HALF-YEAR FINANCIAL REPORT 30 June 2024 CORPORATE DIRECTORY ABN: 13 008 694 817 Contents Managing Director’s Report ........................ 3 Directors Hector M Gordon, Chairman Giustino Guglielmo Mark L Lindh Laura A Reed Managing Director Director’s Report ...................................... 9 Auditor’s Independence Declaration ........... 10 Directors’ Declaration .............................. 11 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income .. 12 Giustino Guglielmo Condensed Consolidated Statement of Financial Position .................................... 13 Company Secretary Consolidated Statement of Changes in Equity ............................................... .14 Robyn M Hamilton Registered Office and Principal Administration Office Level 5, 11-19 Bank Place Melbourne, Victoria, 3000, Australia Telephone +61 (3) 9927 3000 Facsimile +61 (3) 9614 6533 Email admin@bassoil.com.au Auditors Grant Thornton Audit Pty Ltd Collins Square Tower 5/727 Collins Street Melbourne, Victoria, 3008, Australia Share Registry Link Market Services Limited Tower 4, 727 Collins Street Melbourne, Victoria, 3008, Australia Telephone +61 (3) 9615 9800 Stock Exchange Listing Australian Stock Exchange Ltd 525 Collins Street Melbourne, Victoria, 3000, Australia ASX Codes: BAS – Ordinary Shares and BASO - Options Web Site: www.bassoil.com.au Consolidated Statement of Cash Flows ....... 15 Notes to the Financial Statements ............. 16 Independent Auditor’s Review Report ....... 26 Forward Looking Statements This Half Year Financial Report includes certain forward-looking statements that have been based on current expectations about future acts, events and circumstances. These forward-looking statements are, however, subject to risks, uncertainties and assumptions that could cause those acts, events and circumstances to differ materially from the expectations described in such forward-looking statements. These factors include, among other things, commercial and other risks associated with the meeting of objectives and other investment considerations, as well as other matters not yet known to the Group or not currently considered material by the Group. MANAGING DIRECTOR’S REPORT I am pleased to present the first half financial results for the 2024 fiscal year. Bass has reached a number of important milestones across both its producing and prospective assets, including the successful completion of preparatory activities for the Kiwi-1 Extended Production Test (‘EPT’) and the commencement of the Deep Coal Commercialisation Study (PEL-182). Production at the Company’s two cash generating units in Indonesia and the Cooper Basin have continued to deliver with decreases in PCP production (46,000 barrels, down 20.5% from H1FY23) and sales revenue (US$2.69m, down 6.6% from H1FY23) despite temporary operational setbacks in Indonesian operations impacting production in this first half year. Oil price for the period has remained resilient with an average realised price of US$82.24 per barrel resulting in an EBITDA of US$0.242m. The Company’s responsible management of its balance sheet continues to provide a strong foundation for funding priority development activities. Positive free cashflow from production in conjunction with careful cash flow management, have driven a closing cash position of US$1.66m. Over the period, Bass continued to proactively drive safety performance on its assets, and I am pleased to report that there have been no reportable incidents or injuries. I am also pleased to report that during the period Bass successfully completed a capital raise, securing ~US$1.0m in funds and introducing a new ‘tier 1’ institutional investor. This raising will support the strategic initiatives underway at PEL-182 and Kiwi-1. Advancing the ‘Company making’ growth initiatives in these properties and projects continue to be a key driver behind the Company’s goal to become a mid-tier oil and gas producer. The assets continue to show promise and remain attractive opportunities, with the forecast shortfall in supply to the East Coast Gas market in the near future. I would like to thank shareholders for their continued support throughout the period, including those that supported the capital raise, and look forward to sharing further updates on our exciting development pipeline. Half Year Summary Key financial and production performance results for the half year are summarised below. With no debt and sufficient cash reserves, Bass remains well-positioned to execute its strategy and continue its growth trajectory in H2FY24. (All amounts are in United States dollars unless otherwise stated) Bass Oil Limited Half Year Report June 2024 3 MANAGING DIRECTOR’S REPORT (cont’d) Financial and Operating Performance Key Performance Metrics 1H CY24 1H CY23 Change Net Production3 (mbbl) 45.61 57.37 -20.5% Net Oil Sales3 (mbbl) 41.37 52.77 -21.6% Net Entitlement Oil3 (mbbl) 31.50 37.11 -15.1% Sales Revenue (US$million) 2.69 2.88 -6.5% Cash (US$million) 1.66 1.52 9.1% Average Realised Oil Price (USD) 82.42 77.13 6.9% EBITDA1 (US$,000) 242 403 -40.0% NPAT/NLAT2 (US$,000) -242 -120 na . Earnings Before Interest, Taxes, Depreciation and Amortisation . Net Profit After Tax 3 . These are Non-IFRS metrics and contain 55% Bass share of Indonesian results and 100% Australian results. Net production, Oil Sales and Entitlement Oil are all components of the Entitlement Calculation Statement that generates Sales revenue and reserves in the Company’s Indonesian business. 