empire oil & gas nl · 2014. 3. 11. · empire oil & gas nl. abn 55 063 613 730 . interim...

EMPIRE OIL & GAS NL

A B N 5 5 0 6 3 6 1 3 7 3 0

2 2 9 S t i r l i n g H i g h w a y

C L A R E M O N T 6 0 1 0 W E S T E R N A U S T R A L I A

T E L E P H O N E + 6 1 8 9 2 8 4 6 4 2 2

F A C S I M I L E + 6 1 8 9 2 8 4 6 5 8 8

E M A I L i n f o @ e m p i r e o i l . c o m . a u

W E B w w w . e m p i r e o i l . c o m . a u

12 March 2014

The Manager Company Announcements Office Australian Securities Exchange 20 Bridge Street SYDNEY NSW 2000 Dear Sir RE: Interim Financial Report for the Half-Year Ended 31 December 2013 for Empire Oil & Gas NL Please find attached the Empire Oil & Gas NL Interim Financial Report for the Half Year period ending 31 December 2013 which includes the Consolidated Financial Statements for the Group. Yours faithfully

Kent Quinlan Acting Chief Executive Officer

It is not th e number of hours in th e working day th at’ s important it’s th e

work that gets achiev ed in those hours th at concerns Anderson Lee.

Overtim e is not encouraged – excepts on those rar e occasions wh en it is

absolutely nec essary. Anderson Lee prefe rs em ployee s to work ef ficiently in

the seven and a half hours

availabl e each day.

Ander son Lee strives to create a productive and

positive wo rking environme nt. The company has a ‘give -and-tak e’ at titud e

when it come s to it’s

employees . It rewa rds har d wo rk by offering

employee s incentiv es like, flex ible work hours and time in leu . Time in leu

enables emp loye es who have wo rked with diligenc e and effi ciently to tak e

time off during quieter time s or en joy a l ong week end or extended holiday.

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mailto:[email protected]

EMPIRE OIL & GAS NL

ABN 55 063 613 730

INTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

This interim financial report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.2A.3

The information contained in this report is to be read in conjunction with Empire Oil & Gas NL’s 2013 annual report and any announcements to the

market by Empire Oil & Gas NL during and subsequent to the half-year period ended 31 December 2013.

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Empire Oil & Gas N.L. and Controlled Entities ABN 55 063 613 730

1

CORPORATE DIRECTORY

TABLE OF CONTENTS

1. PRINCIPAL OFFICE Empire Oil & Gas NL 229 Stirling Highway Claremont 6010 Western Australia Telephone 61 8 9286 4600 Facsimile 61 8 9284 6588 Email [email protected] Web www.empireoil.com.au ASX code EGO 2. REGISTERED OFFICE Empire Oil & Gas NL 229 Stirling Highway Claremont 6010 Western Australia Telephone 61 8 9286 4600 Facsimile 61 8 9284 6588 Email [email protected] 3. SHARE REGISTRY Link Market Services Limited Locked Bag A14 Sydney South 1235 New South Wales Telephone 61 1300 554 474 Facsimile 61 2 9287 0303 Email [email protected] Web www.linkmarketservices.com.au 4. COMPANY SOLICITOR Mizen & Mizen 69 Mount Street Perth 6000 Western Australia Clayton Utz Lawyers QV.1 Building 250 St Georges Terrace Perth 6000 Western Australia 5. AUDITORS Stantons International Level 2 1 Walker Avenue West Perth 6005 Western Australia

Director’s Report 2 Auditor’s Independence Declaration 6 Condensed Consolidated Statement of Profit or Loss and other Comprehensive Income

7

Condensed Consolidated Statement of Financial Position

8

Condensed Consolidated Statement of Changes in Equity

9

Condensed Consolidated Statement of Cash Flows

10

Notes to the Condensed Consolidated Statement of Financial Statements

11

Directors’ Declaration 24 Independent Auditor’s Review Report 25

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DIRECTORS’ REPORT

Your directors submit the financial report of the consolidated group for the half-year ended 31 December 2013. Directors

The names of directors who held office during or since the end of the half-year: T Iannello appointed 22 November 2013 B Heading appointed 22 November 2013 P Jans appointed 20 December 2013 S Brown appointed 20 January 2014 J L C Marshall resigned 22 November 2013 N K Joyce resigned 22 November 2013 J S MacDonald resigned 22 November 2013 B J Warris resigned 20 December 2013

Review of Operations

The Red Gully Gas and Condensate Processing Facility (“Red Gully Facility”) is the first dedicated gas and condensate–rich facility to be built in the onshore Perth Basin. The Facility was commissioned on 16 September 2013 and at 31 December 2013 reached a significant milestone in the delivery of a total of 1 petajoule of gas to Alcoa of Australia and nearly 36,000 barrels of condensate to the BP Kwinana refinery. On 22 November 2013, Empire Oil & Gas NL (Empire) announced that Empire, ERM Power Ltd (ERM) and the then Empire directors Craig Marshall, Bevan Warris, Jeff MacDonald and Neil Joyce had reached an agreement to facilitate an orderly transition from the Company as a result of the s249D Notice being issued by ERM to Empire. The newly constituted Board and management has, since gaining full access to the records and operational data of Empire, been working on a range of issues across all areas of the company’s operations. Those identified to date include:

the Red Gully Facility is subject to a number of commissioning and operational issues which continue to occur on a regular basis, and have led to between 35 and 65 hours in downtime over each of the months in the December quarter. These issues are being reviewed systematically to understand why they occurred, are occurring, and how to ensure they do not continue. There are still a significant number of outstanding issues to be resolved with the Facility’s design, construction, commissioning and operations. This review will seek to identify and rectify the root cause of the various issues.

an initial high-level review of Empire’s financial position and the performance of the Red Gully Facility conducted in early December 2013 indicated that the financial position of the company was worse than the new Board anticipated, based on information available to it when the new Board members and management assumed their roles in late 2013. Initial findings include:

