GLOBAL PETROLEUM LIMITED

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIALS STATEMENTS 

FOR THE SIX MONTHS ENDED 31 DECEMBER 2021

These consolidated financial statements and notes represent those of Global Petroleum Limited and Controlled Entities (the "Group").

Note 1  Reporting Entity

Global Petroleum Limited ("Global") is a company domiciled and incorporated in Australia. It is a company limited by shares and whose shares are publicly traded on the London Stock Exchange (AIM). The condensed consolidated interim financial statements of the Company as at and for the six months ended 31 December 2021 are comprised of the Company and its controlled entities (together referred to as the "Group"). The Group is a for- profit entity and is primarily involved in oil and gas exploration and development.

The consolidated annual financial statements of the Group as at and for the year ended 30 June 2021 are available upon request from the Company's registered office at Level 4 91 William Street, Melbourne, VIC 3000, Australia or at www.globalpetroleum.com.au.

Note 2  Basis of Preparation

Statement of compliance

These interim financial statements have been prepared in accordance with AASB 134 Interim Financial Reporting, the Corporations Act 2001 and IAS 34 Interim Financial Reporting. They should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 30 June 2021 ('last annual financial statements'). They do not include all of the information required for a complete set of annual financials statements, however, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

These interim financial statements were authorised for issue by the Company's Board of Directors on 29 March 2022. The financial information in this half-year report is presented in United States dollars ("US$").

Use of judgement and estimates

In preparing these interim financial statements, management has made adjustments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

Any significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 30 June 2021.

Note 3  Summary of Significant Accounting Policies

The accounting policies applied in these financial statements are the same as those applied to the Group's consolidated financial statements as at and for the year ended 30 June 2021.

Going Concern Note

The financial statements have been prepared on the going concern basis of accounting, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. The use of this basis of accounting takes into consideration the Group's current and forecast financing position, which indicate a material uncertainty due to the need to raise additional funds or reduce expenditure commitments in order to meet liabilities as they are expected to fall due in the next twelve months.

The Group has no source of operating revenue and settles its expenditure obligations from existing cash resources. It generated a loss of US$825,890 (31 December 2020: loss of US$3,055,295) and had net cash outflows from the operating activities of US$789,522 (31 December 2020: net cash outflows of US$731,795) for the half-year ended 31 December 2021. As of that date, the Group had net assets of US$3,155,137 (30 June 2021: US$2,696,047) and cash assets of US$2,007,024 (30 June 2021: US$1,834,434). The Group has no debt.

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

The raising of additional equity capital is subject to market conditions and investor demand; securing a farm-out requires agreement with a suitable third party which the Group has not achieved to date; and any deferral of licence commitments would require the consent of the Namibian Ministry of Mines and Energy. As each of these are not within the Company's control, these conditions constitute a material uncertainty that may cast significant doubt on the use of the going concern basis of accounting. However the Directors have a reasonable expectation that one or more of these actions will be achieved, noting the Company has raised gross proceeds of GBP3.4 million in three successful equity raises in the period from September 2020 to August 2021.

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

Application of New and Revised Accounting Standards

The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ("AASB") that are mandatory for the current reporting period.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Note 4  Interests in Subsidiaries

(a) Information about Principal Subsidiaries

The subsidiaries listed below have share capital consisting solely of ordinary shares or ordinary units which are held directly by the Group. 

The proportion of ownership interests held equals the voting rights held by the Group.

Note 5  Exploration and Evaluation Assets

The Group's Exploration and Evaluation Assets at the end of the reporting period relates solely to its Namibian licence PEL0094.

During the reporting period, the Group did not expense any other exploration and evaluation costs in the statement of profit and loss, (31 December 2020: US$2,409,656).

An amount of US$546 (31 December 2020: US$27,886) was expensed on business development, which relates to the Group's activities in assessing other opportunities in the oil and gas sector.