1 2 Bass produced 45,613 barrels of oil (net) during the half year ending 30 June 2024, down 20.5% from the prior comparable period. Half-yearly oil sales were 41,370 barrels of oil net to Bass. The net entitlement oil to Bass was 31,518 barrels for the half-year after Domestic Market Obligation (DMO), down 15.1%. The Company realised a 6.5% decrease in sales revenue driven by the reduced production. 1H CY23 vs 1H CY24 Production (kbbl) 12 9 6 3 0 January February March CY23 April May June CY24 Figure 1: Bass Monthly Production Bass Oil Limited Half Year Report June 2024 4 MANAGING DIRECTOR’S REPORT (cont’d) Liquidity / Cash Position: At 30 June 2024, Bass cash reserves had increased to $1.66 million from $0.93 million at 31 December 2023 after the Company raised $1.0 million from a Placement predominantly to an Australian Tier 1 Institutional Investor and a Share Purchase Plan to eligible shareholders at A$0.07 a share. The Company is not carrying any debt and holds US$2.26 million on deposit to support a rehabilitation bond in favor of the South Australian Department for Energy and Mining. Development Planning: Oil Optimisation One of the Company’s core activities remains the focus on production optimization. In the Cooper Basin production from the fields at the end of this half year has remained steady at ~100 bopd. In Indonesia production rates continue to improve. Kiwi Extended Production Test Bass has completed earthworks to re-establish road access to the Kiwi 1 well in order to perform the Extended Production Test (EPT). The test has been delayed due to several significant rain events in the basin, closing roads and preventing the movement of truck and heavy equipment. On 12 August 2024 Bass announced that Wild Desert Rig 10 mobilised to the Kiwi-1 wellsite. The rig commenced activities on the well to complete it for production on 17 August. The Extended Production Test (EPT) will begin immediately thereafter. The EPT will confirm whether the discovery contains a potentially commercial volume of gas. This would provide the pathway for the Company to enter the eastern states' gas market. The geoscience team has also identified the potential for other traps, or prospects, on trend with Kiwi that, as a result of a successful test at Kiwi, may be significantly upgraded, See Figure 2. PRL 245 hosts the Kiwi gas discovery. Kiwi 1 was drilled in 2003 as an exploration well, resulting in a Triassic age, Callamurra Member gas discovery which flow tested at 9.6 million cubic feet per day on drill stem test. The Kiwi structure, drilled on 2D seismic data, was originally thought to contain a sub commercial quantity of gas in a relatively small structural trap. A 3D seismic survey was subsequently acquired over the area. A mapping project utilising 3D seismic data has indicated the possible presence of a larger stratigraphic trap and has resulted in an increased assessment of a mean Contingent Resource at Kiwi of 5.24 BCF and a 3C Contingent Resource of 11.5 BCF. Bass Oil Limited Half Year Report June 2024 5 MANAGING DIRECTOR’S REPORT (cont’d) Figure 2: Kiwi-1 location map Deep Permian Coal Gas Bass has engaged SLB (formally Schlumberger) – a global technology company - to perform a technical study that seeks to identify the potential commercialisation of gas from the deep coal resources in the 100% owned PEL 182 in the Cooper Basin. Study deliverables include a geomechanical model to assist in both well and fracture stimulation design, two key elements to allow commercialisation. At balance date the geomechanical study is well advanced. And will be complete shortly. The results of this study will be used to finalise the scope of a Rapid Resource Assessment (RRA) that will focus on sweet spot identification and assessment of economic exploitation scenarios. Bass Oil Limited Half Year Report June 2024 6 MANAGING DIRECTOR’S REPORT (cont’d) Figure 3: Cooper Basin assets Indonesian Oil Planning and procurement activities have commenced for the drilling of the Bunian 6 development well. The well will be located south-west of the prolific Bunian 3 well (Figure 4). which has produced in excess of one million barrels of oil to date and is still the strongest producer in the field. Bunian 6 will target undrained oil in the southwest of the Bunian field. The well is expected to spud in late 2024. The results of Bunian 6 will inform the potential for a significant extension of the Bunian field to the west. The existence of the westerly extension will likely be tested by the drilling of the Bunian West 1 well currently planned for the 2025 drilling program. A drilling success at Bunian West could increase field reserves significantly, see Figure 