- the performance of the Red Gully well and Facility is lower than anticipated;

- the operational costs of the Red Gully Facility are higher than anticipated;

- Empire’s corporate costs are too high; and

- Empire’s overall financial position and financial management processes require significantly more strengthening than had been anticipated, based on the information available prior to the newly constituted board assuming their roles at the Company.

an initial high level review of the planning processes of Empire has identified the need for significant changes, including focus on:

- engagement with a variety of stakeholders including landowners with respect to land access agreements which are required before any work programs can commence;

- Empire’s obligations and responses to regulatory bodies, particularly in relation to drilling programs, safety and environmental plans; and

- planning and coordination of exploration activities, specifically in respect to the perforation of the Red Gully-1 well B-sands (EP389), Black Arrow-1 well (EP432), Charger-1 well (EP454) and 3D Seismic (EP 368/EP 426), which has resulted in delayed approvals.

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Empire will in the short term continue to review and resolve:

- the commissioning and operational issues with the Red Gully Facility;

- look to improve the performance of the Facility while reducing the costs of operations;

- finalise planning and completion of the perforation of the Red Gully-1 B-sands;

- seek to reduce Empire’s corporate expenditure; and

- seek to put the planning for the exploration activities in the near-term back on track. Board and Management Changes

Further to the changes at the Board and Management level made on 22 November 2013, and as a result of an agreement to facilitate an orderly transition, Messrs Marshall, MacDonald and Joyce resigned as directors of Empire and its related subsidiaries and were replaced by ERM appointees Tony Iannello and Brett Heading. At the time, Mr Iannello and Mr Heading were both Directors of ERM. Mr Iannello also became Chairman of Empire. Mr Heading has since resigned from the ERM Board. On 2 December 2013, Empire announced that Kent Quinlan had been appointed Acting Chief Executive Officer, on secondment from ERM. On 20 December 2013, Bevan Warris resigned as a director of Empire and its subsidiaries. To ensure the Company met its obligations under ASX listing rules, which require it to maintain a minimum of three directors, Peter Jans, the Group General Counsel and Company Secretary of ERM, was appointed as a Director. Dr Warris’ consultancy contract has now expired and Dr Warris has left Empire. Mr Ian Paton, an ERM Gas consultant for over 7 years, has been seconded to Empire in the interim to replace Dr Warris, to plan and complete the perforation of the Red Gully-1 B-sands and to conduct the Asset/Tenement Review. Executive search firm, Park Brown International, has been engaged to identify suitable candidates for the CEO position. The Board is reviewing a possible short-list of high-calibre candidates for the CEO position. On 20 January 2014 Stuart Brown, former Woodside and Shell executive, was appointed to Empire’s Board as an Independent Non-Executive Director. The Board will also continue its search for another Independent Non-Executive Director. The biographies of the Directors and the Acting Chief Executive Officer can be found on Empire’s website at http://empireoil.com.au/management_profiles. $2m Line of Credit from ERM Power

ERM has provided a $2 million credit facility to Empire. The new Empire Board considers this to be a prudent measure as it ensures Empire is able to meet its day-to-day working capital expenditure while the strategic, asset, operational, governance and financial reviews are completed. The new Board of Empire obtained the credit facility following an initial review of the Company’s finances. This review was undertaken after the Board gained full access to the Company’s financial information. The credit facility will remain in place for six months and is repayable on 30 June 2014, but may be extended by agreement, or be repaid earlier, if Empire conducts a capital raising of more than $2 million, whichever occurs first. The terms of the credit facility are an interest rate-based on the highest of the big-four banks’ benchmark overdraft rate plus 1 percentage point, secured. The interest rate is fixed for the period of the facility at the time of first draw-down. There are no other fees. There were no drawings on this facility as at 31 December 2013. On 27 February 2014 Empire drew down $1 million from the facility. Legal

The Company understands that the $22,000 in payments made by Empire shareholders to settle legal actions against them by Messrs Marshall, Joyce and Warris has been received by the solicitors acting for them in these actions. It is the view of Empire's current board that as the legal actions were personal actions by these former directors, the Company is not legally entitled to these funds and Empire’s accounts have been amended to reflect this view. On 20 December 2013, Empire announced that it had commenced legal proceedings against former directors, Messrs Marshall, Joyce and Warris to recover over $400,000 in legal costs incurred by them, but paid for by Empire, while they were directors. The legal costs were incurred in relation to the personal defamation actions they took against certain Empire shareholders. The writs in the proceedings allege contraventions of the Corporations Act and breach of fiduciary duties to the Company. The legal proceedings in the Supreme Court of Western Australia with regards to the Deemed Withdrawal of Wharf Resources Plc from EP 389 continue with initial Directions hearings and an initial Mediation occurring in the first quarter of

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4

2014. The Company expects it will be some time before the court is able to hear these proceedings and it will advise shareholders when further information becomes available. Corporate Reviews

As announced during the s249D Notice issued in September 2013, and presented at the AGM and EGM on 26 November 2013, the new Empire Board has commenced the following five reviews: 1. Asset/Tenement Review The Asset/Tenement Review involves a comprehensive review of all of Empire’s tenements, including:

the current status of each tenement;

the prospectivity and potential value of each tenement (i.e. the potential gas and oil/condensate and/or unconventional recoverable reserves/resources) and verification of all potential recoverable reserves previously reported to the market;

tenement work program commitments and timing;

capital expenditure required to assess the prospectivity and define the potential reserves and resources;

assessment of the risk-versus-reward of each tenement;

