marion energy limited

MARION ENERGY LIMITED

ABN 99 000 031 292

ANNUAL REPORT 30 JUNE 2015

MARION ENERGY LIMITED

ABN 99 000 031 292 ANNUAL REPORT 30 JUNE 2015

1

CONTENTS Corporate Directory 1

Directors’ Report 2

Remuneration Report 10

Auditor’s Independence Declaration 16

Financial Report 17

Directors’ Declaration 53

Independent Auditor’s Report 54

Corporate Governance Statement 58

Additional ASX Information 67

CORPORATE DIRECTORY

Directors

Bryn Hardcastle (Chairman)

Faldi Ismail

Tom Bahen

Company Secretary Dave Filov

Registered office 108 Outram Street, West Perth, WA, 6005 Ph: +61 8 9486 7244

Auditor Ernst and Young 11 Mounts Bay Road Perth, Western Australia, 6000

Share Registry Automic Registry Services Level 1, 7 Ventnor Avenue West Perth, WA, Australia, 6005

Securities Exchange Listing ASX Limited Level 40, Central Park152-158 St Georges Terrace Perth WA 6000 ASX Code – MAE

MARION ENERGY LIMITED ABN 99 000 031 292


DIRECTORS’ REPORT

2

Your Directors present their report, together with the financial statements of Marion Energy Limited (“the Company”) and

controlled entities (“the Group”) for the financial year ended 30 June 2015.

Directors

The names and the particulars of the Directors of the Company since the end of the financial year are:

Name Status Appointed

Faldi Ismail Non-Executive Director Appointed 28 October 2015

Tom Bahen Non-Executive Director Appointed 5 November 2015

Bryn Hardcastle Non-Executive Director Appointed 5 November 2015

Nicholas Young Non-Executive Director Appointed 28 October 2015, Resigned

5 November 2015

Steven Bryson Haynes Non-Executive Director Appointed 28 October 2015, Resigned

5 November 2015

The below named directors held office during the financial year up until the date of their resignation:

Name Status Appointed/Resigned

Karel Louman Executive Director & Chief Financial

Officer

Removed 28 October 2015

Stephen Watts

Non-Executive Chairman


Jeffrey Clarke Non-Executive Director Removed 28 October 2015

Nicholas Stretch Non-Executive Director & Company

Secretary


Principal Activities

The principal continuing activity of the Consolidated Entity during the year was the management and operation of oil and gas

properties in the USA.

Incomplete records

On 2 February 2015, the Board resolved to place the Company into voluntary administration and appointed Mr James Downey

of JP Downey & Co as voluntary administrator of the Company.

Following appointment of the administrators, the powers of the Company’s officers (including Directors) were suspended

and the administrators assumed control of the Company’s business, property and affa irs.

The financial report has been prepared by Directors who were not in office for the periods presented in this report, nor were

they parties involved with the Company and did not have oversight or control over the group’s financial reporting systems

including but not limited to being able to obtain access to complete accounting records of the Company. In addition, Directors

have not been able to source books and records of the Company’s subsidiaries. Accordingly, the financial information of the

Group’s subsidiaries has been deconsolidated effective 1 July 2014. The Directors who prepared this financial report were

appointed on or after 28 October 2015. Every reasonable effort has been made by the Directors to ascertain the true position

of the Company as at 30 June 2015.

To prepare the financial report, the Directors have reconstructed the financial records of the Group using data extracted from

the Group’s accounting system for the half year. However, there may be information that the current Directors have not been

able to obtain, the impact of which may or may not be material on the accounts.



DIRECTORS’ REPORT

3

Incomplete records

These financial statements do not contain all the required information or disclosures in relation transactions undertaken by

the Company as this information is unascertainable due to the administration process and/or the change in directorships and

key management personnel.

Consequently, although the Directors have prepared this financial report to the best of their knowledge based on the

information made available to them, they are of the opinion that it is not possible to state that this financial report has been

prepared in accordance with Australian Accounting Standards including Australian interpretations, other authoritative

pronouncements of the Australian Accounting Standard Board and the Corporations Act 2001, nor is it possible to state this

financial report gives a true and fair view of the Group’s financial position as at 30 June 2015 and for the year then ended.

Operating and financial review

The Company commenced trading on the Australian Securities Exchange (“ASX”) on the 3 July 1986. The Company was

suspended from trading on ASX on 3 October 2011, due to non-lodgment of its financial report for the year ended 30 June

2011, and has remained suspended since that date.

The Company was obliged to scale back field operations at its Clear Creek Utah project in September 2011 due to capital

constrains. Following this, the then Board resolved to pursue a number of strategies aimed at achieving a financial

restructuring through targeting a major debt reduction and recapitalisation of the Company. The Company also undertook a

major scaling back of its USA office and staffing to a level appropriate to the scale of its operations.

In June 2013 the Company completed a major restructuring of its external financing with TCS II Funding Solutions, LLC

(Castlelake) which enabled the Company to restart and ramp up its well production operations at Clear Creek in the second

half of the 2013 calendar year.

Pursuant to a loan agreement for US$25 million, Castlelake held a first registered charge over all the assets of the Company's

former wholly owned subsidiary Marion Energy Inc (MEI), which included its Clear Creek and Helper oil and gas assets, and a

charge over all the assets of the Company's former wholly owned subsidiary OEL Operating (USA) Inc, which included its

Jester-Bloomington oil and gas assets.

On 31 October 2014, MEI filed for bankruptcy protection under the US Bankruptcy Code after being unable to find

replacement funding for Castlelake. On 5 December 2014 the US Federal Bankruptcy Court refused of an application by

Castlelake to set aside the bankruptcy of MEI. Following this, Castlelake and MEI came to an agreement under which

Castlelake subsequently elected to purchase substantially all of MEI's assets by way of a credit bid. As announced by the

Company on 28 May 2015, it was anticipated that Castlelake's decision would be ratified by the US Federal Bankruptcy Court

at a hearing on 28 May 2015 and the transaction closed with an effective date of 1 June 2015. Post the creditors meeting, it

was announced on 28 May 2015 pursuant to orders made by the US Federal Bankruptcy Court, Castlelake proceeded to

purchase all of the subsidiary Marion Energy Inc’s (MEI) assets by way of a credit bid. This left the parent Marion Energy

Limited without substantial assets.

The consolidated loss for the year amounted to $141,469,917 (2014: loss $18,613,652).

Dividends Paid or Recommended

There were no dividends paid or recommended during the financial year ended 30 June 2015 (2014: Nil).



DIRECTORS’ REPORT

4

Significant changes in state of affairs

Significant changes in the state of affairs of the Company during the financial year were as follows:

On 2 February 2015, the Company announced that the Board resolved to appoint Mr James Downey of JP Downey & Co as

voluntary administrator of the Company.

On 19 March 2015, the Company announced that at a meeting of creditors of the Company, the creditors resolved that the

Company execute a deed of company arrangement (“Original DOCA”) and that Mr James Downey be appointed as

administrator of the deed of company arrangement (Deed Administrator). The purpose of the Original DOCA was to put in

place a moratorium on all unsecured debts until the end of a further creditors’ meeting which was required to be called after

conclusion of the US bankruptcy process or by 19 March 2016 (whichever was the later). Post the creditors meeting, it was

announced on the 28 May 2015 pursuant to orders made by the US Federal Bankruptcy Court, Castlelake LP proceeded to

purchase all of the subsidiary Marion Energy Inc’s (MEI) assets by way of a credit bid. This left the parent Marion Energy

Limited without substantial assets.

No other significant changes in the nature of the Company’s activities have occurred during the year.

Significant events after balance date

On 6 August 2015, the creditors of the Company resolved that the Company vary the Original DOCA. The following day the

Company, the Deed Administrator, KM Custodians (the Company’s secured creditor) and Otsana Capital (Otsana) executed a

varied deed of company arrangement (DOCA), which embodied a proposal by Otsana for the recapitalisation of the Company

(Recapitalisation Proposal).

A recapitalisation proposal typically involves an injection of new cash into a company that is either in financial distress or has

been placed into voluntary administration. In the ordinary course, the entity will retain some or all of its assets and seek

reinstatement to trading following completion of the recapitalisation.

A summary of the material terms of the Recapitalisation Proposal is set out below. Further information appears in sections

3.1 and 3.2 of the Company's notice of meeting lodged with ASX on 28 August 2015.

a) the Company and the Deed Administrator will establish the Creditors' Trust, with the Deed Administrator acting as

trustee;

b) the assets of the Company will be transferred to the Creditors' Trust, including an amount of $150,000 to be

comprised of:

i. $10,000 (Deposit), paid by Otsana upon execution of the DOCA and receipt of the Deed

Administrator of an irrevocable undertaking from KM Custodians for the release and discharge of its

security and to vote in favour of the Recapitalisation Resolutions, this payment was made on the 10

August 2015; and

ii. $140,000 (Recapitalisation Payment), to be paid by the Company upon Shareholder approval of the

Recapitalisation Resolutions. If the Company lacks sufficient funds to make the Recapitalisation

Payment, Otsana will loan the Company necessary funds, with such funds to be repaid to Otsana

upon reinstatement of the Company's securities to the Official List;

c) the Company will issue 10,000,000 Creditor Shares to the Creditors Trust (to be distributed to the admitted

creditors pro rata), shareholder approval was obtained on the 30 September 2015 and shares were issued on 28

October 2015;

d) all creditors will be required to prove debts against the Trustee of the Creditors' Trust and payment will be made

in accordance with the DOCA and the Creditors' Trust Deed;

e) upon completion of the DOCA, the funds in the Creditors' Trust will be distributed as follows:

i. first, to the Deed Administrator and Trustee for administering the DOCA and the Creditors’ Trust

(including fees and disbursements);

ii. second, to any priority Creditors pro rata according to the amount for which each creditor shall be

admitted to proof pursuant to the Creditors' Trust Deed;



DIRECTORS’ REPORT

5


iii. third, to KM Custodians as secured Creditor, up to $2,674,000; and

iv. fourth, the remainder (if any) to be returned to the Company for distribution to unsecured Creditors;

f) the Deed Administrator will cause the current Directors of the Company to be removed and appoint nominees of

Otsana Capital as Directors of the Company, the nominee directors were appointed on 28 October 2015;

g) all security over the Company's assets will be discharged and released;

h) the Company will undertake the Consolidation, the capital consolidation was approved by shareholders on 30

September 2015;

Consolidation of existing fully paid shares (Shares) on a one (1) for one hundred (100) basis together

with the consolidation of its existing options in the same ratio as existing shares;

i) the Company will raise up to $750 (before costs) via the following capital raisings, the capital raising was approved

by shareholders on 30 September 2015:

$500 from the issue of 50,000,000 Placement Shares to clients of Otsana, (40,000,000 of which were

issued on 28 October 2015); and

$250 from the issue of 25,000,000 Placement Options to clients of Otsana, issued on 4 November

2015; and

j) the Company will issue such other securities as are required by Otsana (of which there were none).