4. Bass Oil Limited Half Year Report June 2024 7 MANAGING DIRECTOR’S REPORT (cont’d) Figure 4: Tangai-Sukananti KSO Location Map Business Development: Bass is actively seeking opportunities to expand its operations and grow production. In addition to organic growth contained within Bass’ existing portfolio the Company is focused on acquiring assets with low-risk growth potential that have the are able to deliver above average returns by leveraging its expertise and resources. Bass Oil Limited Half Year Report June 2024 8 DIRECTORS’ REPORT The Directors present their report on the results of Bass Oil Limited consolidated entity (“BAS” or “Bass” or “the Company” or “the Group”) for the half-year ended 30 June 2024. DIRECTORS The names and details of the Company’s directors in office during the half-year and until the date of this report are set out below: Directors were in office for the entire period unless otherwise stated. Hector M Gordon (Chairman) Giustino (Tino) Guglielmo (Managing Director) Mark L Lindh Laura A Reed PRINCIPAL ACTIVITY The principal activity of the Group during the period was oil production from producing assets in the Cooper Basin, South Australia and a 55% Operator interest in the Tangai-Sukananti licence in the prolific South Sumatra Basin. The Company is debt free and committed to creating and maximizing value, leveraging its competitive strengths in both Australia and Indonesia. REVIEW AND RESULTS OF OPERATIONS A review of Group’s operations can be found on page 3. The Group’s operating loss for the half-year ended 30 June 2024 after income tax was $242,460 (30 June 2023: loss of $119,799). SIGNIFICANT EVENTS AFTER BALANCE DATE No other matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES We have obtained an independence declaration from our auditor, Grant Thornton Audit Pty Ltd, a copy of which is attached to this report. Signed in accordance with a resolution of the Directors Chairman Melbourne, 30 August 2024 Bass Oil Limited Half Year Report June 2024 9 Grant Thornton Audit Pty Ltd Level 22 Tower 5 Collins Square 727 Collins Street Melbourne VIC 3008 GPO Box 4736 Melbourne VIC 3001 T +61 3 8320 2222 Auditor’s Independence Declaration To the Directors of Bass Oil Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Bass Oil Limited for the half-year ended 30 June 2024, I declare that, to the best of my and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and b no contraventions of any applicable code of professional conduct in relation to the review. Grant Thornton Audit Pty Ltd Chartered Accountants T S Jackman Partner – Audit & Assurance Melbourne, 30 August 2024 www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. 10 DIRECTORS’ DECLARATION The directors declare that: (a) 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 (b) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity. Signed in accordance with a resolution of the directors made pursuant to s303(5) of the Corporations Act 2001. On behalf of the Directors Hector M Gordon Chairman Melbourne, 30 August 2024 Bass Oil Limited Half Year Report June 2024 11 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the half year ended 30 June 2024 Consolidated 6 months to 30 June 2024 $ 6 months to 30 Jun 2023 $ Oil revenue 2,692,657 2,883,240 Cost of oil sold (1,894,615) (2,081,174) 798,042 802,067 Interest received 53,714 42,264 Operator fees 42,561 37,281 Total revenue and other income 894,317 881,612 (686,604) (546,232) Employee benefits expense (317,085) (368,644) Finance costs (57,822) (3,755) Profit/(loss) before income tax (167,194) (37,019) Note Revenue Gross profit Other income Administrative expenses Income tax expense 3 (75,266) (82,780) (242,460) (119,799) Foreign currency translation (123,686) (63,699) Total comprehensive profit/(loss) for the half year (366,146) (183,498) Basic and diluted (loss)/earnings per share - cents (0.09) (0.04) Profit/(loss) for the half year Other comprehensive loss, net of income tax Items that may be reclassified to profit or loss The above statement of comprehensive income should be read in conjunction with the accompanying notes. Bass Oil Limited Half Year Report June 2024 12 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2024 Consolidated Note 30 June 2024 $ 31 December 2023 $ ASSETS Current Assets Cash and cash equivalents 1,657,505 932,148 Trade and other receivables 4 856,049 1,351,994 Other current assets 431,335 437,653 Inventories 420,515 455,482 Other financial assets 3,643 3,762 Total current assets 3,369,047 3,181,039 446,068 155,958 Non-current assets Trade and other receivables Other financial assets 2,290,673 2,364,473 Property, plant, and equipment 101,856 114,542 Right of use assets 122,461 161,600 5,077,552 5,320,164 Oil properties 5 Exploration assets 6 233,357 81,647 Total non-current assets 8,271,967 8,198,384 TOTAL ASSETS 11,641,014 11,379,423 Trade and other payables 955,733 1,079,558 Provisions 53,751 57,995 Lease liabilities 59,838 68,347 LIABILITIES Current Liabilities Provision for tax Total current liabilities 406,026 573,046 1,475,348 1,778,946 2,707,053 2,704,250 