ranking of each tenement against the other tenements held; and

review the status and outcomes to date of the Macquarie Global Farmout process. The Asset/Tenement review will also encompass Empire’s shareholding in Key Petroleum (ASX: KEY). Shareholders should note that the new Board of Empire has determined that until this review is completed and that all aspects of resource estimates and other related matters have been reviewed and verified, including previously reported estimates, that all references to any resource estimates have been removed from Empire’s internet site and will not be included in either this report nor any future reports lodged with the ASX. This will remain the case until the new Board is confident that any estimates provided to the ASX are verifiable and in accordance with the ASX listing rules which apply to the reporting of these estimates. 2. Operational Review The Operational Review focuses on the operational efficiency and effectiveness of:

the Red Gully Joint Venture and in particular, the operations of the Red Gully-1 and Gingin West-1 wells, and the Red Gully Facility, including the capital and operational costs associated with these activities, and certification of reserves and resources;

a post-activity review of the Wannamal 3D Heliseismic review, including the operation and the costs associated with this work program and an understanding of why the project over-ran its joint venture budget of $4.5m by nearly $2m (total cost ~$6.4m); and

a general review of the planning and execution of various work program activities, including ensuring appropriate and skilled resourcing, and understanding of the factors which have in the past led to significant delays in work program activities, including the drilling of wells and conducting seismic surveys and approvals process.

3. Financial Review

The Financial Review encompasses all financial aspects of the business, including:

a full review of the financial management processes within Empire;

a review of expected revenue and expenditures for Red Gully;

a review of the 2013 Annual Report as provided to the market and any supplementary disclosures as required;

forecasts of future profit and loss and cash flows;

an assessment of forecast operating and exploration capital expenditure commitments and cash flows of the Company’s interests (incorporating the elements reviewed in the Asset/Tenement review and the overall Strategic review);

ensuring any operational efficiencies identified in the Operational Review are realised; and

the future funding requirements of the strategic plan.

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4. Governance Review The Governance Review focuses on the following operational and corporate policies in place, specific items regarding the previously announced defamation actions and the recruitment of new directors and management, such as:

Empire’s corporate policies to ensure compliance with good corporate governance principles, compliance with ASIC Corporations Act and ASX Listing Rules;

related-party and financial report disclosures;

legal advice in respect to the legal cost indemnities provided to previous Empire directors in relation to personal defamation action taken by them against shareholders, including instituting legal proceedings to recover the funds; and

the engagement of PwC to assist within a forensic analysis covering certain aspects of its finances and prior expenditures.

5. Strategic Review The Strategic Review will encompass all outcomes of the above four reviews and involve formulating a comprehensive strategic plan to unlock the potential underlying value of Empire’s assets and create value for Empire’s shareholders. Prior Period Adjustment At June 30 2013 Oil and Gas Properties, Development Costs were impaired in value by $4.010m on the basis that the recoverable value, using the value-in-use method, was lower than the carrying value of the asset. A review of the financial model used to calculate the value-in-use was conducted and subsequently revealed an error in the application of the assumption relating to gas prices. With no changes in the underlying assumptions as at 30 June 2013 and the correct application of the model, there was no impairment in the carrying value at 30 June 2013. Therefore the reported loss before tax of $8.326m will be restated to $4.316m and adjusted for in Accumulated Losses for the year commencing 1 July 2013. The reversal of the impairment has no cash flow impact. The Company will conduct its impairment testing in accordance with AASB 136 Impairment of Assets at June 30 2014. Macquarie Global Farm Out

The Macquarie Global Farm Out has been put on hold pending the outcome of the Corporate Reviews above. Although a number of parties have expressed an interest in, and reviewed the opportunity in detail, no party had submitted a formal proposal prior to the process being put hold. Rounding of Amounts

The consolidated group has applied the relief available to it in ASIC Class Order 98/100 and accordingly certain amounts in the financial report and the directors’ report have been rounded off to the nearest $1,000. Auditor’s Independence Declaration

The lead auditor’s independence declaration under S 307C of the Corporations Act 2001 is set out on page 6 for the half-year ended 31 December 2013. This directors’ report is signed in accordance with a resolution of the Board of Directors.

T Ianello Director Signed on this 11th day of March 2014.

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2013

Consolidated Group

CONTINUING OPERATIONS Note 31 December 2013

31 December 2012

$ $ Interest Income 42,570 291,079 Sale of gas and condensate 5,436,124 - Access and Hire Income 57,257 35,555

Total Revenue 5,535,951 326,634

Finance expense 79,565 13,843 Depreciation and amortisation expense 1,697,015 35,657 Impairment of Exploration expenditure 5,902 61,466 General and Administration expense 1,264,508 1,526,448 Management, Consulting and Professional expenses 667,034 198,423 Provision for Joint Venture Restructure 21,338 - Production expenses 2,053,109 -

Total Expenditure (5,788,471) (1,835,837)

Profit/(loss) from continuing operations before income tax

(252,520)

(1,509,203)

Income tax benefit/(expense) - 498,140

Net profit/(loss) from continuing operations (252,520) (1,011,063)

Other comprehensive income for the period Items that will not be reclassified subsequently to profit or loss - - Items that may be reclassified subsequently to profit or loss: Net gain/(loss) on available for sale financial assets 208,000 (109,200)

Total comprehensive profit/(loss) for the period

(44,520)

(1,120,263)

Net profit/(loss) attributed to members of the Company (256,786) (1,011,063) Net profit/(loss) attributed to non-controlling interest 4,266 -

(252,520) (1,011,063)

Total comprehensive income/(loss) attributed to the Company

(48,786)

(1,120,263)

Total comprehensive income attributed to non-controlling interest

4,266

-

(44,520) (1,120,263)

Earnings per share on earnings attributable to the ordinary equity holders of the Company

From continuing operations:

Cents Cents

Basic and diluted loss per share (cents per share) (0.004) (0.023)

The condensed consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013

Note

31 December 2013

Restated 30 June

2013 $ $

ASSETS

Current Assets Cash and cash equivalents 4 1,091,241 8,894,419 Trade and other receivables 5 4,934,004 2,693,848 Inventories 16,304 161,023