Key conditions precedent for completion of the DOCA include:

payment of the Deposit and Recapitalisation Payment, on 10 August 2015, the deposit of $10,000 was paid to the

Deed Administrators. This amount was paid by Otsana Capital on behalf of the company in accordance with DOCA,;

discharge and release of all security over the Company's assets;

all subsidiaries (other than those advised by Otsana) being removed from the Company;

termination or repudiation of existing employment and service contracts; and

Shareholder approval being obtained to give effect to the Recapitalisation Proposal.

The conditions precedent were satisfied on 28 October 2015 and the DOCA was effectuated. On termination of the DOCA,

control of the Company reverted to the officers of the Company.

On 28 October 2015, Mr Nicholas Young was appointed as Company Secretary. Mr Young resigned on 5 November 2015 and was replaced by Mr Dave Filov. On 5 November 2015 the Company announced the intention to acquire 100% of Global Agenda Technologies Pty Ltd (‘Agenda’), an entity developing a software as a service (‘SaaS’), sales conversion and social networking technology platform. The Company will seek to re-comply as a technology company on the ASX and be renamed Cre8tek Limited. As consideration for 100% of the issued capital of Agenda, the Company has agreed to issue:

2,500,000 fully paid ordinary shares in MAE at a deemed issue price of $0.02 each (Initial Consideration Shares). All

consideration shares will be subject to ASX escrow provisions;

25,000,000 deferred consideration shares (Deferred Consideration Shares) (at a deemed issue price of $0.02 per

MAE share) upon Agenda achieving 500,000 active registered users on the Agenda Platform within 24 months of

listing on the ASX (Milestone)

Settlement of the Acquisition is conditional upon the satisfaction (or waiver) of the following conditions precedent: Shareholder approval for the change of its business from an oil and gas company to a software and technology

company;

Shareholder approval to change the name of Marion Energy Limited to Cre8tek Limited;

Completion of due diligence by MAE on Agenda’s business and operations, to the sole satisfaction of MAE within

14 days of the HOA being executed;


MAE obtaining all necessary regulatory approvals or waivers pursuant to the ASX Listing Rules, Corporations Act



DIRECTORS’ REPORT

6

or any other law to allow MAE to lawfully complete the matters set out in the HOA

Execution by the Agenda shareholders of ASX restriction agreements to the Initial Consideration Shares and

provision of undertakings for the escrow of any Deferred Consideration Shares

Establishment of a performance rights plan, the terms of which are to be agreed between MAE and Agenda, and

obtaining shareholder approval to issue 10 million performance rights to each of Faldi Ismail, Bryn Hardcastle and

Tom Bahen, in tranches of 3,333,333 million performance rights each, with Share price vesting hurdles of 3 cents,

4 cents and 5 cents respectively for each tranche (based on 10 day Share VWAP), expiring 3 years after grant and

otherwise on terms to be agreed.

MAE undertaking a capital raising of not less than $3,600,000 through the offer of MAE Shares at a price of not

less than $0.02 per MAE Share (Capital Raising).

As outlined above the Directors are currently working towards the restructure and recapitalisation of the Company and

liaising with the ASX in relation to the reinstatement of Marion Energy Limited’s securities for trading on the ASX. On

24 November 2015 the Company despatched a notice of general meeting for a meeting to be held on 23 December 2015

seeking approval for the Agenda acquisition and re-compliance with Chapters 1 and 2 of the Listing Rules.

The Company (as borrower) has entered into a loan agreement with the following three lenders:

(a) DXB Holdings Pty Ltd, an entity associated with Mr Bryn Hardcastle;

(b) Romfal Sifat Pty Ltd, an entity associated with Mr Faldi Ismail; and

(c) Seamist Enterprises Pty Ltd (an unrelated entity).

Pursuant to the terms of the loan agreement the lenders have agreed (each in equal portions) to make available a loan facility

of up to $200,000, with funds drawn down to be used towards the necessary costs of the Company's re-compliance with

Chapters 1 and 2 of the Listing Rules.

As at the date of this financial report, the Company has drawn down $150,000.

The loan is interest free and must be repaid within two weeks of the Company's securities being reinstated to trading

following completion of the Acquisition.

Upon the occurrence of an event of default, the lenders may, for so long as the event of default is continuing, declare

outstanding monies to be immediately due and payable to the lenders without the need for any further demand or notice to

be given. Events of default include the Company failing to repay an amount by the due date (unremedied within 14 days),

the Company failing to obtain any relevant authorisations, any warranty provided by the Company becomes false or

misleading, or any part of the agreement becomes void or unenforceable.



DIRECTORS’ REPORT

7

Information on Directors – Current Directors

Mr Faldi Ismail Non-Executive Director (Appointed 28 October 2015)

Qualifications Bachelor of Business (Accounting & Finance)

Experience Mr Ismail has significant experience working as a corporate advisor specialising in the

restructure and recapitalisation of a wide range of ASX-listed companies. With many

years of investment banking experience, his expertise covers a wide range of industry

sectors. Mr Ismail is the founder and operator of Otsana Capital, a boutique advisory

firm specialising in mergers & acquisitions, capital raisings and Initial Public Offerings

(IPO’s) and is currently a director of several ASX-Listed companies.

Interest in Shares and Options Nil

Special Responsibilities Nil

Directorships held in other listed

entities

WHL Energy Limited (‘WHN’)

Advanced Engine Components Limited(‘ACE’)

Galicia Energy Corporation Limited (‘GAL’)

Kalimantan Gold Corporation (‘KLG’)

BGD Corporation Limited (formerly Boulder Steel Limited) (‘BGD’)

Emergent Resources Limited (‘EMG’) – resigned 16 November 2015

Style Limited (‘SYP’) – resigned 10 August 2015

Ascot Resources Limited (‘AZQ’) - resigned 27 March 2013

Coventry Group Limited (‘CYG’) - resigned 8 January 2013

Mr Tom Bahen Non-Executive Director (Appointed 5 November 2015)

Qualifications Bachelor of Commerce (Accounting and Finance)

Experience Mr Bahen is currently a director of Private Clients and Institutional Sales at national

stock broking firm Patersons Securities Limited. He has significant experience in capital

raisings and corporate advisory for ASX listed companies. He has previously worked in

assurance for global accounting firm Deloitte.




entities

Carbine Resources Limited (‘CRB’)

Naracoota Resources Limited (‘NRR’)

Mr Bryn Hardcastle Non-Executive Director (Appointed 5 November 2015)

Qualifications Bachelor of Laws, Bachelor of Arts

Experience Mr Hardcastle is an experienced corporate lawyer specialising in corporate,

commercial and securities law. He is the principal of Bellanhouse Legal which

predominantly advises on equity capital markets, re-compliance transactions and

takeovers across a variety of industries. Mr Hardcastle has extensive international

legal experience and has advised on numerous cross border transactions working in

the United Kingdom, Middle East and North America. He also has experience acting as

a non-executive director of ASX listed companies.




entities

Attila Resources Limited (‘AYA’)



DIRECTORS’ REPORT

8

Information on Directors – Current Directors

Mr Nicholas Young Non-Executive Director (Appointed 28 October 2015) (Resigned 5 November 2015)

Qualifications Bachelor of Commerce (Accounting and Finance) and Chartered Accountant

Experience Mr Young holds a Bachelor of Commerce, majoring in Accounting and Finance and is

a Chartered Accountant. Mr Young commenced his career at Pitcher Partners and has

gained valuable experience in Australia and Southern Africa in corporate

restructuring, across a wide range of industries, including mining and exploration,

mining services, renewable energy, professional services, manufacturing and

transport. Mr Young has been involved in the recapitalisation of various ASX listed

companies.




entities

BGD Corporation Limited (formerly Boulder Steel Limited) (‘BGD’)

(resigned 1 February 2015)

Mr Stephen Bryson Haynes Non-Executive Director (Appointed 28 October 2015) (Resigned 5 November 2015)

Qualifications Bachelor of Commerce (Accounting)

Experience Mr Bryson Haynes has experience in corporate advisory, specialising in due diligence,

M&A financial analytics and company restructures, and recapitalizations on the ASX.

Mr Bryson Haynes family background in the technology sector has enabled him to

build upon and expand his knowledge of science and technology with particular

interest in the creation of new products and services. More recently he has worked to

bring together the discipline of corporate finance analytics to the evaluation of

potential technology projects and their capacity to create shareholder wealth.




entities

Nil

Company secretary

Mr Dave Filov is a corporate lawyer with experience in equity capital markets, IPOs and back door listings, having previously spent time with ASX advising listed entities with ASX listing rules compliance requirements and processing numerous IPOs and back door listing applications.

Meetings of directors

Due to the appointment of the Administrator on 2 February 2015 to the Company and the current Directors not being in control of the Company during this time, information on the attendance at Directors’ meetings is not available.



DIRECTORS’ REPORT

9

Share options

At the date of this report, the unissued ordinary shares Marion Energy Limited under option are as follows:

Expiry date Exercise Price* Number under option*

31 July 2016 $6.00 98,000

22 December 2016 $5.00 88,705

31 July 2016 $10.00 91,733

Expiry 2 Years from relisting $3.00 221,056


567,186

* Exercise price and number of options on issue have been adjusted for the share consolidation completed by the company

on 14 October 2015

No option holder has any right under the options to participate in any other share issue of the Company or of any other entity.

No options were exercised during the year (2014: Nil).

Non-audit Services

No fees for non-audit services were paid to the external auditors during the year ended 30 June 2015 (2014: Nil).

Auditor’s Independence Declaration

The auditor’s independence declaration for the year ended 30 June 2015 has been received and can be found on page 16 of

the financial report.



DIRECTORS’ REPORT

10

This remuneration report, which forms part of the Directors’ Report, sets out information about the remuneration of

Marion Energy Limited’s directors and its senior management for the financial year ended 30 June 2015. The Company was

in administration from 2 February 2015. On entering administration, the Administrators were responsible for the

remuneration policies of the Company.

The Directors who are in office at the date of this report had no involvement in adopting, implementing or complying with

these remuneration policies. These policies may or may not have been in place during the financial period.

If the recapitalisation process is successful, the Directors who are in office at the date of this report will adopt a new

remuneration policy in accordance with the corporate governance framework adopted by the Board on 1 December 2015.

The prescribed details for each person covered by this report are detailed below under the following headings:

- Remuneration policy for directors and senior executives

- Details of Remuneration

- Options issued as part of remuneration

- Employment Contracts of Directors and Senior Executives

Remuneration Policy for Directors and Senior Executives

The remuneration policy of Marion Energy was designed to align Director and Senior Management objectives with

shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives

based on key performance areas affecting the group’s medium and long-term financial outcomes.

The Board’s policy for determining the nature and amount of remuneration for Board members and Senior Management of

the group was as follows:

- The remuneration policy, setting the terms and conditions for Executives and Directors was developed by the Board.

- All Executives received a base salary (which was based on factors such as scope of responsibilities, length of service

and experience), superannuation, fringe benefits, options and performance incentives.

- The Board reviewed Executive Directors and Senior Management performance annually by reference to the group’s

performance, and comparable information from industry sectors and other listed companies in similar industries.