Non-current liabilities Provisions 59,237 88,181 Total non-current liabilities Lease liabilities 2,766,290 2,792,431 TOTAL LIABILITIES 4,241,638 4,571,377 NET ASSETS 7,399,376 6,808,046 32,566,214 31,608,738 EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY 7 3,214,417 3,338,103 (28,381,255) (28,138,795) 7,399,376 6,808,046 The above statement of financial position should be read in conjunction with the accompanying notes. Bass Oil Limited Half Year Report June 2024 13 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the half year ended 30 June 2024 At 1 January 2023 Contributed equity Accumulated losses Currency translation reserve Share based payments reserve Total $ $ $ $ $ 31,598,393 (28,450,382) 3,087,512 262,036 6,497,559 Net profit for the year - 269,783 - - 269,783 Foreign currency translation loss - - 40,704 - 40,704 Total comprehensive income for the year - 269,783 40,704 - 310,487 10,345 - - (10,345) - - 41,804 - (41,804) - At 31 December 2023 31,608,738 (28,138,795) 3,128,216 209,887 6,808,046 At 1 January 2024 31,608,738 (28,138,795) 3,128,216 209,887 6,808,046 Net loss for the period - (242,460) - - (242,460) Foreign currency translation loss - - (123,686) - (123,686) Total comprehensive income for the period - (242,460) (123,686) - (366,146) 1,015,878 - - - 1,015,878 (58,402) - - - (58,402) 32,566,214 (28,381,255) 3,004,530 209,887 7,399,376 Shares issued on conversion performance rights Lapsed performance rights Shares issued Transaction cost on share issues At 30 June 2024 The above statement of changes in equity should be read in conjunction with the accompanying notes. Bass Oil Limited Half Year Report June 2024 14 CONSOLIDATED STATEMENT OF CASH FLOWS For the half year ended 30 June 2024 Consolidated 30 June 2024 $ 30 June 2023 $ Receipts from customers 3,058,935 3,158,288 Payments to suppliers and employees (2,817,642) (2,519,642) (242,286) (103,111) Note Cash flows from operating activities Taxation paid Interest paid (5,421) (3,755) Interest received 52,743 28,387 46,329 560,167 Oil properties capital expenditure (59,575) (441,617) Exploration expenditure (154,289) (37,791) (213,864) (479,408) (43,621) (20,636) Proceeds from share issues 1,013,261 - Payment share issue costs (58,402) - Net cash provided by/ (used in) by financing activities 911,238 (20,636) Net increase in cash and cash equivalents 734,703 60,123 Foreign exchange movement (18,346) (15,183) Cash and cash equivalents at the beginning of the year 932,148 1,477,074 1,657,505 1,522,014 Net cash provided by operating activities Cash flows from investing activities Net cash (used in) investing activities Cash flows from financing activities Principal elements of lease payments Cash and cash equivalents at the end of the half year Some administration and corporate costs included in the 30 June 2024 ASX Quarterly Appendix 5B have been reclassified to exploration expenditure from payments to suppliers for production. The above statement of cash flows should be read in conjunction with the accompanying notes. Bass Oil Limited Half Year Report June 2024 15 NOTES TO THE FINANCIAL STATEMENTS For the half year ended 30 June 2024 Note 1. Corporate Information The consolidated financial statements of Bass Oil Limited (“Parent Entity” or “Company”) and its controlled entities (collectively as “Consolidated Entity” or “the Group”) for the half-year ended 30 June 2024 was authorised for issue in accordance with a resolution of the directors on 30 August 2024. Bass Oil Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange. The nature of the operations and principal activities of the Group are oil production and oil exploration. Note 2. Summary of Material Accounting Policy Information Basis of Preparation The consolidated financial statements have been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in United States 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 Company’s 2023 annual financial report for the financial year ended 31 December 2023. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards. In the application of the Group’s accounting policies, which are described below, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ from these estimates. Except where indicated otherwise, all amounts are presented in United States dollars. Going Concern The consolidated financial statements have been prepared on the going concern basis, which assumes that the Group will be able to realise its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial report. For the financial half-year ended 30 June 2024 the Group earned a loss after tax of $242,460 (30 June 2023: loss of $119,799), had a net cash inflow from operating activities of $46,329 (30 June 2023: inflow $560,167), a net cash outflow from investing activities of $213,864 (30 June 2023: $479,408) and had a net cash inflow from financing activities of $911,238 (30 June 2023: outflow $20,636). The Directors have prepared a cash flow forecast through to September 2025 which indicates that the Group has sufficient funds to remit the final instalment of the performance bond for the