Total Current Assets 6,041,549 11,749,290

Non-Current Assets

Trade and other receivables 5 31,000 25,000 Property, plant and equipment 2,171,725 2,116,418 Oil and gas properties 3,6 45,727,627 46,362,048 Exploration and evaluation assets 7 8,267,293 7,746,915 Available-for-sale financial assets 572,000 364,000 Inventories 13,458 13,458

Total Non-Current Assets 56,783,103 56,627,839

TOTAL ASSETS 62,824,652 68,377,129

LIABILITIES Current Liabilities Trade and other payables 4,073,508 6,023,503 Other liabilities 8 9,007,960 11,952,961 Provisions 43,810 62,503 Provision joint venture restructure 1,001,030 1,888,622 Interest bearing liabilities 5,118 4,870

Total Current Liabilities

14,131,426

19,932,459

Non-Current Liabilities Other liabilities 8 4,738,537 5,042,167 Shareholder loans 455,596 455,596 Provision-rehabilitation 4,717,189 4,644,441 Provision joint venture restructure 13 526,581 - Interest bearing liabilities 7,158 9,781

Total Non-Current Liabilities

10,445,061

10,151,985

TOTAL LIABILITIES 24,576,487 30,084,444

NET ASSETS 38,248,165

38,292,685

EQUITY

Issued capital 9 77,054,969 77,054,969 Reserves 3,111,913 2,903,913 Accumulated losses 3 (41,927,836) (41,671,050)

Capital and reserves attributable to owners of Empire Oil and Gas NL 38,239,046 38,287,832 Non-controlling interest 9,119 4,853

TOTAL EQUITY 38,248,165 38,292,685

The condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 31 DECEMBER 2013

Issued Ordinary Capital

Accumulated

Losses

Option

Reserve

Asset Revaluation

Reserve

Non Controlling

Interest

Total $ $ $ $ $ $

Balance at 1 July 2012 61,802,788 (37,709,780) 3,469,913 441,000 - 28,003,921 Loss for the half year - (1,011,063) - - - (1,011,063) Other comprehensive income - - - (109,200) - (109,200)

Total comprehensive loss for the half year - (1,011,063) - (109,200)

- (1,120,263)

Shares issued during the half year 8,748,254 - - - - 8,748,254 Less: issue costs (352,656) - - - - (352,656)

Balance 31 December 2012 70,198,386 (38,720,843) 3,469,913 331,800 - 35,279,256

Balance at 1 July 2013 77,054,969 (45,681,050) 3,469,913 (566,000) 4,853 34,282,685 Prior period correction (note 3) - 4,010,000 - - - 4,010,000

Restated balance at 1 July 2013 77,054,969 (41,671,050) 3,469,913 (566,000) 4,853 38,292,685

Loss for the half year - (256,786) - - 4,266 (252,520) Other comprehensive income - - - 208,000 - 208,000

Total comprehensive profit/(loss) for the half year - (256,786) - 208,000

4,266 (44,520)

Balance 31 December 2013 77,054,969 (41,927,836) 3,469,913 (358,000) 9,119 38,248,165

The condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 31 DECEMBER 2013 Half Year

Note

31 December 2013

31 December 2012

$ $

Cash Flows from Operating Activities

Interest income received 80,526 233,508 Other income 10,630 35,555 Condensate sales 2,662,155 - Payments to suppliers, contractors and employees (2,479,850) (1,414,033)

Net Cash provided by/(used in) Operating Activities 273,461 (1,144,970)

Cash Flow from Investing Activities

Payments for plant and equipment (123,276) (521,689) Expenditure on oil and gas properties and exploration (7,946,795) (8,895,022) Gas and condensate plant prepayment - 10,312,500

Net Cash provided by/(used in) Investing Activities (8,070,071) 895,789

Cash flow from Financing Activities

Repayment of borrowings (6,569) (6,628) Proceeds from issue of shares - 8,748,253 Share placement costs - (352,656)

Net Cash provided by/(used in) Financing Activities (6,569) 8,388,969

Net Increase in Cash and Cash Equivalents held (7,803,179) 8,139,788

Cash and Cash Equivalents at the beginning of the half year 8,894,420 4,752,042

Cash and Cash Equivalents at the end of the half year 4 1,091,241 12,891,830

Note: Cash Flows are GST exclusive except the category, Payments to suppliers, contractors and employees, which includes the net effect of GST.

The condensed consolidated statement of cash flows is to be read in conjunction with the accompanying notes.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR

THE HALF YEAR ENDED 31 DECEMBER 2013 1. REPORTING ENTITY

Empire Oil & Gas NL (the Company) is a company domiciled in Australia. The consolidated interim financial report of the Company as at, and for the six months ended 31 December 2013 covers the consolidated group of Empire Oil & Gas NL and its subsidiaries.

The annual financial report of the consolidated entity as at and for the year ended 30 June 2013 is available upon request from the Company’s registered office or may be viewed on the Company’s website, www.empireoil.com.au.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation

These general purpose interim financial statements for the half-year reporting period ended 31 December 2013 have been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting. The group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. This interim financial report is intended to provide users with an update on the latest annual financial statements of Empire Oil & Gas NL and its controlled entities (referred to as the “consolidated entity” or “Group”). As such, it does not contain information that represents relatively insignificant changes occurring during the half-year within the Group. It is therefore recommended that this financial report be read in conjunction with the annual financial statements of the Group for the year ended 30 June 2013, together with any public announcements made during the following half-year.

