AXP ENERGY LIMITED 2021 ANNUAL REPORT
For personal use only
ANNUAL REPORT 2021
For personal use only
TABLE OF CONTENTS | |
CORPORATE GOVERNANCE STATEMENT ...................................................................................... | 4 |
DIRECTORS REPORT......................................................................................................................... | 5 |
REMUNERATION REPORT (AUDITED)............................................................................................. | 12 |
AUDITOR'S INDEPENDENCE DECLARATION ................................................................................ | 23 |
CONSOLIDATED PROFIT & LOSS AND OTHER CONSOLIDATED INCOME................................... | 25 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................................... | 26 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY................................................................ | 27 |
CONSOLIDATED STATEMENT OF CASH FLOWS............................................................................ | 28 |
NOTES TO THE FINANCIAL STATEMENTS........................................................................................ | 29 |
DIRECTORS' DECLARATION .......................................................................................................... | 82 |
INDEPENDENT AUDITOR'S REPORT ............................................................................................... | 83 |
ADDITIONAL INFORMATION REQUIRED BY ASX........................................................................... | 92 |
YEAR ENDED 30 JUNE 2021
ANNUAL REPORT 2021
For personal use only
CHAIRMAN'S REPORT
Dear Fellow Shareholders,
On behalf of the Board of Directors, I am pleased to present this year's annual report for AXP Energy Limited ('AXP' - formerly known as Fremont Petroleum Corporation Limited) in my first year as the Company's chairman.
I am pleased to bring my experience in the oil and gas sector to the Company at such an exciting time in its history. Complementing the skills of my fellow Directors and those of our very talented and committed management team, our primary focus is to continue the transformation of AXP Energy from a relatively small ASX listed oil and gas production company into something of much greater scale.
In line with this transformation, in July we changed the Company's name from Fremont Petroleum Corporation Limited to AXP Energy Limited. The re-brand and change in corporate identity better reflects our strategy of acquiring quality assets, expanding our lease holdings and increasing production. We believe that AXP Energy Limited better signifies that mindset and opportunity.
What attracted me initially to AXP Energy is its growth potential, particularly following the cornerstone acquisition of Magnum Hunter Production Inc. (now renamed to AXP Energy, Inc.) and its portfolio of natural gas wells in Kentucky, Virginia and Tennessee. These new Appalachian Basin assets have really established the foundation for AXP and are set to rapidly advance the transformation of the Company. We have already begun to see this take shape with a stable revenue stream the business delivers and a team of highly skilled individuals that have stayed with the business under AXP's ownership. The acquisition will act as both a blueprint and catalyst for much greater expansion in the US.
Following this significant acquisition, our focus shifted to building out a stable and predictable revenue base through the enhancement of our broader well portfolio across the Appalachian and Illinois Basins. This focus has seen the Company pivot away from making speculative investments in exploration projects and rather identify and pursue assets which will provide the Company with a reliable base for growth.
Another example of this is the Trey Exploration leases. Trey provides tremendous future field development opportunities for the Company and along with our other leases, we are only beginning to see the true production potential begin to materialise.
The commitment of the management team in the US under Tim Hart's leadership has been very encouraging. With limited resources at his disposal, Tim has managed a seamless integration of the team and the assets in a short period of time. MPH has delivered a very hard working committed cohort of individuals and Tim and the rest of the team in the US have been drawing on their skills to enhance the performance of assets across the US.
YEAR ENDED 30 JUNE 2021 | Page 1 |
ANNUAL REPORT 2021
For personal use only
As a board and management team we are constantly exploring innovative strategies to make sure we are providing the best possible value for our shareholders. I am confident that the growth strategy implemented has set the Company on the right course and we will see a more productive 2022. I would like to thank my fellow directors, executives and operations personnel in the US for their ongoing support. Lastly, thanks to our loyal shareholders for whom we are committed to delivering value and growth.
Sincerely,
Simon Johnson
Chairman
YEAR ENDED 30 JUNE 2021 | Page 2 |
ANNUAL REPORT 2021
CEO'S OPERATIONS REVIEW
For personal use only
A review of the operations of the economic entity during the financial year and the results of those operations are as follows:
AXP Energy Limited (AXP) is an oil and gas production and development company founded in 2006 and headquartered in Lexington, Kentucky USA with its Australian office located in Sydney, Australia. The company also has field offices in Coldiron, Kentucky and Florence, Colorado. With operations in the Appalachian, Illinois and the Denver-Julesburg basins the company's assets are well positioned in 3 of the most mature and prolific oil and gas areas of the US. These strategically selected areas provide a good balance for AXP's low-risk, low- cost production profile resulting in stable cashflows.
In October 2020, AXP entered into an agreement with Trey Exploration, Inc to acquire 115 oil wells holding approximately 5000 acres in the heart of the Illinois basin spanning Western Kentucky, Indiana and Illinois. These assets were selected for their stable production, additional opportunities for production enhancements and significant development potential. Two notable fields included in this acquisition are the North Hanson field located in Hopkins, County Kentucky and the Mt. Carmel Consolidated field in Knox County, Indiana. The North Hanson field (900 producing acres) was previously owned in part by Exxon USA, this field has 7 producing formations and has over 20 "in-fill" drilling locations. The Mt. Carmel field is comprised of 1,374 acres, it currently produces from 6 formations and has numerous additional drill locations and recompletion targets in existing wells.
Consistent with the companies "expansion through acquisition" model through the economic downturn of 2020, in late February 2021, the company acquired Magnum Hunter Production, Inc. This acquisition was transformational as it increased the company's production by approximately 1,700%. In addition to this production increase the acquisition also provided commodity diversification as these acquired assets were primarily gas and NGL producers. With this addition the company added approximately 100,000 acres and 1,300 wells in the Appalachian basin, spanning across Eastern Kentucky, Tennessee & Virginia. The opportunities for production enhancements and development potential are enormous within this asset as there has been limited historical investment.
With this significant expansion, AXP now operates approximately 120,000 acres and 1,500 wells in the most prolific areas of the American oil and gas basins.
Likely Developments
AXP is focused on the consolidation of its assets and streamlining its operational procedures in order to maximize profit margins. Expansion and development plans are being established to continually replenish and increase production. These plans include workovers, procedural enhancements, field development and drilling. AXP is also continually reviewing acquisition opportunities that meet the low cost, low risk profile of its existing asset base.
YEAR ENDED 30 JUNE 2021 | Page 3 |
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AXP Energy Ltd. published this content on 21 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 March 2022 07:37:05 UTC.