The performance of Executive Directors and Senior Management was measured against criteria agreed for each Executive

Director, based predominantly on key performance areas of the group, and its shareholders’ value. All bonuses and incentives

were linked to predetermined performance criteria. The Board was able to, however, exercise its discretion in relation to

approving incentives, bonuses and options. The policy was designed to attract the highest calibre of Executive Directors and

reward them for performance that results in long-term growth in shareholder wealth.

Executive Directors were also entitled to participate in the employee share and option arrangements. The Executive Directors

and Senior Management receive a superannuation guarantee contribution required by the government, which was 9.25% for

the financial year and did not receive any other retirement benefits.

All remuneration paid to Executive Directors and Senior Management was valued at the cost to the Company and expensed.



DIRECTORS’ REPORT

11

Remuneration Policy for Directors and Senior Executives

Non-Executive Directors were remunerated at market rates for comparable companies for time, commitment and

responsibilities. The Board determined payments to the Non-Executive Directors and reviewed their remuneration annually,

based on market practice, duties and accountability. The maximum aggregate amount of fees that can be paid to Non-

Executive Directors is subject to approval by shareholders at the Annual General Meeting. Fees for Non-Executive Directors

are not linked to the performance of the group. However, to align Directors’ interests with shareholder interests, the Non-

Executive Directors were encouraged to hold shares in the Company and were also able to participate in the employee option

plan.

The table below sets out information about the consolidated entity’s earnings and movements in shareholder wealth for the

five years to 30 June 2015.

Note 2015 2014 2013 2012 2011

Revenue 457 101,275 3,037 251,446 232,514

Net Profit/(loss) (141,469,917) (18,613,652) 46,421,689 (9,591,519) (15,122,432) before tax Net profit/(loss) (141,469,917) (18,613,652) 46,421,689 (9,591,519) (15,122,432) after tax Share price at - - - 0.016 0.02 start of year Share price at - - - - 0.016 end of year Dividends - - - - -

Return of capital - - - - -

Basic earnings 4 ($77.18)* ($15.31)* 38.9* (9.0)* (21.0)* per share (cents)

Diluted earnings 4 ($77.18)* ($15.31)* 38.9* (9.0)* (21.0)* per share (cents)

* The weighted average number of ordinary shares used in the calculation of loss per share has been adjusted for the share

consolidation completed by the company on 30 September 2015.



DIRECTORS’ REPORT

12

Details of Remuneration

From 2 February 2015 the Company was in administration. The Company’s operations were suspended by the Administrator.

The Company does not have adequate information to enable the disclosures required by Corporations Act 2001 for the year

ended 30 June 2015.

For the year ended 30 June 2015, the Company incurred administrator’s fees of $45,985 (2014: Nil).

2014 Group Key Management Personnel

Short-term benefits Post- Long-

term benefits

Equity-settled share-based payments

Total % of

remuneration as options

employment benefits

Salary, fees and leave

Profit share and

bonuses

Non-monetary

Other

Super-

Other Equity Options annuation

Directors: $ $ $ $ $ $ $ $ $

J Clarke

381,384 - 33,538 - - - - -

414,922

-

P Collery

230,354 - - - 21,308 - - -

251,662

-

K Louman

381,384 - 53,601 - - - - -

434,985

-

N Stretch

50,000 - - - - - - -

50,000 -

S Watts

54,167 - - - - - -

-

54,167

-

1,097,289 - 87,139 - 21,308 - - - 1,205,736

Options and Shares issued as part of remuneration

Options may be issued to Directors and Executives as part of their remuneration based on set performance criteria.

Information available on the ASX details that options and shares were issued to directors in lieu of employee entitlements

however these were related to remuneration outstanding from 30 June 2013. The issue of options was approved by

shareholders at an Extraordinary General Meeting (“EGM”) held on the 19 June 2014.

Options issued as part of remuneration

No options were exercised, since the last report (2014: Nil).

Employment Contracts of Directors and Senior Executives

The previous directors’ contracts ended upon entering administration.

1 The dollar value of option was detailed in the EGM, per the resolutions the value is in lieu of a cash payment for settlement of outstanding remuneration related to 30 June 2013. Accordingly, the fair value of the options and share based payments reflected below has been recognised as a reduction of the liability rather than as an expense in the profit or loss.

Director Options No Value1 Shares No Value

Jeffery Clarke 4,564,156 $273,849 9,000,000 $540,000

Peter Collery 6,639,650 $398,379 9,000,000 $540,000

Karel Louman 1,430,555 $85,833 9,000,000 $540,000



DIRECTORS’ REPORT

13

KMP Options and Rights Holdings

The number of options over ordinary shares held by each KMP of the Group during the financial year is as follows:

30 June 2015

Balance at the

start of the year

Granted during

the year

Exercised during

the year

Other changes

during the year2

Balance at the

end of the year

Vested and

exercisable Unvested

P Collery - 6,639,650 - - 6,639,650 - -

J Clarke - 4,564,156 - - 4,564,156 - -

N Stretch 13,578,115 5,073,482 - - 18,651,597 - -

S Watts - - - 1,973,540 1,973,540 - -

K Louman - 1,430,555 - - 1,430,555 - -

Total 13,578,115 17,707,843 - 1,973,540 33,259,498 - -

30 June 2014

Balance at the

start of the year

Granted during

the year

Exercised during

the year

Other changes

during the year3

Balance at the end

of the year

Vested and

exercisable Unvested

P Collery - - - - - - -

J Clarke - - - - - - -

N Stretch 12,846,072 135,781,145 - (135,049,102) 13,578,115 - 13,578,115

S Watts 945,089 - - (945,089) - - -

K Louman - - - - - - -

Total 13,791,161 135,781,145 - (135,994,191) 13,578,115 - 13,578,115

KMP Shareholdings

The number of ordinary shares in Marion Energy Limited held by each KMP of the Group during the financial year is as

follows:

30 June 2015

Balance at the start of

the year

Granted as

Remuneration during

the year

Issued on exercise of

options during the year

Other changes

during the year

Balance at

end of Year

P Collery 1,044,882 9,000,000 - - 10,044,882

J Clarke 1,345,382 9,000,000 - - 10,345,382

N Stretch - - - - -

S Watts 2,650,141 - - 1,680,001 13,330,142

K Louman 972,615 9,000,000 - - 9,972,615

Total 6,013,020 27,000,000 - 1,680,001 33,013,020

2 Refers to shares purchased, consolidated or sold during the financial year or, in the case of resignation of a director, the holding at the date of resignation. 3 Refers to shares purchased, consolidated or sold during the financial year or, in the case of resignation of a director, the holding at the date of resignation.



DIRECTORS’ REPORT

14

KMP Shareholdings

30 June 2014

Balance at the start of

the year

Granted as

Remuneration during

the year

Issued on exercise of

options during the year

Other changes

during the year

Balance at

end of Year

P Collery 10,448,818 - - (9,403,936) 1,044,882

J Clarke 13,453,818 - - (12,108,436) 1,345,382

N Stretch - - - - -

S Watts 26,501,413 - - (23,851,272) 2,650,141

K Louman 9,726,151 - - (8,753,536) 972,615

Total 60,130,200 - - (54,117,180) 6,013,020

Loans to Key Management Personnel

To the best of the Directors’ knowledge, they are not aware of any loans to Key Management Personnel during the financial

year.

Other KMP Transactions

To the best of the directors’ knowledge, they are not aware of other transactions with Key Management Personnel.

REMUNERATION REPORT (END)

Proceedings on Behalf of Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to

which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those

proceedings.

The Company was not a party to any such proceedings during the year.

Indemnifying Officers

During the financial year the Company paid a premium in respect of a contract insuring the directors of the Company (as

named above), the Company Secretary, and all executive directors of the Company and of any related body corporate against

a liability incurred as such a director, secretary or executive office to the extent permitted by the Corporation Act 2001. The

contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

Due to the Company being in Administration the Directors insurance premiums have not been renewed since the last policy

was paid. It is the intention of the current Directors of the Company to ensure an adequate premium in respect of insuring

the Directors, Secretary or Executive officers to the extent permitted by the Corporations Act 2001.

Environmental Regulations

In the normal course of business, there are no environmental regulations or requirements that the Company is subject to.



DIRECTORS’ REPORT

15

Future Developments, Prospects and Business Strategies

The company is in the process of being recapitalised and its future developments, prospects and business strategies are

detailed in the significant events after balance sheet date section of the directors report.

Indemnification of auditors

To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its

audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment

has been made to indemnify Ernst & Young during or since the financial year.

Signed in accordance with a resolution of the Board of Directors.

Faldi Ismail

Non-Executive Director

Dated 7 December 2015

A member firm of Ernst & Young Global LimitedLiability limited by a scheme approved under Professional Standards Legislation

TD:MW:MAE

Ernst & Young11 Mount Bay RoadPerth WA 6000 AustraliaGPO Box M939 Perth WA 6843

Tel: +61 8 9429 2222Fax: +61 8 9429 2436ey.com/au

Auditor’s Independence Declaration to the Directors of Marion EnergyLimited

In relation to our audit of the financial report of Marion Energy Limited for the financial year ended 30June 2015, to the best of my knowledge and belief, there have been no contraventions of the auditorindependence requirements of the Corporations Act 2001 or any applicable code of professionalconduct.

Ernst & Young

T G DachsPartner7 December 2015

16



17

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2015

Note 2015 2014

$ $

Revenue 2 457 101,275

Administrators expense (45,985) -

Salaries and employee benefits expense 3 (79,167) (1,248,938)

Lease operating expenses - (1,723,522)

Impairment expense - (2,546)

Loss on deconsolidation of subsidiaries 3 (138,959,347) -

Legal and professional fees (425,020) (1,857,192)

Depreciation and amortisation expense - (30,894)

Increase in royalty payable resulting from measurement on a

realisation basis - (5,847,984)

Secretarial and listing expenses (103,800) (397)

Finance costs 3 (146,356) (7,424,229)

Share based payment expense 16 (1,658,942) -

Other expenses (51,757) (579,225)

Results from operating activities (141,469,917) (18,613,652)

Loss before income tax (141,469,917) (18,613,652)

Income tax expense 4 - -

Loss for the period (141,469,917) (18,613,652)

Other comprehensive income:

Items that may be reclassified subsequently to profit or loss

Exchange differences on translating foreign operations 18,473,866 (3,106,627)

Other comprehensive loss for the year, net of tax 18,473,866 (3,106,627)

Total comprehensive loss for the year (122,996,051) (21,720,279)

Loss attributable to:

Members of the parent entity (141,469,917) (18,613,652)

(141,469,917) (18,613,652)

Total comprehensive loss attributable to:

Members of the parent entity (122,996,051) (21,720,279)

(122,996,051) (21,720,279)

Basic & Diluted loss per share (dollars per share) 7 (77.18) (15.31)

The accompanying notes form part of these financial statements.