Accounting Policies

The same accounting policies and methods of computation have been followed in this interim financial report as were applied in the most recent annual financial statements, except in relation to the matters discussed below. Critical Accounting Estimates and Judgments

The critical estimates and judgments are consistent with those applied and disclosed in the June 2013 annual report. New and Revised Accounting Requirements Applicable to the Current Half-Year Reporting Period

The Group has adopted the following new and revised Australian Accounting Standards applicable from 1 July 2013 together with consequential amendments to other Standards:

- AASB 10: Consolidated Financial Statements; - AASB 127: Separate Financial Statements (August 2011); - AASB 11: Joint Arrangements - AASB 128: Investments in Associates and Joint Ventures (August 2011); - AASB 12: Disclosure of Interests in Other Entities; - AASB 2011-7: Amendments to Australian Accounting Standards arising from the Consolidation and Joint

Arrangements Standards; and - AASB 2012-10: Amendments to Australian Accounting Standards – Transition Guidance and Other

Amendments.

These Standards became mandatorily applicable from 1 January 2013 and became applicable to the Group for the first time in the current half-year reporting period 1 July 2013 to 31 December 2013. Where applicable, the Group has applied these Accounting Standards in accordance with AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors and the specific transitional requirements of AASB 10 and AASB 11. Principles of Consolidation

The consolidated financial statements incorporate all the assets, liabilities and results of the parent and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of subsidiaries is provided in Note 14. The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses in transactions between Group entities are fully eliminated on consolidation, Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting practices adopted by the Group.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2013

12

Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling interests”. The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-controlling interest’s proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of financial position and statement of comprehensive income. Critical Accounting Estimates and Significant Judgements Used in Applying Accounting Policies

The critical estimates and judgements are consistent with those applied and disclosed in the June 2013 annual report.

Exploration and evaluation costs Exploration and evaluation costs are carried forward where right of tenure to the area of interest is current and they are expected to be recouped through sale or successful development and exploitation of the area of interest or, where exploration and evaluation activities in the area of interest have not reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Where the expenditure has resulted in the development of a project, the expenditure applicable to the area of interest is transferred to Oil and Gas Properties. Where an area of interest is abandoned or the Directors decide that it is not commercial, any capitalised exploration costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting period and accumulated costs written off to the extent that they will not be recoverable in the future. Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences. Oil and Gas Properties

(i) Assets in Development When the technical and commercial feasibility of an undeveloped oil or gas field has been demonstrated the field enters its development phase. The costs of oil and gas assets are transferred from exploration and evaluation expenditure and reclassified into development phase and include past exploration and evaluation costs, development drilling and other subsurface expenditure, surface plant and equipment, and any associated land and buildings. When commercial operations commence the accumulated costs are transferred to oil and gas assets-producing assets.

(ii) Producing Assets The cost of oil and gas assets in production are separately accounted for as tangible assets, and include past exploration and evaluation costs, pre-production development costs and the ongoing costs of continuing to develop reserves for production and to expand or replace plant and equipment and any associated land and buildings.

These costs are amortised over the life of the estimated proved plus probable reserves using the production method. Depreciation of the Red Gully Processing Facility commenced on completion of commissioning. Depreciation was not charged during commissioning. During commissioning, revenue derived from oil and gas was offset against development costs.

Interests in Joint Arrangements

Joint arrangements represent the contractual sharing of control between parties in a business venture where unanimous decisions about relevant activities are required. Separate joint venture entities providing joint venturers with an interest to net assets are classified as a “joint venture” and accounted for using the equity method. Joint venture operations represent arrangements whereby joint operators maintain direct interests in each asset and exposure to each liability of the arrangement. The Group’s interests in assets, liabilities, revenue and expenses of joint operations are included in the respective line items of the consolidated financial statements. Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties’ interests. When the Group makes purchases from a joint operation, it does not recognise its share of the gains and losses from the joint arrangement until it resells those goods/assets to a third party.

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Details of the Group’s interest in joint arrangements are provided in Note 15.

Fair Value of Assets and Liabilities The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (ie the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs). For non-financial assets, the fair value measurement also takes into account a market participant's ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use. The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements.

(i) Valuation techniques

In the absence of an active market for an identical asset or liability, the Group selects and uses one or more valuation techniques to measure the fair value of the asset or liability. The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques selected by the Group are consistent with one or more of the following valuation approaches: - Market approach: valuation techniques that use prices and other relevant information generated by market

transactions for identical or similar assets or liabilities. - Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a

single discounted present value. - Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service

capacity. Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are considered unobservable. (ii) Fair value hierarchy

AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised into as follows: Level 1 Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

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Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2

Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3

Measurements based on unobservable inputs for the asset or liability.

The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3. The Group would change the categorisation within the fair value hierarchy only in the following circumstances: (i) if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or (ii) if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa. When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (ie transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred. Going concern basis

The consolidated interim financial report have been prepared on a going concern basis as the Company may need to raise additional funds when required to fund future exploration and development costs, to review costs and to generate revenue from the Red Gully Gas and Condensate Production Facility.

3 RESTATEMENT DUE TO MATERIAL ERROR Reversal of Impairment Loss at 30 June 2013

At June 30 2013, Oil and Gas Properties, Development Costs was impaired in value by $4,010,000 on the basis that the recoverable value, using the value-in-use method, was lower than the carrying value of the asset. A review of the financial model used to calculate the value-in-use was conducted and subsequently revealed an error in the application of assumptions relating to gas prices. The restated value of the asset has been adjusted against Accumulated Losses at 30 June 2013. The reversal of the impairment has no cashflow impact. The comparative for 30 June 2013 in the Interim Financial Report is restated as follows:

Disclosed 30 June 2013

$

Correction $

Restated 30 June 2013

Balance Sheet Oil and Gas Properties 42,352,048 4,010,000 46,362,048

Total Non-Current Assets 52,617,839 4,010,000 56,627,839

Total Assets 64,367,129 4,010,000 68,377,129

Net Assets 34,282,685 4,010,000 38,292,685

Accumulated Losses (45,681,050) 4,010,000 (41,671,050)

Capital and reserves attributable to owners of Empire Oil and Gas NL

34,277,832 4,010,000 38,287,832

Total Equity 34,282,685 4,010,000 38,292,685

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3 RESTATEMENT DUE TO MATERIAL ERROR (Continued) Disclosed