Namibia

In September 2018, Global Petroleum Namibia was awarded licence PEL0094 and a Petroleum Agreement was signed on 11 September 2018. The Initial Exploration Period runs for four years, and is divided into two sub periods of two years each; IEP1, and IEP2. IEP1 runs from September 2018 to September 2020. During IEP1, Global has undertaken to purchase and reprocess the existing available 3D seismic data and other 2D data, as well as some additional G & G studies. In July 2020, agreement was reached with the Ministry of Mines and Energy ("MME") for the extension of the sub- period ending in September 2020 for one year to September 2021, with a modified work commitment. The Company has met all IEP1 commitments at the date of this report. In August 2021, the Company announced that the Namibian authorities had acknowledged the exercise by the Company of its option to enter into the next sub-period of PEL0094 from September 2021 to September 2022.

Note 6  Issued Capital

The Group has authorised share capital amounting to 811,541,816 ordinary shares.

a) Ordinary Shares

On 13 August 2021, the Company completed a placing issuing a total of 200,000,000 fully paid ordinary shares, raising a total of US$1,367,000.

(b) Options

(c) Warrants

Note 7  Operating Segments

The following is an analysis of the Group's revenue and results by reportable segment.

Africa - the Group currently holds prospective oil and gas exploration interests offshore Namibia.

(a) Segment information

(i)   Segment performance

Africa                                         Consolidated

(ii)   Segment assets and liabilities

Africa                                         Consolidated

Note 8  Share-based Payments

No share based payments were made during the 6 month period to 31 December 2021.

Note 9  Financial Instruments

The financial assets and liabilities consist of trade and other receivables and trade and other payables. The financial assets and liabilities are carried at amortised cost, the carrying value is assumed to approximate their fair value.

Note 10   Capital and Joint Venture Commitments

(a)    Exploration expenditure commitments

In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various foreign governments where exploration tenements are held.

These obligations are subject to renegotiation when application for a tenement is made and at other times. These obligations are not provided for in the financial statements.

Financial commitments for subsequent periods can only be determined at future dates, as the success or otherwise of exploration programmes determines courses of action allowed under options available in tenements. The Group's only exploration expenditure commitments relate to its interest in joint ventures.

(b)    Namibia Licence PEL0094

Global was awarded licence PEL0094 in Namibia in September 2018, and a Petroleum Agreement was signed on 11 September 2018. 

The Initial Exploration Period ("IEP") runs for four years, and is divided into two sub periods of two years each; IEP1, and IEP2. IEP 1 runs from December 2018 to December 2020.

In July 2020, agreement was reached with the MME for an extension of the sub period ending September 2020 for one year to September 2021, with a modified work commitment.

During IEP1, Global has undertaken to licence existing seismic data and the carry out of studies specifically designed to focus on the Marula and Welwitschia Deep prospects. 

The technical work undertaken in late 2020 has more than fulfilled the firm work commitments in respect of IEP1. In August 2021, the Company elected to enter the next licence sub-period IEP2 until September 2022.

The commitment is to shoot and process a new 2,000 square kilometre 3D seismic data survey.

Global Petroleum Namibia Limited has an 78 per cent interest in the PEL0094, however it is responsible for 100 per cent of the expenditure requirements with its joint venture 

partners holding a total of 22 per cent free carried interest.

With respect to PEL0029 (Blocks 1910B and 2010A), the licence was issued on 3 December 2010 and expired under its terms on 3 December 2020, further extensions not being permitted under Namibian petroleum exploration law. The Company completed its outstanding licence work programme commitments for PEL0029 under budget in the latter part of 2020.

Note 11     Subsequent Events

There are no events subsequent to reporting period.

GLOBAL PETROLEUM LIMITED DIRECTORS' DECLARATION

In accordance with a resolution of the Directors of Global Petroleum Limited, the Directors of the Company declare that:

1.      the condensed consolidated interim financial statements and notes are in accordance with the Corporations Act 2001 and:

(a)    comply with Australian Accounting Standards applicable to the entity, which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards; and

(b)    give a true and fair view of the financial position as at 31 December 2021 and of the performance for the year ended on that date of the consolidated 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; and

3.      the Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer.

Director

Mr Andrew Draffin

Dated :               29 March 2022