18

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015

Note 2015 2014

$ $

CURRENT ASSETS

Cash and cash equivalents 8 a 53,208 232,404

Trade and other receivables 9 - 251,224

Plant and equipment - 69,285

Oil and gas properties 10 - 167,728,769

Other assets - 1,126,584

TOTAL CURRENT ASSETS 53,208 169,408,266

TOTAL ASSETS 53,208 169,408,266

CURRENT LIABILITIES

Trade and other payables 11 966,716 20,231,144

Borrowings 12 2,744,844 34,978,172

Provisions 13 - 662,933

TOTAL CURRENT LIABILITIES 3,711,560 55,872,249

TOTAL LIABILITIES 3,711,560 55,872,249

NET (LIABILITIES)/ ASSETS (3,658,352) 113,536,018

SHAREHOLDERS’ (DEFICIT)/ EQUITY

Issued capital 14 216,497,117 213,084,239

Reserves 15 20,287,708 (574,961)

Accumulated losses (240,443,177) (98,973,260)

SHAREHOLDERS’ (DEFICIT)/ EQUITY (3,658,352) 113,536,018




19

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2015

Issued Capital

Option

Premium

Reserve

Capital Profit

Reserve

Foreign

Currency

Translation

Reserve

Accumulated

Losses

Total

$ $ $ $ $ $

Balance at 1 July 2013 212,645,805 14,400,481 277,610 (15,367,239) (80,359,608) 131,597,049

Loss for the year - - - - (18,613,652) (18,613,652)

Other comprehensive income/(loss) - - - (3,106,627) - (3,106,627)

Total comprehensive loss for the year - - - (3,106,627) (18,613,652) (21,720,279)

Transactions with owners, recognised

directly in equity

Equity issued during the year 438,434 3,220,814 - - - 3,659,248

Balance at 30 June 2014 213,084,239 17,621,295 277,610 (18,473,866) (98,973,260) 113,536,018

Balance at 1 July 2014 213,084,239 17,621,295 277,610 (18,473,866) (98,973,260) 113,536,018

Loss for the year - - - - (141,469,917) (141,469,917)

Other comprehensive income/(loss) - - - 18,473,866 - 18,473,866

Total comprehensive loss for the year - - - 18,473,866 (141,469,917) (122,996,051)

Transactions with owners, recognised

directly in equity

Equity issued during the year 3,412,878 2,388,803 - - - 5,801,681

Balance at 30 June 2015 216,497,117 20,010,098 277,610 - (240,443,177) (3,658,352)




20

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015

Note 2015 2014

$ $

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers - 95,062

Payments to suppliers and employees (622,870) (4,455,288)

Interest received 457 6,213

Interest and other costs of finance paid - (61,650)

Net cash used in operating activities 8 b (622,413) (4,415,663)

CASH FLOWS FROM INVESTING ACTIVITIES

Expenditure on oil and gas projects - (3,903,582)

Expenditure on plant and equipment - (65,058)

Deposit guarantees (acquired) / realised - 10,611

Net cash from investing activities - (3,958,029)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of equity instruments - 438,434

Proceeds from borrowings 1,392,399 250,000

Repayment of borrowings (949,182) (438,434)

Net cash from financing activities 443,217 250,000

Net (decrease) in cash and cash equivalents (179,196) (8,123,692)

Effects of exchange rate changes on the balance of cash held in foreign

currencies

- (247,275)

Cash and cash equivalents at the beginning of the financial year 232,404 8,603,372

Cash and cash equivalents at the end of the financial year 53,208 232,404

The accompanying notes form part of these financial statements



CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

21

These consolidated financial statements cover Marion Energy Limited (“the Company”) and its controlled entities as a

consolidated entity (also referred to as “the Group”). Marion Energy Limited is a company limited by shares, incorporated

and domiciled in Australia. The Group is a for-profit entity.

The financial report was issued by the board of directors on 7 December 2015 by the directors of the Company.

The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation and

presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

a) Basis of preparation of the financial report

Statement of Compliance

These financial statements are general purpose financial statements which have been prepared in accordance with Australian

Accounting Standards (“AASBs”) (including Australian interpretations) adopted by the Australian Accounting Standard Board

(“AASB”) and the Corporations Act 2001 where possible (refer to Note 1(b)). These financial statements of the Group also

comply with the International Financial Reporting Standards (“IFRSs”) and interpretations adopted by the International

Accounting Standards Board (“IASB”) where possible (refer to Note 1(b)).

The financial statements have been prepared on an accruals basis and is based on historical costs modified, where applicable,

by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

b) Incomplete records


of JP Downey and Co as voluntary administrator of the Company.

Following appointment of the administrators, the powers of the Company’s officers (including Directors) were suspended

and the administrators assumed control of the Company’s business, property and affairs.

The financial report has been prepared by Directors who were not in office for the periods presented in this report, nor were

they parties involved with the Company and did not have oversight or control over the group’s financial reporting systems

including but not limited to being able to obtain access to complete accounting records of the Company. In addition, Directors

have not been able to source books and records of the company’s subsidiaries (refer to note 1(d)). Accordingly, the financial

information of the group’s subsidiaries has been deconsolidated effective 1 July 2014. The Directors who prepared this

financial report were appointed on or after the 28 October 2015. Every reasonable effort has been made by the Directors to

ascertain the true position of the Company as at 30 June 2015.

To prepare the financial report, the directors have reconstructed the financial records of the Group using data extracted from

the Group’s accounting system for the entire financial year. However, there may be information that the current Directors

have not been able to obtain, the impact of which may or may not be material on the financial statements.

These financial statements do not contain all the required information or disclosures in relation transactions undertaken by

the Company as this information is unascertainable due to the administration process and/or the change in directorships and

key management personnel.




22

b) Incomplete records

Consequently, although the Directors have prepared this financial report to the best of their knowledge based on the

information made available to them, they are of the opinion that it is not possible to state that this financial report has been

prepared in accordance with Australian Accounting Standards including Australian interpretations, other authoritative

pronouncements of the Australian Accounting Standard Board and the Corporations Act 2001, nor is it possible to state this

financial report gives a true and fair view of the Group’s financial position as at 30 June 2015 and for the year then ended.

c) Going concern

The Group incurred a loss of $141,469,917 for the year ended 30 June 2015. In addition, the Group had a net current liability

and a shareholders’ deficit of $3,658,352 as at 30 June 2015.

The financial report has been prepared on a going concern basis, which assumes continuity of normal business activities and

the realisation of assets and settlement of liabilities in the ordinary course of business. The Directors believe it is appropriate

to prepare these accounts on a going concern basis because under the DOCA effectuated on 28 October 2015 the Company

has extinguished all liabilities associated with the previous administration of the Company and is in the process of undertaking

the following transactions:

Completion of a capital raising to raise a minimum of $3,600,000; and

Acquisition of Global Agenda Technologies Pty Ltd (“Agenda”), a software and technology development company. In

consideration for the acquisition, Marion Energy Limited will issue to Agenda shareholders o 2,500,000 fully paid ordinary shares in MAE at a deemed issue price of $0.02 each (Initial Consideration

Shares). All consideration shares will be subject to ASX escrow provisions;

o 25,000,000 deferred consideration shares (Deferred Consideration Shares) (at a deemed issue price of $0.02

per MAE share) upon Agenda achieving 500,000 active registered users on the Agenda Platform within 24

months of listing on the ASX (milestone)

The cash flow forecast indicates that based on the completion of the capital raising as described above, the consolidated

entity will have sufficient cash flows to meet all commitments and working capital requirements for a period of at least 12

months from the signing of this financial report. The Directors are also confident that all the necessary regulatory approvals

and requirements will be met to enable the Company to be re-instated on the ASX and for the transaction with Agenda to

proceed. Accordingly, the Directors are satisfied that the going concern basis of the preparation is appropriate.

Should the Group not achieve the matters set out above, there is significant uncertainty whether the Group will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business

and at the amounts stated in the financial report.

The financial report does not contain any adjustments relating to the recoverability and classification of recorded assets or liabilities that might be necessary should the Group not be able to continue as a going concern.

d) Principles of Consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2015.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and

has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and

only if the Group has:




23

d) Principles of Consolidation (Continued)

Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the

investee);

Exposure, or rights, to variable returns from its involvement with the investee, and

The ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts

and circumstances in assessing whether it has power over an investee, including:

The contractual arrangement with the other vote holders of the investee,

Rights arising from other contractual arrangements,

The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to

one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the

subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary

acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group

gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of

the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line

with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating

to transactions between members of the Group are eliminated in full on consolidation.

A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the

Group loses control over a subsidiary, it:

De-recognises the assets (including goodwill) and liabilities of the subsidiary

De-recognises the carrying amount of any non-controlling interests

De-recognises the cumulative translation differences recorded in equity

Recognises the fair value of the consideration received

Recognises the fair value of any investments retained

Recognises any surplus or deficit in profit and loss

Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as

appropriate, as would be required if the Group had directly disposed of the related assets or liabilities

For the purposes of preparing the financial statements for the year ended 30 June 2015, as detailed in Note 1(b), the Directors

have not been able to obtain financial information of the company’s subsidiaries and accordingly, the financial information

of the company’s subsidiaries have been deconsolidated effective 1 July 2014.

It should be noted that control of Marion Energy Inc. (“MEI”) was lost when it filed for bankruptcy protection on 31 October

2014. Control of MEI was regained when it left bankruptcy protection following TCS Funding Solutions, LLC (Castlelake)

purchase of the assets of MEI by way of a credit bid. Accordingly, the financial information of MEI should have been

deconsolidated on 31 October 2014 (when it filed for bankruptcy protection) and reconsolidated when it left bankruptcy

protection. However, as disclosed above and in note 1 (b), the Directors have not been able to obtain the financial information

of the company’s subsidiaries (including MEI) and therefore, the financial information of MEI has been deconsolidated

effective 1 July 2014.




24

e) Income Tax

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable

income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured

at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as

well unused tax losses.

Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when

the tax relates to items that are credited or charged directly to equity.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and

liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been

fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition

of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset i s

realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement

also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or

liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is

probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,

deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be

controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net

settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and

liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income

taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended

that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods

in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.




25

f) Plant and equipment

Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and

impairment losses.

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable

amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be

received from the assets employment and subsequent disposal. The expected net cash flows have not been discounted to

their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets including building and capitalised lease assets is depreciated on a straight line basis

over their useful lives to the Group commencing from the time the asset is held ready for use. Leasehold improvements are

depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

Class of Fixed Asset Depreciation Rate

Plant and Equipment 10 – 20 %

The assets’ carrying values are reviewed for impairment when events or changes in circumstances indicate the carrying value

may not be recoverable. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s

carrying amount is greater than its estimated recoverable amount.

Profit and loss on disposal is determined by comparing proceeds with the carrying amount. These amounts are included in

the profit or loss.

g) Financial Instruments

Initial recognition and measurement

Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party

to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered

within timeframes established by marketplace convention.

Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at

fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are

expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.

Classification and subsequent measurement

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to

determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar

instruments and option pricing models.