30 June 2013 $

Correction $

Restated 30 June 2013

$

Oil and Gas Properties

Development Costs 19,068,852 4,010,000 23,078,852

Accumulated Amortisation - - -

Balance 30 June 2013 19,068,852 4,010,000 23,078,852

Reconciliation of Development Costs:

Opening net carrying amount 3,684,855 - 3,684,855

Additions 20,549,602 - 20,549,602

Commissioning revenue (318,051) - (318,051)

Rehabilitation provision 4,617,778 - 4,617,778

Transfers from exploration and evaluation costs 17,827,864 - 17,827,864

Impairment of development (4,010,000) 4,010,000 -

Transfers to Red Gully Processing Facility (23,283,196) - (23,283,196)

Balance at 30 June 2013 19,068,852 4,010,000 23,078,852

Basic and Diluted Loss per Share (cents per share) (0.147) (0.073)

31 December 2013

$

30 June 2013

Restated $

4. CASH AND CASH EQUIVALENTS

Cash and Cash Equivalents comprise the following:

Cash at bank and in hand 611,270 3,701,388 Short-term deposits 479,971 5,193,031

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31 December

2013 $

30 June 2013

Restated $

5. TRADE AND OTHER RECEIVABLES

Current Interest 2,441 40,397 GST receivables (87,190) 442,901 Other receivables-from joint venture Partners and others 3,339,970 2,123,592 Prepayments 435,714 86,958 Condensate 916,776 - Condensate funds withheld 326,293 -

Balance at 31 December/30 June 4,934,004 2,693,848

At 31 December, $3,251,922 receivable from Joint Venture Partners was past due but not impaired.

Non-current

Security deposits 31,000 25,000

6. OIL AND GAS PROPERTIES

Oil and Gas Properties 45,727,627 46,362,048

Represented by:

Red Gully Processing Facility (i) 22,836,388 23,283,196 Development Costs (ii) 22,891,239 23,078,852

Balance 31 December/30 June 45,727,627 46,362,048

(i) Red Gully Processing Facility Cost 23,306,478 23,283,196 Accumulated Depreciation (470,090) -


Reconciliation: Opening net carrying amount 1 July 23,283,196 - Additions 23,282 - Transfers from Development - 23,283,196 Depreciation (470,090) -


Depreciation for the Red Gully Processing Facility is based upon its estimated useful life of 15 years (6.67%). (ii) Development Costs Cost 24,050,196 23,078,852 Accumulated Amortisation (1,158,957) -


Reconciliation: Opening net carrying amount 1 July 23,078,852 3,684,855 Additions 2,077,527 20,549,602 Commissioning revenue (1,106,183) (318,051) Rehabilitation provision - 4,617,778 Transfers from exploration and evaluation costs - 17,827,864 Transfers to Red Gully Processing Facility - (23,283,196) Amortisation (1,158,957) -


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31 December 2013

$

30 June 2013

$

7. EXPLORATION AND EVALUATION ASSETS

At 1 July 7,746,915 19,896,929

Exploration and evaluation expenditure for period 526,280 5,969,445

Transfer to Oil and Gas Properties-Development - (17,827,864)

Impairment (5,902) (291,595)


8. OTHER LIABILITIES

Gas and condensate processing facility pre-payment

Current 9,007,960 11,952,961

Non-current 4,738,537 5,042,167

Total 13,746,497 16,995,128

The EP389 Joint Venture Partners entered into a Gas Supply Agreement (“Agreement”) with Alcoa of Australia Limited (“Alcoa”) to supply gas from the Red Gully Gas and Condensate Processing Facility. The gas contracted to be supplied to Alcoa is 15,000 Terrajoules, and is to be supplied in two tranches. Pursuant to the Agreement, Alcoa pre-paid $25 million to the Joint Venture partners; the Company has recognised its share of this prepayment.

9. ISSUED CAPITAL

The following movements in issued capital occurred during the six months ended 31 December 2013:

31 December 2013 30 June 2013

Number of Shares

$ Number of

Shares $

Balance 1 July 6,294,307,442 77,054,969 4,745,658,296 61,802,788

Issue of shares at $0.01055 each pursuant to a Share Purchase Plan in September 2012 - -

444,218,394 4,686,502

Issue of shares at $0.01055 each pursuant to a share Purchase Plan in October 2012 - -

385,000,000 4,061,740

Issue of shares at $0.010 each pursuant to a share entitlement in May 2013 - -

306,338,174

3,063,382

Issue of shares at $0.010 each pursuant to a share entitlement shortfall in June 2013

Issue of shares at $0.010 each to a share placement in June 2013. - -

313,092,578

100,000,000 1,500,000

3,130,926 1,500,000

1,000,000

Transaction costs - - - (690,369)

Balance 31 December 6,294,307,442 77,054,969 6,294,307,442 77,054,969

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10. SEGMENT REPORTING

The Company has applied AASB 8 Operating Segments from 1 July 2009. AASB 8 requires a ‘management approach’ under which segment information is presented on the same basis as that used for internal reporting purposes.

Operating segments are now reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision-maker has been identified as the Board of Empire Oil & Gas NL.

The Company operates only in one business and geographical segment being predominantly in the area of oil and gas exploration and development in Western Australia. The Company consider its business operations in oil and gas exploration and development to be its primary reporting segment.

11. COMMITMENTS

The changes to the commitments and contingencies disclosed in the most recent annual report are specified below.

Exploration Commitments

The consolidated entity has certain commitments to meet minimum expenditure requirements on the petroleum exploration assets it has an interest in.

31 December 2013

$

30 June 2013

$

Exploration commitments are as follows:

not later than one year 3,900,000 2,457,000

later than one year and not later five year 5,300,000 7,600,000

greater than five years - -

9,200,000 10,057,000

These obligations may vary over time depending on the group’s exploration programme and movements. These obligations are also subject to variation by regulation, joint venturing or relinquishing some of the relevant tenements. The above figures include proposed commitments on permits yet to be formally granted. Development Commitments

The consolidated entity has expenditure commitments for the Red Gully Gas and Condensate Facility in which it has an interest.

