available data on oil and gas industry companies provide comparison figures to ensure the directors' and senior executives' compensation is competitive in the market. 

Remunerations for Executive, Non-Executive Directors and staff members impacted were reviewed early in the 2022 financial year. Remuneration increases were implemented for certain individuals with effect from 1 September 2021.

Compensation for senior executives is separately reviewed at the time of promotion or initial appointment.

1.2 Performance Linked Compensation

Performance linked compensation includes both short-term and long-term incentives designed to reward key management personnel for growth in shareholder wealth. The short-term incentive ("STI") is an "at risk" bonus provided in the form of cash or shares, while the long-term incentive plan ("LTI") is used to reward performance by granting options over ordinary shares of the Company.

Short-Term Incentives

The Group has introduced a short-term incentive scheme for key management personnel with effect from 1 January 2022.

The short-term incentive scheme has been designed by the Remuneration Committee and approved by the Board, having regard to the business plans as well as the achievement of performance targets as determined by the Board. These targets include a combination of key strategic, financial and personal performance measures which have a major influence over company performance in the short term.

On 3 April 2023, the Company issued unlisted nil-cost options over 70,043,152 shares as a non-cash settlement of amounts due to the Company's three executive directors and the Head of India Assets in accordance with the Company's short-term incentive plan and recommendations by the Company's Remuneration Committee for the 12-month period ended 31 December 2022. The options are fully vested with the holder on 3 April 2023; and are exercisable on or before 1 April 2028.

Long-Term Incentives

On 13 July 2022, following shareholder approval, the Company released its Employee Incentive Plan. The shareholders approved the issue of up to a maximum of 388,559,703 shares under the Company's Employee Incentive Plan.

The primary objectives of the Employee Incentive Plan are to:

·    establish a method by which eligible participants can participate in the future growth and profitability of the Company;

·    to provide an incentive and reward for eligible participants for their contribution to the Company; and

·    attract and retain a high standard of managerial and technical personnel for the benefit of the Company.

Under the Employee Incentive Plan, an award (i.e. options or performance rights, etc.) may be awarded to an eligible participant.

The Board, at its sole and absolute discretion, may invite an eligible person selected by it to complete an application relating to a specified number of awards allocated to that eligible person by the Board. The Board may offer an award (as applicable) to any eligible person it elects and determine the extent of that person's participation in the Employee Incentive Plan (Participant).

An offer by the Board is required to specify, among other things, the type of award offered, the date and total number of awards granted, the exercise price and exercise period and any other matters the Board determines necessary, including the exercise conditions and disposal restrictions attaching to the awards.

At the General Meeting held on 13 July 2022, the shareholders approved the issue of 324,675,324 unlisted options as long term incentives to the Executive Directors. The options are to vest with the holder over a period of three (3) years, commencing on 1 July 2021. The Company issued the 324,675,324 unlisted options on 12 August 2022. No other long-term incentives were issued to senior executives or staff during the year ended 30 June 2023.

1.3 Non-Executive Directors

Total compensation for all Non-Executive Directors is based on a comparison with external data with reference to fees paid to Non-Executive Directors of comparable companies. Directors' fees cover all main Board activities and membership of committees, if applicable.

The annual fee for Mr Salomon has been set at A$105,000 plus statutory superannuation per annum effective from the date of his appointment as Non-Executive Chairman on 29 June 2023.

The annual fee for Mr Bolton was set at A$55,381 plus statutory superannuation per annum effective from 1 July 2021 when he was appointed as Non-Executive Director and remains unchanged.

The annual fee for Mr Haywood, the Company's UK based Non-Executive Director was set at £30,000 per annum on commencement in May 2017 and remains unchanged.

The annual fee for Mr Schwarz, the Company's UK based Non-Executive Director was set at £30,000 per annum on commencement in September 2019 and remains unchanged.

The aggregate maximum fixed annual amount of remuneration available for Non-Executive Directors of A$500,000 per annum was approved by Shareholders on 9 November 2011.

In addition to the fixed component, the Company can remunerate any director called upon to perform extra services or undertake any work for the Company beyond their general duties. This remuneration may either be in addition to, or in substitution for, the director's share of remuneration approved by Shareholders.

1.4 Clawback Policy

The Board has adopted the following Clawback Policy applicable from August 2015.

In relation to circumstances where an employee acts fraudulently or dishonestly, or wilfully breaches his or her duties to the Company or any of its subsidiaries, the Board has adopted a clawback policy in relation to any cash performance bonuses (including deferred share awards) or LTIs. The Board reserves the right to take action to reduce, recoup or otherwise adjust an employee's performance based remuneration in circumstances where in the opinion of the Board, an employee has acted fraudulently or dishonestly or wilfully breached his or her duties to the Company or any of its subsidiaries. The Board may:

·    deem any bonus payable, but not yet paid, to be forfeited;

·    require the repayment by the employee of all or part of any cash bonus received;

·    determine that any unvested and/or unexercised LTIs will lapse;

·    require the repayment of all or part of the cash amount received by the employee following vesting and subsequent sale of a LTI;

·    reduce future discretionary remuneration to the extent considered necessary or appropriate to take account of the event that has triggered the clawback;

·    initiate legal action against the employee; and/or

·    take any other action the Board considers appropriate.

1.5 Remuneration Consultants

There were no remuneration recommendations made in relation to key management personnel by remuneration consultants in the financial year ended 30 June 2023.

1.6 Adoption of year ended 30 June 2022 Remuneration Report

At the AGM held 23 November 2022 shareholders adopted the 30 June 2022 Remuneration Report with a clear majority of 1,458,204,495 votes in favour, being 99.90% of the votes cast.