The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the

requirements of accounting standards specifically applicable to financial instruments.



CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

26

g) Financial Instruments (Continued)

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in

an active market and are subsequently measured at amortised cost.

Loans and receivables are included in current assets, except for those which are not expected to mature within 12

months after the end of the reporting period. (All other loans and receivables are classified as non-current assets.)

(ii) Financial assets at fair value through profit and loss

Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of

short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an

accounting mismatch or to enable performance evaluation where a Group of financial assets is managed by Key

Management Personnel on a fair value basis in accordance with a documented risk management or investment

strategy. Realised and unrealised gains and losses arising from changes in fair value are included in profit or loss in

the period in which they arise.

(iii) Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.

Gains or losses are recognised in profit and loss through the amortisation process and when the financial liability is

derecognised.

Derivative instruments

The Group does not trade or hold derivatives.

Financial guarantees

The Group has no material financial guarantees.

Impairment

At the end of each reporting period, the Group assesses whether there is objective evidence that a financial instrument has been impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’) has an impact on the estimated future cash flows of the financial asset or the group of financial assets

that can be reliably estimated.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flow expires or the asset is transferred to

another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated

with the asset.

Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The

difference between the carrying value of the financial liability extinguished or transferred to another party and the fair

value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

h) Impairment of non-financial assets

At the end of each reporting period, the Directors assesses whether there is any indication that an asset may be impaired.

The assessment will include the consideration of external and internal sources of information, including dividends received

from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits.




27

h) Impairment of non-financial assets (Continued)

If any such indication exists, an impairment test is carried out on the asset by comparing the asset’s recoverable amount,

being the higher of its fair value less costs to sell and its value in use, to the asset’s carrying amount. Any excess of the

asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss. Where it is not possible to

estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating

unit to which the asset belongs.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

i) Intangible assets

Research and development costs

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:

The technical feasibility of completing the intangible asset so that the asset will be available for use or sale

Its intention to complete and its ability to use or sell the asset

How the asset will generate future economic benefits

The availability of resources to complete the asset

The ability to measure reliably the expenditure during development

The ability to use the intangible asset generated

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated

amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. During the period of development, the asset is tested for impairment annually.

j) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits available on demand with banks with original maturity of three

months or less.

k) Revenue

Revenue is measured at the fair value of the consideration received or receivable. Interest revenue is brought to account

on an accruals basis using the effective interest rate method and, if not received at the end of the reporting period, is

reflected in the statement of financial position as a receivable

l) Goods and Services Tax (GST)

Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of GST incurred is not

recoverable from the Australian Tax Office (ATO).

Receivable and payables are stated inclusive of the amount of GST receivable or payable. The net amount of the GST

recoverable from, or payable to, the ATO is included with other receivables and payables in the statement of financial

position.




28

l) Goods and Services Tax (GST) - continued

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and

financing activities, which are disclosed as operating cash flows.

m) Employee Benefits

Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to the end of

the reporting period. Employee benefits that are expected to be settled within 12 months have been measured at the

amounts expected to be paid when the liability is settled. Employee benefits payable later than 12 months have been

measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the

liability, consideration is given to employee wages increases and the probability that the employee may satisfy any vesting

requirements. Those cash flows are discounted using market yields on national government bonds with terms to maturity

that match the expected timing of cash flows attributable to employee benefits.

Equity-settled compensation

The Group operates an employee share ownership plan. Share-based payments to employees are measured at the fair

value of the instruments issued and amortised over the vesting periods. Share-based payments to non-employees are

measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined

the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are

received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the

Black-Scholes pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of

each reporting period such that the amount recognised for services received as consideration for the equity instruments

granted is based on the number of equity instruments that eventually vest.

n) Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is

probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting

period.

o) Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation

for the current financial year.

p) Foreign currency transactions and balances

Functional and presentation currency

The functional currency of each entity within the Group is measured using the currency of the primary economic

environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which

is the parent entity’s functional and presentation currency.




29

p) Foreign currency transactions and balances - continued

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the

transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured

at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured

at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the profit or loss.

Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive

income to the extent that the underlying gain or loss is recognized other comprehensive Income; otherwise the exchange

difference is recognised in profit or loss.

q) Oil and Gas Properties

Development expenditure is recognised at cost less accumulated depletion and any impairment losses. Where commercial

production in an area of interest has commenced, the associated costs together with any forecast capital expenditure

necessary to develop proved and probable reserves are amortised over the estimated economic life of the field on a units-

of-production basis.

Changes in factors such as estimates of proved and probable reserves that affect unit-of-production calculations are dealt

with on a prospective basis.

r) Provision for Site Restoration Costs

A provision for site restoration costs is recognised when there is a present obligation as a result of exploration, development

or production activities undertaken, it is probable that an outflow of economic benefits will be required to settle the

obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs

of dismantling and removal of oil and gas plant, equipment and building structures, waste removal and rehabilitation of the

site in accordance with clauses of the oil and gas permits.

s) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets

that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those

assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying

assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or

loss in the period in which they are incurred.

Group companies

The financial results and position of foreign operations whose functional currency is different from the Group’s presentation

currency are translated as follows:

assets and liabilities are translated at year-end exchange rates prevailing at that reporting period;

income and expenses are translated at average exchange rates for the period; and

retained earnings are translated at the exchange rates prevailing at the date of the transaction.




30

s) Borrowing Costs – continued

Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars

are recognised in other comprehensive income and included in the foreign currency translation reserve in the statement

of financial position. These differences are recognised in the profit or loss in the period in which the operation is disposed

of.

t) Adoption of new and revised accounting standards

In the current year, the Group has applied a number of new and revised standards issued by the Australian Accounting

Standards Board (AASB) that are mandatorily effective for an accounting period that begins on or after 1 July 2014.

Reference Title Application date of standard

Application date for Group*

AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities

AASB 2012-3 adds application guidance to AASB 132 Financial

Instruments: Presentation to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of "currently has a legally enforceable right of set-off" and that some gross settlement systems may be considered equivalent to net settlement.

1 January 2014

1 July 2014

AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets

AASB 2013-3 amends the disclosure requirements in AASB 136 Impairment of Assets. The amendments include the requirement to disclose additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposal.

1 January 2014

1 July 2014

AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting [AASB 139]

AASB 2013-4 amends AASB 139 to permit the continuation of hedge accounting in specified circumstances where a derivative, which has been designated as a hedging instrument, is novated from one counterparty to a central counterparty as a consequence of laws or regulations.

1 January 2014

1 July 2014

AASB 1031 Materiality

The revised AASB 1031 is an interim standard that cross-references to other Standards and the Framework (issued December 2013) that contain guidance on materiality.

AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and Interpretations have been removed. AASB 2014-1 Part C issued in June 2014 makes amendments to eight Australian Accounting Standards to delete their references to AASB 1031. The amendments are effective from 1 July 2014.

1 January 2014

1 July 2014




31

t) Adoption of new and revised accounting standards - Continued



AASB 2013-9

Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments

The Standard contains three main parts and makes amendments to a number Standards and Interpretations.

Part A of AASB 2013-9 makes consequential amendments arising from the issuance of AASB CF 2013-1.

Part B makes amendments to particular Australian Accounting Standards to delete references to AASB 1031 and also makes minor editorial amendments to various other standards.

Part C makes amendments to a number of Australian Accounting Standards, including incorporating Chapter 6 Hedge Accounting into AASB 9 Financial Instruments.

PART A & PART B:

1 July 2014

PART C:

1 July 2015

PART A & PART B:

1 July 2014

PART C:

1 July 2015

AASB 2014-1

Part A -Annual Improvements

2010–2012 Cycle

AASB 2014-1 Part A: This standard sets out amendments to

Australian Accounting Standards arising from the issuance by the International Accounting Standards Board (IASB) of International Financial Reporting Standards (IFRSs) Annual Improvements to IFRSs 2010–2012 Cycle and Annual Improvements to IFRSs 2011–2013 Cycle.

Annual Improvements to IFRSs 2010–2012 Cycle addresses the following items:

► AASB 2 - Clarifies the definition of 'vesting conditions' and 'market condition' and introduces the definition of 'performance condition' and 'service condition'.

► AASB 3 - Clarifies the classification requirements for contingent consideration in a business combination by removing all references to AASB 137.

► AASB 8 - Requires entities to disclose factors used to identify the entity's reportable segments when operating segments

have been aggregated. An entity is also required to provide a reconciliation of total reportable segments' asset to the entity's total assets.

► AASB 116 & AASB 138 - Clarifies that the determination of accumulated depreciation does not depend on the selection of the valuation technique and that it is calculated as the difference between the gross and net carrying amounts.

AASB 124 - Defines a management entity providing KMP services as a related party of the reporting entity. The amendments added an exemption from the detailed disclosure requirements in paragraph 17 of AASB 124 for KMP services provided by a management entity. Payments made to a management entity in respect of KMP services should be separately disclosed.

1 July 2014 1 July 2014




32

t) Adoption of new and revised accounting standards - Continued



AASB 2014-1

Part A -Annual Improvements

2011–2013 Cycle

Annual Improvements to IFRSs 2011–2013 Cycle addresses the following items:

► AASB13 - Clarifies that the portfolio exception in paragraph 52 of AASB 13 applies to all contracts within the scope of AASB 139 or AASB 9, regardless of whether they meet the definitions of financial assets or financial liabilities as defined in AASB 132.

AASB 140 - Clarifies that judgment is needed to determine whether an acquisition of investment property is solely the acquisition of an investment property or whether it is the acquisition of a group of assets or a business combination in the scope of AASB 3 that includes an investment property. That judgment is based on guidance in AASB 3.

1 July 2014 1 July 2014

Amendments to Australian Accounting Standards - Part B

Defined Benefit Plans: Employee Contributions (Amendments to AASB 119)

AASB 2014-Part B makes amendments in relation to the requirements for contributions from employees or third parties that are set out in the formal terms of the benefit plan and linked to service.

The amendments clarify that if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the related service is rendered, instead of attributing the contributions to the periods of service.

1 July 2014 1 July 2014

u) Critical Accounting estimates and judgements

The directors evaluate estimates and judgements incorporated into the financial statements based on historical

knowledge and best available current information. Estimates assume a reasonable expectation of future events and are

based on current trends and economic data, obtained both externally and within the Group.

Key Estimates and judgements

Impairment - General

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in

which the estimate is revised if it affects only that period or in the period of the revision and future periods if the

revision affects both current and future periods.

Share based payments

The Company measures the cost of shares and options issued to employees and third parties by reference to the fair

value of the equity instruments at the date at which they are granted. The fair value of unlisted options is determined

by an external valuer using the Black-Scholes formula, taking into account the terms and conditions upon which the

instruments were granted.




33

u) Critical Accounting estimates and judgements - Continued

Provision for site restoration costs

In determining an appropriate level of provision consideration is given to the expected future costs to be incurred, the

timing of these expected future costs and the estimated future level of inflation.