Development commitments are as follows:

not later than one year - 1,771,000

later than one year and not later five year - -


- 1,771,000

Lease Expenditure Commitments

Operating leases (non-cancellable)

Minimum lease payments

not later than one year 215,000 193,000

later than one year and not later five year 616,000 625,000


Aggregate lease expenditure contracted for at reporting date 831,000 818,000

The Company lease for its office at 229 Stirling Highway Claremont expires on 31 August 2017.

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31 December 2013

$

30 June 2013

$ 11. COMMITMENTS (Continued)

Hire Purchase Expenditure Commitments

Commitments in relation to finance leases are as follows: not later than one year 6,087 6,100 later than one year and not later than five years 7,101 10,700 greater than five years - -

Minimum lease payments 13,188 16,800

12. SUBSEQUENT EVENTS

Other than information previously disclosed to the markets the directors are not aware of any significant events since the end of the interim period.

13. CONTINGENT ASSETS AND LIABILITIES

(i) Provision for Joint Venture Restructure

31 December 2013

$

30 June 2013

$

Current

Provision for Joint Venture Restructure 1,383,419 1,888,662

Interest in gas revenue (382,389) -


Non-current

Provision for Joint Venture Restructure 526,581 -

Total 1,527,611 1,888,662

The provision for joint venture restructure is the liability the Company will incur for the Alcoa prepayment due to the defaulting Joint Venture Partner in the EP389 Joint Venture. The provision is reduced by the Company’s interest in the defaulting Joint Venture Partner’s interest in gas supplied to Alcoa.

(ii) Joint Ventures

There has been no change to contingent asset and liabilities since the last Annual Report due to the default of Joint Venture Partners with respect to cash calls. The Defaulting Parties were notified that as a Defaulting Party of the applicable Joint Venture Joint Operating Agreement it was deemed to have given its notice of withdrawal from the Joint Venture effective immediately at that time. The transfer of the Defaulting Parties interest on a proportional basis to the remaining Parties in the Joint Venture was arranged and executed. These transfers have yet to be registered by the Department of Mines and Petroleum Western Australia (“Department”). Until the Department registers the transfers the Company continues to recognise its interest in the Joint Ventures at the pre-default interest. When registered, the transfers will increase the Company’s interest in the Joint Ventures assets and liabilities. F

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13. CONTINGENT ASSETS AND LIABILITIES (Continued)

The defaults are in the following Joint Ventures and will increase the Company’s interest as follows:

Joint Venture

Defaulting Partner’s interest

%

The Group’s increase

Pre-default

%

Post-default

%

Increase

%

EP389 10.00 68.75 76.39 7.64

EP416 10.00 85.00 94.44 9.44

EP426 10.00 42.22 46.91 4.69

EP432 10.00 77.50 86.11 8.61

The Company’s would also receive a 7.64% increased interest in current and future gas and condensate production from the EP389 Joint Venture Facility.

A writ of summons was issued on 10 September 2013 to Wharf Resources Plc. (“Wharf”), the defaulting Joint Venture Party in EP389 Joint Venture, joining the Minister of Mines and Petroleum Western Australia, seeking a declaration the deemed withdrawal of Wharf from the EP389 Joint Venture was valid and effective and for the Minister to approve and register the transfers of Wharf’s defaulted interest to the remaining Parties of the EP389 Joint Venture. If the declaration is not obtained and the transfers not registered, Wharf will be required to pay its interest in cash calls issued by the EP389 Joint Venture, including those for the Red Gully Facility, which it has not paid. At 31 December 2013 Wharf has an unpaid interest in the EP389 Joint Venture of approximately $2,750,000.A related party to Wharf is the Defaulting Joint Venture Party in the EP416, EP426 and EP432 Joint Ventures.

At the balance date the Company has provided $1,910,000 for potential liabilities that it may incur under the Gas Sales Agreement with Alcoa.

(iii) Litigation

On 20 December 2013 the Company served writs on three of the former Directors to recover legal costs paid by the Company under an indemnity provided to the former Directors for defamation actions the former Directors commenced against certain shareholders of the Company and other parties.

Contingent Liabilities

Writs issued on 10 September 2013, against Wharf joining the Minister of Mines and Petroleum Western Australia, and on 20 December 2013, against former Directors, may result in costs being awarded against the Company if the actions are unsuccessful.

14. SUBSIDIARIES Name

Country of Incorp.

Class of Share

Holding Percentage

Book Value of Investment (Company)

2013 %

2012 %

2013 $

2012 $

Empire Services Pty Ltd Australia Ordinary 100 100 2 2 Empire Oil Company (WA) Limited and its Controlled Entity

New Zealand

Ordinary

100

100

4,771,722

4,771,722

Rough Range Oil Pty Ltd Australia Ordinary 100 100 2 2 Victoria Diamond Exploration Pty Ltd Australia Ordinary 100 100 2 2 Lansvale Oil & Gas Pty Ltd Australia Ordinary 100 100 - - Cattamarra Farms Pty Ltd Australia Ordinary 68.75 68.75 69 69 Provision for Investment Diminution (4,771,720) (4,771,720)

77 77

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15. INTEREST IN JOINT ARRANGEMENTS

Equity details of Joint Ventures in place as of the balance date are as follows:

Permit Empire

EP389 68.75% (Pre Wharf Resources Plc default)

EP426

EP368

42.22% (Pre Allied Oil Plc default)

80.00%

EP432 77.50% (Pre Allied Oil Plc default and pre ERM Gas farmout)

EP416 85.00% (Pre Allied Oil Plc default)

EP440 87.50%

EP437 35.00%

EP454 50.00% (Pre ERM Gas farmout on Shallow Rights and farmout on deep rights)