rehabilitation of the Cooper Basin properties in favour of the SA Department for Energy and Mining and invest in further projects to maintain/increase production levels. The Group may be required to secure additional funding (which may be sourced as debt or equity) in the event of unforeseen issues arising including but not limited to a weakness in the price of oil, field production performance or projected cash returns from the Company’s Indonesian subsidiary or to fund drilling and non-drilling projects beyond September 2025. Bass Oil Limited Half Year Report June 2024 16 NOTES TO THE FINANCIAL STATEMENTS For the half year ended 30 June 2024 Note 2. Summary of Material Accounting Policy Information (cont’d) Going concern (cont’d) Based on the Group’s cash flow forecast, achieving the funding referred to above and achieving successful results from drilling and non-drilling projects, the Directors believe that the Group will be able to continue as a going concern. Should the Group be unsuccessful in achieving the projected levels of cashflow from initiatives set out above, a material uncertainty would exist that may cast significant doubt on the ability of the Group to continue as a going concern and, therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts and the amount and classification of liabilities that might be necessary should the Group not continue as a going concern. (a) Statement of Compliance These financial statements are general purpose interim financial statements which have been prepared in accordance with the Corporations Act 2001 and AASB 134 Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with Australian Accounting Standards and should be read in conjunction with the most recent annual report. The financial statements comprise the consolidated statements of the Group. For the purpose of preparing the consolidated financial statements, the Company is a for-profit entity. Compliance with AASB 134 ensures compliance with IFRS Accounting Standard IAS 34 Interim Financial Reporting. (b) New Accounting Standards and Interpretations The Group has adopted all the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for an accounting period that begins on or after 1 January 2024. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted and will not have a material impact on the financial statements. (c) Critical accounting estimates and judgements The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Bass Oil Limited Half Year Report June 2024 17 NOTES TO THE FINANCIAL STATEMENTS For the half year ended 30 June 2024 Note 2. (c) Summary of Material Accounting Policy Information (cont’d) Critical accounting estimates and judgements (cont’d) These accounting policies have been consistently applied by each entity with the exception of oil property assets, in the consolidated entity, and the estimates and underlying assumptions are reviewed on an ongoing basis. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year are discussed below. (i) Impairment of Oil Property Assets Oil properties impairment testing requires an estimation of the value in use of the cash generating unit to which deferred costs have been allocated when impairment indicators have been identified. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. Other assumptions used in the calculations which could have an impact on future years includes available reserves and oil prices. (ii) Useful Life of Oil Property Assets Oil properties are amortised on the Units of Production basis using the latest approved estimate of Proven (1P) Reserves and Proven and Probable (2P) Reserves. Amortisation is charged only once production has commenced. No amortisation is charged on areas under development where production has not yet commenced. Estimates of reserve quantities are a critical estimate impacting amortisation of oil property assets. (iii) Estimates of Reserve Quantities The estimated quantities of Proven and Probable hydrocarbon reserves reported by the Company are integral to the calculation of the amortisation expense relating to oil properties, and to the assessment of possible impairment of these assets. Estimated reserve quantities are based upon interpretations of geological and geophysical models and assessments of the technical feasibility and commercial viability of producing the reserves. These assessments require assumptions to be made regarding future development and production costs, commodity prices, exchange rates and fiscal regimes. The estimates of reserves may change from period to period as the economic assumptions used to estimate the reserves can change from period to period, and as additional geological data is generated during the course of operations. Reserves estimates are prepared in accordance with the Company’s policies and procedures for reserves estimation which conform to guidelines prepared by the Society of Petroleum Engineers. The estimated reserve quantities are used in the assessment of fair value of the oil properties. (iv) Income tax The consolidated entity is subject to income taxes in the jurisdictions in which it operat