The ultimate cost of site restoration is uncertain and costs can vary in response to many factors including changes to

the relevant legal requirements, the emergence of new restoration techniques or discount rates. The expected timing

of expenditure can also change, for example in response to changes in reserves or to production rates.

Consolidation of group’s subsidiaries

For the purposes of preparing the financial statements for the year ended 30 June 2015, as detailed in Note 1(b), the

Directors have not been able to obtain financial information of the company’s subsidiaries and accordingly, the financial

information of the company’s subsidiaries have been deconsolidated effective 1 July 2014.

It should be noted that control of Marion Energy Inc. (“MEI”) was lost when it filed for bankruptcy protection on 31

October 2014. Control of MEI was regained when it left bankruptcy protection following TCS Funding Solutions, LLC

(Castlelake) purchase of the assets of MEI by way of a credit bid. Accordingly, the financial information of MEI should

have been deconsolidated on 31 October 2014 (when it filed for bankruptcy protection) and reconsolidated when it

left bankruptcy protection. However, as disclosed above and in note 1 (b), the Directors have not been able to obtain

the financial information of the company’s subsidiaries (including MEI) and therefore, the financial information of MEI

has been deconsolidated effective 1 July 2014.




34

Note 2015 2014

NOTE 2: REVENUE AND OTHER INCOME $ $

Revenue from continuing operations

Other revenue:

- Interest received, non-related parties 457 6,213

- Sale of gas - 46,409

- Other revenue - 48,653

Total Revenue 457 101,275

NOTE 3: LOSS FOR THE YEAR

Loss before income tax from continuing operations includes the

following specific expenses:

Salaries and employee benefits expense:

- Defined contribution superannuation benefits - 21,308

- Other employee benefits 79,167 93,605

- Remuneration - 1,134,025

79,167 1,248,938

Finance costs:

- External 146,356 7,364,817

- Accretion expense - 35,552

- Facility maintenance fees - 23,860

146,356 7,424,229

Loss on deconsolidation of subsidiaries:*

- Loss on deconsolidation of shares in Marion Energy Inc 3,771,225 -

- Loss on deconsolidation of loan to Marion Energy Inc 113,184,587 -

- Loss on deconsolidation of OEL Operating (USA) Inc 22,000,000 -

- Other loss on deconsolidation 3,535 -

138,959,347 -

* For the purposes of preparing the financial statements for the year ended 30 June 2015, as detailed in Note 1(b), the

Directors have not been able to obtain financial information of the company’s subsidiaries and accordingly, the financial












35

Note 2015 2014

NOTE 4: INCOME TAX $ $

(a) Income tax expense - -

Current tax - -

Deferred tax - -

(b) The prima facie tax payable on loss from ordinary activities before

income tax is reconciled to the income tax expense as follows:

Prima facie tax on operating loss at 30% (2014: 30%) (42,440,975) (5,584,096)

Add / (Less)

Tax effect of:

Other reconciling items (42,440,975) 5,584,096

Deferred tax asset not brought to account * *

Income tax attributable to operating loss - -

The directors resolved on 2 February 2015 that the Group should be placed into voluntary administration and the Groups

operations were suspended under the Administrators. As detailed in Note 1 (b), the directors do not have access to

sufficient information to enable this level of disclosure to be made.

Carry forward losses

Potential future income tax benefits attributable to tax losses carried forward have not been brought to account at 30 June 2015, because the directors do not believe it is appropriate to regard realisation of the future income tax benefits as probable.

Deferred tax

Disclosure of each type of temporary difference as at 30 June 2015 and the amount of any unrecognised deductible temporary differences or unused tax losses has not been included as the directors do not have access to sufficient information to enable this level of disclosure to be made.

NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION

Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each

member of the Group’s key management personnel (KMP) for the year ended 30 June 2015.

The totals of remuneration paid to KMP during the year are as follows:

2015 2014

$ $

Short-term employee benefits * 1,162,713

Post-employment benefits * 21,308

Equity Settled * -

Other payments * -

Total KMP Compensation * 1,184,021




36

NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION


operations were suspended under the Administrators. As detailed in Note 1 (b), the directors do not have access to

sufficient information to enable this level of disclosure to be made.

For the year ended 30 June 2015, the company incurred administrator’s fees of $45,985 (2014: Nil).

Loans to Key Management Personnel

To the best of the directors’ knowledge, they are not aware of any loans to Key Management Personnel during the financial

year.

Other KMP Transactions

To the best of the directors’ knowledge, they are not aware of other transactions with Key Management Personnel.

NOTE 6: AUDITOR’S REMUNERATION Note

2015

$

2014

$

Remuneration of the auditor of the Group for:4

Ernst & Young

- Auditing or reviewing the financial reports 17,500 -

- other services provided by related practice of auditor - -

Grant Thornton

- Auditing or reviewing the financial reports - 175,903

- other services provided by related practice of auditor - -

17,500 175,903

NOTE 7: LOSS PER SHARE $ $

Reconciliation of loss to profit or loss: (77.18) (15.31)

Loss used in calculation of basic EPS (141,469,917) (18,613,652)

Weighted average number of ordinary shares outstanding during the year

used in calculation of basic loss per share 1,832,952* 1,267,536*

* The weighted average number of ordinary shares used in the calculation of loss per share has been adjusted for the

share consolidation completed by the company on 30 September 2015. Diluted loss per share has not been calculated

as any option outstanding at 30 June 2015 and 30 June 2014 will be anti-dilutive.

NOTE 8 : CASH AND CASH EQUIVALENTS

Cash at bank 53,208 232,404

Total cash and cash equivalents in the statement of cash flows 8 a 53,208 232,404

4 The Group auditors for the period ending 30 June 2014 were Grant Thornton (Australia) and Deloitte (American Subsidiaries). Subsequently the Group auditors have been replaced by EY, there were no amounts paid to EY during the period ending 30 June 2015.




37

NOTE 8 : CASH AND CASH EQUIVALENTS Note 2015

$

2014

$

CASH FLOW INFORMATION

Loss after income tax (141,469,917) (18,613,652)

Non-cash flows in loss after income tax

Loss on deconsolidation 138,959,347 -

Loss on disposal of plant and equipment - 2,546

Unrealised foreign exchange (gain)/ loss - 372,036

Impairment expense - 5,847,984

Interest expense capitalised into loan balance - 7,327,027

Depreciation expense - 66,446

Share based payment expense 1,658,942 -

Changes in assets and liabilities

Decrease/ (increase) in other assets 277,280 (164,174)

(Decrease)/ increase in payables (48,065) 746,124

Cash flow (used in) operations 8 b (622,413) (4,415,663)

Credit Standby Facilities

The Group has no credit standby facilities.

Non-Cash investing and financing activities

There were nil non-cash investing and financing activities for the period.

NOTE 9: TRADE AND OTHER RECEIVABLES Note 2015

$

2014

$

CURRENT

Trade receivables (a) - 175,514

Employee advances (b) - 5,306

GST receivable - 131,764

Other receivables (c) - 52,721

Allowance for impairment (d) - (114,081)

- 251,224

(a) Trade receivables are on normal commercial arrangement and are paid 60 days after volume

verification by the purchaser.

(b) Employee advances are repaid in accordance with signed promissory notes.

(c) Other receivables are non-interest bearing and have payment terms between 30 and 60 days.

(d) An allowance has been made for balances more than 180 days overdue that are considered

uncollectible.




38

NOTE 10: OIL AND GAS PROPERTIES 2015

$

2014

$

Producing projects at cost 167,728,769 169,490,226

Less: accumulated depreciation - (1,761,457)

Write off on deconsolidation (note a) (167,728,769) -

- 167,728,769

Note (a) - For the purposes of preparing the financial statements for the year ended 30 June 2015, as detailed in Note 1(b),

the Directors have not been able to obtain financial information of the company’s subsidiaries and accordingly, the financial









.

NOTE 11: TRADE AND OTHER PAYABLES Note 2015

$

2014

$

CURRENT

Trade payables 966,716 373,703

Royalty payable - 15,916,808

Sundry payables and accrued expenses - 3,940,633

966,716 20,231,144

Following effectuation of the DOCA on 28 October 2015 (Refer to Note 18), all

liabilities, contingent liabilities, obligations, warranties and long-term

commitments of the Company were released.

NOTE 13: SHORT TERM PROVISIONS

CURRENT

Restoration of operating locations - 662,933

- 662,933

NOTE 12: OTHER LIABILITIES

CURRENT

Borrowings 2,744,844 34,978,172

2,744,844 34,978,172

Following effectuation of the DOCA on 28 October 2015 (Refer to Note 18),

all liabilities, contingent liabilities, obligations, warranties and long-term

commitments of the Company were released.




39

NOTE 14: ISSUED CAPITAL

(a) Share Capital

192,505,402 (2014: 126,753,630) fully paid ordinary shares 216,497,118 213,084,239

Transaction costs relating to share issues for year - -

216,497,118 213,084,239

(b) Movements in fully paid Ordinary Capital

Date Number $

Balance at beginning of the reporting period 1 July 2013 1,194,464,080 212,645,805

Shares issued for repayment of convertible note 18 March 2014 73,072,217 438,434

Consolidation of shares 10:1 basis 30 June 2014 (1,140,782,667) -

Balance at end of the reporting period 30 June 2014 126,753,630 213,084,239

Balance at beginning of the reporting period 1 July 2014 126,753,630 213,084,239

Shares issued in lieu of payment entitlements 18 July 2014 27,000,000 1,620,000

Shares issued for conversion of convertible note 05 August 2014 20,540,831 1,232,450

Shares issued for services 19 September 2014 470,000 28,200

Shares issued for outstanding loans 28 October 2014 17,740,941 532,227

Balance at end of the reporting period 30 June 2015 192,505,402 216,497,117

Ordinary shareholders are entitled to participate in dividends and the proceeds on winding up of the company in proportion

to the number of and amounts paid on the shares held. Every ordinary shareholder present at a meeting in person or by proxy

is entitled to one vote on a show of hands or by poll. Shares have no par value.

(c) Options

i. For information relating to the Marion Energy Limited employee option plan, including details of options issued,

exercised and lapsed during the financial year and the options outstanding at year-end, refer to Note 16: Share-based

Payments.

ii. For information relating to share options issued to Key Management Personnel during the year, refer to Note 16.

(d) Capital Management

The Directors’ objectives when managing capital are to ensure that the Group can fund its operations and continue

as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders.

The Group is not subject to any externally imposed capital requirements.




40

NOTE 15: RESERVES

a) Option reserve

The option reserve records items recognised as expenses on valuation of employee share options and proceeds

from issue of options as part of a capital raising.

Expiry date Exercise Price* Number under option*

31 July 2016 $6.00 98,000

22 December 2016 $5.00 88,705

31 July 2016 $10.00 91,733



567,186

* Exercise price and number of options on issue have been adjusted for the share consolidation completed by the company

on 14 October 2015

b) Foreign currency translation reserve

The foreign currency translation reserve records exchange differences arising on translation of a foreign

controlled subsidiary.