EP479 100.00%

EP480 40.00%

EP435 90.00%

EP412 35.00%

EP325 36.10%

EP359 76.66%

EP433 88.80%

EP434 90.00%

EP439 69.22%

EP460 68.57%

EP461

EP444

69.22%

100.00%

16. CREDIT FACILITIES

ERM Power Limited has provided a $2 million credit facility to the Group which is secured by a fixed and floating

charge over the assets of Empire Oil & Gas NL. The terms of the credit facility are variable interest, based on the highest of the big-four banks’ benchmark overdraft rate plus 1 percentage point. The interest rate is fixed for the period of the facility at the time of the first draw down. Any draw down on the facility will be repayable by 30 June 2014 but may be extended by agreement, or repaid earlier, if the Company conducts a capital raising of more than $2 million, whichever occurs first. There are no other fees associated with the credit facility. There were no drawings as at 31 December 2013. On 24 February 2014 Empire Oil & Gas provided a drawdown notice for $1m to ERM Power Limited.

17. RELATED PARTIES

The following Key Management Personnel held office during the interim period to 31 December 2013:

T Iannello appointed 22 November 2013 B Heading appointed 22 November 2013 P Jans appointed 20 December 2013 K Quinlan appointed 2 December 2013 J L C Marshall resigned 22 November 2013 N K Joyce resigned 22 November 2013 J S MacDonald resigned 22 November 2013 B J Warris resigned 20 December 2013

(a) Compensation of Key Management Personnel was as follows:

The following payments were accrued / made in the 6 months to 31 December 2013. No share-based payments or long term benefits were accrued or paid during the period.

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17. RELATED PARTIES (Continued)

Total Total

6 months to 31

December 2013

6 months to 31

December 2012

T Iannel lo 1 Chairman $ 5,400 $ - $ 5,400 $ -

B Heading 1 Director $ 5,400 $ - $ 5,400 $ -

P Jans 2 Director $ 15,755 $ - $ 15,755 $ -

K Quinlan 3

Acting Chief

Executive

Officer

$ 25,306 $ - $ 25,306 $ -

JLC Marshal l & related enti ties 4Managing

Director $ 350,314 $ 350,314 $ 169,610

B Warris & related enti ties 5Executive

Director $ 175,800 $ - $ 175,800 $ 154,400

N Joyce & related enti ties 6Non-Executive

Director $ 59,133 $ - $ 59,133 $ 28,500

J MacDonald 7Non-Executive

Director $ 81,419 $ - $ 81,419 $ -

$ 718,526 $ 352,510 Totals

Name Note Role Short TermPost-

employment

Note 1: Director’s Fees accrued for the period but not yet paid. Note 2: Professional fees were paid to ERM for the services of Mr Jans pursuant to the secondment agreement, prior to his appointment to the board. No director fees were paid or accrued to 31 December 2013. Note 3: Professional fees were paid to ERM for the services of Mr Quinlan who was appointed to the role of Acting Chief Executive Officer on 2 December 2013 until a permanent appointee is finalised. Mr Quinlan is seconded from ERM pursuant to the secondment agreement on a fee basis of $27,000 per month plus normal business expenses. The first month payment (December 2013) was $25,306. Note 4: Includes payments under the employment contract and those made to Seaville Investments Pty Ltd for consultancy services, a related entity to Mr Marshall, and payments pursuant to the settlement agreement announced to the market on 22 November 2013. Note 5: Payments to Dr Warris are for consultancy services. Note 6: Payments to Mr Joyce include director fees and those made to Demandem Holdings Pty Ltd for consultancy services, a related entity to Mr Joyce and payments under the settlement agreement announced to the market on 22 November 2013. Note 7: Payments to Mr MacDonald are for director fees and consultancy services. (b) Other Related Party Transactions in the 6 month period ended 31 December 2013.

Anthony Ho & Associates, a business associated with Mr K Hogg, the Company Secretary, received $35,926 (2012: $52,272) in fees for company secretarial services. Ms B Marshall, a daughter of Mr Craig Marshall, received $57,953 (2012: $40,804) in consultancy fees as a Communications and Public Relations Consultant. Payments of $24,463 were made to Key Petroleum Ltd for work done on EP437. Dr Warris charged $3,400 to Key Petroleum and this formed part of the invoice for services performed. The Managing Director of Key Petroleum, Mr JL Kane Marshall, is the son of Mr Craig Marshall. The company currently holds 52 million shares in Key Petroleum.

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17. RELATED PARTIES (Continued) Payments of $17,610 were made to Odyssey Oil Pty Ltd for project management and administration related to Charger-1 and Black Arrow-1 compliance documentation. Odyssey Oil Pty Ltd is an entity associated with Mr JL Kane Marshall. Ms G MacDonald (related to Mr J MacDonald) was paid $414 (2012: $5,483) as an employee. Payments made on behalf of King Petroleum NL, a company associated with Mr Craig Marshall totalled $2,113. During the current period, ERM reimbursed the Company $2,354 in costs related to additional share registry fees arising from the request for a copy of the Empire Oil & Gas NL share register for prior to the holding of the Extraordinary General Meeting. During the period, legal fees of $62,813 were paid relating to the defamation proceedings commenced by the former directors which is now the subject of legal action between the Company and former directors.

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Directors' Declaration

In accordance with a resolution of the directors of Empire Oil & Gas NL, the directors of the Company declare that:

(1) The Financial Statements and Notes, as set out on pages 7 to 23 are in accordance with the Corporations Act 2001, including

(a) complying with Accounting Standards AASB 134: Interim Financial Reporting; and

(b) giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2013 and of its performance for the half-year ended on that date.

(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

On Behalf of the Board

T Ianello

Director

Perth, 11th day of March 2014

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empire oil & gas nl · 2014. 3. 11. · empire oil & gas nl. abn 55 063 613 730 . interim...

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