NOTE 16: SHARE BASED PAYMENTS

The following share-based payment arrangements existed at 30 June 2015:

i. On 18 July 2014, 22,105,541 options were granted to KM Custodians as an incentive fee for finance provided. The

issue was approved by shareholders at an Extraordinary General Meeting (“EGM”) held on the 19 June 2014. The

services provided had a value of $1,326,331 and was recognised as a share based payment in the profit and loss.

ii. On 18 July 2014, 5,073,482 options were granted to NSL as an incentive fee for finance provided. The issue was

approved by shareholders at an Extraordinary General Meeting (“EGM”) held on the 19 June 2014. The services

provided had a value of $304,409 and was recognised as a share based payment in the profit and loss.

iii. On 19 September 2014, 470,000 shares were granted to Contractors for services provided. The issue was

approved by shareholders at an Extraordinary General Meeting (“EGM”) held on the 19 June 2014. The services

provided had a value of $28,200 and was recognised as a share based payment in the profit and loss.

iv. Options granted to Key Management Personnel are as follow:

Grant Date Number

18 July 2014 12,634,361

These options vest immediately. The options hold no voting or dividend rights and are unlisted.

In addition to the above, 27,840,508 options were granted to service providers, employees and contractors but have not

been fair valued as the directors do not have sufficient information to value these.


operations were suspended under the Administrators. A Deed of Company Arrangement was wholly effectuated on 28

October 2015 and the control of the Company was handed back to the newly appointed directors. As detailed in Note 1

(b), the current directors do not have access to sufficient information to enable further level of disclosure to be made.




41

NOTE 17: OPERATING SEGMENTS

Segment Information

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of

Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

The principal activity of the Consolidated Entity during the year was the management and operation of oil and gas

properties in the USA. The directors resolved on 2 February 2015 that the Group should be placed into voluntary

administration and the Groups operations were suspended under the Administrators. As detailed in Note 1 (b), the

directors do not have access to sufficient information to enable this level of disclosure to be made.

NOTE 18: FINANCIAL INSTRUMENTS

Financial Risk Management Policies

The financial risk management polices below were adopted by the directors of the Company who were in office prior to the

company entering administration. On 2 February 2015, the Board resolved to place the Company into voluntary

administration and appointed Mr James Downey of JP Downey and Co as voluntary administrator of the Company. On

entering administration, the Administrators were responsible for the Company. Therefore there is no current financial risk

management policy.

Specific Financial Risk Exposures and Management

The main risk the Group is exposed to through its financial instruments are interest rate risk and credit risk.

(a) Interest Rate Risk

The consolidated entity's exposure to interest rate risk that a financial instrument's value will fluctuate as a result of changes

in the market, interest rates and the effective weighted average interest rates on those financial assets, is set out below:

Floating

Interest

Rate

Non-interest

bearing

2015 Total Floating

Interest

Rate

Non-interest

bearing

2014 Total

$ $ $ $ $ $

Financial assets

- Within one year

Cash and cash equivalents 53,208 - 53,208 232,404 - 232,404

Other receivables - - - - 251,224 251,224

Total financial assets 53,208 - 53,208 232,404 251,224 483,628

Weighted average interest rate * *

Financial Liabilities

- Within one year

Trade and other Payables - 966,716 966,716 - 20,231,144 20,231,144

Borrowings - 2,744,844 2,744,844 - 34,978,172 34,978,172

Other liabilities - - - - 662,933 662,933

Total financial liabilities - 3,711,560 3,711,560 - 55,872,249 55,872,249

Net financial assets 53,208 (3,711,560) (3,658,352) 232,404 (55,621,025) (55,388,621)




42


(b) Credit risk

The maximum exposure to credit risk, excluding the value of any collateral or other security at the balance date, to recognised

financial assets is the carrying amount, net of any provision for doubtful debts, as disclosed in the Balance Sheet and Notes

to the Financial Statements.

The consolidated entity does not have any material risk exposure to any single debtor or group of debtors under financial

instrument entered into by it. The credit risk on liquid funds is limited because the counterparties are banks with high credit-

ratings assigned by international credit-rating agencies.

(c) Liquidity risk

Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash

equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable .

The consolidated entity manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and

forecast cash flows and matching the maturity profiles of financial assets and liabilities.

The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The

tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which

the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining

contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

2015

Carrying Amount

$

Contractual Cash Flows

$

1 year

or less

$

Between 1 and 2 years

$

Between 2 and 5 years

$

Over 5

Years

$

Trade and other payables 966,716 966,716 966,716 - - -

Borrowings 2,744,844 2,744,844 2,744,844 - - -

2014

Trade and other payables 4,307,336 4,307,336 4,307,336 - - -

Borrowings 34,978,172 34,978,172 34,978,172 - - -

(d) Net fair Value of financial assets and liabilities

Fair value estimation

Methods and assumptions used in determining net fair value:

For assets and other liabilities, the net fair value approximates the carrying values. No financial assets and financial liabilities

are readily traded on organised markets in standardised form.


of JP Downey and Co as voluntary administrator of the Company. As detailed in Note 1 (b), the directors do not have access

to sufficient information to enable this level of disclosure to be made.




43


(d) Financial arrangements

The company had no other financial arrangements in place at 30 June 2015 based on the information available to the current

board.

NOTE 19: PARENT ENTITY DISCLOSURES

(a) Financial Position of Marion Energy Limited

Note 2015 2014

$ $

ASSETS

Current assets 53,208 295,407

Total assets 53,208 177,581,055

LIABILITIES

Current liabilities 3,711,560 5,088,828

Total liabilities 3,711,560 5,088,828

SHAREHOLDERS’ (DEFICIT)/ EQUITY

Issued capital 216,497,117 213,084,239

Reserves 20,287,708 17,898,905

Accumulated Losses (240,443,177) (58,195,509)

SHAREHOLDERS’ (DEFICIT)/ EQUITY (3,658,352) 172,787,635

(b) Financial Performance of Marion Energy Limited

Loss for the year (141,469,917) (830,031)

Other comprehensive income - -

Total comprehensive income (141,469,917) (830,031)

(c) Guarantees entered into by Marion Energy Limited for the debts of its subsidiary

There are no guarantees entered into by Marion Energy Limited for the debts of its subsidiary as at 30 June 2015 (2014:

$1,027,886).

(d) Contingent liabilities of Marion Energy Limited

There were no known contingent liabilities as at 30 June 2015 (2014: Nil).

(e) Commitments by Marion Energy Limited

There were no known commitments as at 30 June 2015 (2014: none).




44

NOTE 20: CONTROLLED ENTITIES CONSOLIDATED

Marion Energy Limited

Controlled entity Country of Incorporation Percentage Owned

2015 2014

Brisa Pty Limited5(Note a) Australia 100% 100%

Marion Energy Inc6 (Note a) USA 100% 100%

OEL Operating (USA) Inc 7 (Note a) USA 100% 100%

Note (a) - For the purposes of preparing the financial statements for the year ended 30 June 2015, as detailed in Note 1(b),

the Directors have not been able to obtain financial information of the company’s subsidiaries and accordingly, the financial





deconsolidated on 31 October 2014 (when it filed for bankruptcy protection) and reconsolidated it left bankruptcy protection.

However, as disclosed above and in note 1 (b), the Directors have not been able to obtain the financial information of the

company’s subsidiaries (including MEI) and therefore, the financial information of MEI has been deconsolidated effective 1

July 2014.

NOTE 21: CAPITAL COMMITMENTS 2015

$

2014

$

Operating lease commitments:

Not longer than 1 year * 103,137

Longer than 1 year and not longer than 5 years * 434,491

Longer than 5 years * -

* 537,628

* On 2 February 2015, the Board resolved to place the Company into voluntary administration and appointed Mr James

Downey of JP Downey and Co as voluntary administrator of the Company. As detailed in Note 1 (b), the directors do not have

access to sufficient information to enable this level of disclosure to be made.

NOTE 22: CONTINGENT LIABILITIES

The Group has no known contingent liabilities as at 30 June 2015.

NOTE 23: EVENTS SUBSEQUENT TO REPORTING DATE


Company, the Deed Administrator, KM Custodians (the Company's secured creditor) and Otsana Capital (Otsana) executed

a varied deed of company arrangement (DOCA), which embodied a proposal by Otsana for the recapitalisation of the

Company (Recapitalisation Proposal).

5 During the 2008 year deregistration of this subsidiary was initiated. The deregistration process was completed on the 26 July 2015.

6 The subsidiary is to be de-registered, and was transferred to the creditors trust on settlement of the DOCA. The de-registration process in ongoing and is expected to be completed without giving rise to any losses for the parent entity. 7 The subsidiary is to be de-registered, and was transferred to the creditors trust on settlement of the DOCA. The de-registration process in

ongoing and is expected to be completed without giving rise to any losses for the parent entity.




45


A summary of the material terms of the Recapitalisation Proposal is set out below. Further information appears in sections

3.1 and 3.2 of the Company's notice of meeting lodged with ASX on 28 August 2015

a) the Company and the Deed Administrator will establish the Creditors' Trust, with the Deed Administrator acting as

trustee;

b) the assets of the Company will be transferred to the Creditors' Trust, including an amount of $150,000 to be

comprised of:

i. $10,000 (Deposit), paid by Otsana upon execution of the DOCA and receipt of the Deed

Administrator of an irrevocable undertaking from KM Custodians for the release and discharge of its

security and to vote in favour of the Recapitalisation Resolutions, this payment was made on the 10

August 2015; and

ii. $140,000 (Recapitalisation Payment), to be paid by the Company upon Shareholder approval of the

Recapitalisation Resolutions. If the Company lacks sufficient funds to make the Recapitalisation

Payment, Otsana will loan the Company necessary funds, with such funds to be repaid to Otsana

upon reinstatement of the Company's securities to the Official List;

c) the Company will issue 10,000,000 Creditor Shares to the Creditors Trust (to be distributed to the admitted

creditors pro rata), shareholder approval was obtained on the 30 September 2015 and shares were issued on 28

October 2015;

d) all creditors will be required to prove debts against the Trustee of the Creditors' Trust and payment will be made

in accordance with the DOCA and the Creditors' Trust Deed;

e) upon completion of the DOCA, the funds in the Creditors' Trust will be distributed as follows:

i. first, to the Deed Administrator and Trustee for administering the DOCA and the Creditors’ Trust

(including fees and disbursements);

ii. second, to any priority Creditors pro rata according to the amount for which each creditor shall be

admitted to proof pursuant to the Creditors' Trust Deed;

iii. third, to KM Custodians as secured Creditor, up to $2,674,000; and

iv. fourth, the remainder (if any) to be returned to the Company for distribution to unsecured Creditors;

f) the Deed Administrator will cause the current Directors of the Company to be removed and appoint nominees of

Otsana Capital as Directors of the Company, the nominee directors were appointed on 28 October 2015;

g) all security over the Company's assets will be discharged and released;

h) the Company will undertake the Consolidation, the capital consolidation was approved by shareholders on the 30

September 2015;

Consolidation of existing fully paid shares (Shares) on a one (1) for one hundred (100) basis together

with the consolidation of its existing options in the same ratio as existing shares;

i) the Company will raise up to $750 (before costs) via the following capital raisings, the capital raising was approved

by shareholders on the 30 September 2015:

$500 from the issue of 50,000,000 Placement Shares to clients of Otsana, (40,000,000 of which were

issued on 28 October 2015); and

$250 from the issue of 25,000,000 Placement Options to clients of Otsana, issued on 4 November

2015; and

j) the Company will issue such other securities as are required by Otsana (of which there were none).

Key conditions precedent for completion of the DOCA include:

payment of the Deposit and Recapitalisation Payment, On 10 August 2015, the deposit of $10,000 was paid to the

Deed Administrators. This amount was paid by Otsana Capital on behalf of the company in accordance with DOCA,;

discharge and release of all security over the Company's assets;

all subsidiaries (other than those advised by Otsana) being removed from the Company;




46


termination or repudiation of existing employment and service contracts; and

Shareholder approval being obtained to give effect to the Recapitalisation Proposal.

The conditions precedent were satisfied on 28 October 2015 and the DOCA was effectuated. On termination of the DOCA,

control of the Company reverted to the officers of the Company.

On 28 October 2015, Mr Nicholas Young was appointed as Company Secretary. Mr Young resigned on the 5 November 2015 and was replaced by Mr Dave Filov.

On 5 November 2015 the Company announced the intention to acquire 100% of Global Agenda Technologies Pty Ltd (‘Agenda’), an entity developing a software as a service (‘SaaS’), sales conversion and social networking technology platform. The Company will seek to re- comply as a technology company on the ASX and be renamed Cre8tek Limited.

As consideration for 100% of the issued capital of Agenda, the Company has agreed to issue:

2,500,000 fully paid ordinary shares in MAE at a deemed issue price of $0.02 each (Initial Consideration Shares). All

consideration shares will be subject to ASX escrow provisions;

25,000,000 deferred consideration shares (Deferred Consideration Shares) (at a deemed issue price of $0.02 per

MAE share) upon Agenda achieving 500,000 active registered users on the Agenda Platform within 24 months of

listing on the ASX (Milestone)

Settlement of the Acquisition is conditional upon the satisfaction (or waiver) of the following conditions precedent: Shareholder approval for the change of its business from an oil and gas company to a software and technology

company;

Shareholder approval to change the name of Marion Energy Limited to Cre8tek Limited;

Completion of due diligence by MAE on Agenda’s business and operations, to the sole satisfaction of MAE within

14 days of the HOA being executed;

MAE obtaining all necessary regulatory approvals or waivers pursuant to the ASX Listing Rules, Corporations Act

or any other law to allow MAE to lawfully complete the matters set out in the HOA

Execution by the Agenda shareholders of ASX restriction agreements to the Initial Consideration Shares and

provision of undertakings for the escrow of any Deferred Consideration Shares

Establishment of a performance rights plan, the terms of which are to be agreed between MAE and Agenda, and

obtaining shareholder approval to issue 10 million performance rights to each of Faldi Ismail, Bryn Hardcastle and

Tom Bahen, in tranches of 3,333,333 million performance rights each, with Share price vesting hurdles of 3 cents,

4 cents and 5 cents respectively for each tranche (based on 10 day Share VWAP), expiring 3 years after grant and

otherwise on terms to be agreed.

MAE undertaking a capital raising of not less than $3,600,000 through the offer of MAE Shares at a price of not

less than $0.02 per AME Share (Capital Raising).

As outlined above the Directors are currently working towards the restructure and recapitalisation of the Company and

liaising with the ASX in relation to the reinstatement of Marion Energy Limited’s securities for trading on the ASX. On 24

November 2015 the Company despatched a notice of general meeting for a meeting to be held on 23 December 2015 seeking

approval for the Agenda acquisition and re-compliance with Chapters 1 and 2 of the Listing Rules.

The Company (as borrower) has entered into a loan agreement with the following three lenders:

(a) DXB Holdings Pty Ltd, an entity associated with Mr Bryn Hardcastle;

(b) Romfal Sifat Pty Ltd, an entity associated with Mr Faldi Ismail; and

(c) Seamist Enterprises Pty Ltd (an unrelated entity).




47


Pursuant to the terms of the loan agreement the lenders have agreed (each in equal portions) to make available a loan facility

of up to $200,000, with funds drawn down to be used towards the necessary costs of the Company's re-compliance with

Chapters 1 and 2 of the Listing Rules.

As at the date of this financial report, the Company has drawn down $150,000.

The loan is interest free and must be repaid within two weeks of the Company's securities being reinstated to trading

following completion of the Acquisition.

Upon the occurrence of an event of default, the lenders may, for so long as the event of default is continuing, declare

outstanding monies to be immediately due and payable to the lenders without the need for any further demand or notice to

be given. Events of default include the Company failing to repay an amount by the due date (unremedied within 14 days),

the Company failing to obtain any relevant authorisations, any warranty provided by the Company becomes false or

misleading, or any part of the agreement becomes void or unenforceable.




NOTE 24: NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE PERIODS

48

Australian accounting standards and Interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the Group for the year ended 30 June 2015.

Relevant Standards and Interpretations are outlined in the table below.

Reference Title Summary Application date of

standard

Application date for

Group

AASB 9/IFRS 9 Financial Instruments AASB 9 (December 2014) is a new standard which replaces AASB 139. This new version supersedes AASB 9 issued in December 2009 (as amended) and AASB 9 (issued in December 2010) and includes a model for classification and measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially-reformed approach to hedge accounting.

AASB 9 is effective for annual periods beginning on or after 1 January 2018. However, the Standard is available for early adoption. The own credit changes can be early adopted in isolation without otherwise changing the accounting for financial instruments.

Classification and measurement

AASB 9 includes requirements for a simpler approach for classification and measurement of financial assets compared with the requirements of AASB 139. There are also some changes made in relation to financial liabilities.

The main changes are described below.

Financial assets

a. Financial assets that are debt instruments will be classified based on (1) the objectiveof the entity's business model for managing the financial assets; (2) the characteristics of the contractual cash flows.

b. Allows an irrevocable election on initial recognition to present gains and losses oninvestments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return oninvestment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument.

c. Financial assets can be designated and measured at fair value through profit or loss atinitial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases.

1 January 2018 1 July 2018





49


standard


Group

Financial liabilities

Changes introduced by AASB 9 in respect of financial liabilities are limited to the measurement of liabilities designated at fair value through profit or loss (FVPL) using the fair value option.

Where the fair value option is used for financial liabilities, the change in fair value is to be accounted for as follows:

► The change attributable to changes in credit risk are presented in other comprehensive income (OCI)

► The remaining change is presented in profit or loss

AASB 9 also removes the volatility in profit or loss that was caused by changes in the credit risk of liabilities elected to be measured at fair value. This change in accounting means that gains or losses attributable to changes in the entity’s own credit risk would be recognised in OCI. These amounts recognised in OCI are not recycled to profit or loss if the liability is ever repurchased at a discount.

Impairment

The final version of AASB 9 introduces a new expected-loss impairment model that will require more timely recognition of expected credit losses. Specifically, the new Standard requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a more timely basis.

Hedge accounting

Amendments to AASB 9 (December 2009 & 2010 editions and AASB 2013-9) issued in December 2013 included the new hedge accounting requirements, including changes to hedge effectiveness testing, treatment of hedging costs, risk components that can be hedged and disclosures.

Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7, AASB 2010-10 and AASB 2014-1 – Part E.

AASB 2014-7 incorporates the consequential amendments arising from the issuance of AASB 9 in Dec 2014.

AASB 2014-8 limits the application of the existing versions of AASB 9 (AASB 9 (December 2009) and AASB 9 (December 2010)) from 1 February 2015 and applies to annual reporting periods beginning on after 1 January 2015.





50


standard


Group

AASB 15 Revenue from Contracts with Customers

AASB 15 Revenue from Contracts with Customers replaces the existing revenue recognition standards AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations (Interpretation 13 Customer Loyalty Programmes, Interpretation 15 Agreements for the Construction of Real Estate, Interpretation 18 Transfers of Assets from Customers, Interpretation 131 Revenue—Barter Transactions Involving Advertising Services and Interpretation 1042 Subscriber Acquisition Costs in the Telecommunications Industry). AASB 15 incorporates the requirements of IFRS 15 Revenue from Contracts with Customers issued by the International Accounting Standards Board (IASB) and developed jointly with the US Financial Accounting Standards Board (FASB).

AASB 15 specifies the accounting treatment for revenue arising from contracts with customers (except for contracts within the scope of other accounting standards such as leases or financial instruments).The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps:

(a) Step 1: Identify the contract(s) with a customer

(b) Step 2: Identify the performance obligations in the contract

(c) Step 3: Determine the transaction price

(d) Step 4: Allocate the transaction price to the performance obligations in the contract

(e) Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Currently, AASB 15 is effective for annual reporting periods commencing on or after 1 January 2017. Early application is permitted. (Note A)

AASB 2014-5 incorporates the consequential amendments to a number Australian Accounting Standards (including Interpretations) arising from the issuance of AASB 15.


The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of

promised goods or services to customers in an amount that reflects the consideration to

which the entity expects to be entitled in exchange for those goods or services. An entity

recognises revenue in accordance with that core principle by applying the following steps:





51


standard


Group

(a) Step 1: Identify the contract(s) with a customer

(b) Step 2: Identify the performance obligations in the contract

(c) Step 3: Determine the transaction price

(d) Step 4: Allocate the transaction price to the performance obligations in the contract

(e) Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Early application of this standard is permitted.

AASB 2014-3 Amendments to

Australian Accounting

Standards –

Accounting for

Acquisitions of

Interests in Joint

Operations

[AASB 1 & AASB 11]

AASB 2014-3 amends AASB 11 to provide guidance on the accounting for acquisitions of

interests in joint operations in which the activity constitutes a business. The amendments

require:

(a) the acquirer of an interest in a joint operation in which the activity constitutes a

business, as defined in AASB 3 Business Combinations, to apply all of the principles on

business combinations accounting in AASB 3 and other Australian Accounting Standards

except for those principles that conflict with the guidance in AASB 11; and

(b) the acquirer to disclose the information required by AASB 3 and other Australian

Accounting Standards for business combinations.

This Standard also makes an editorial correction to AASB 11


AASB 2014-4 Clarification of Acceptable Methods of Depreciation and

AASB 116 and AASB 138 both establish the principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset.






52


standard


Group

Amortisation (Amendments to

AASB 116 and AASB

138)

The IASB has clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic

benefits embodied in the asset.

The amendment also clarified that revenue is generally presumed to be an inappropriate

basis for measuring the consumption of the economic benefits embodied in an intangible

asset. This presumption, however, can be rebutted in certain limited circumstances.

The Group has decided not to early adopt any of the new and amended pronouncements. The impact of the above standards is yet to be determined.



DIRECTORS’ DECLARATION

53

Faldi Ismail

Non-Executive Director

Dated 7 December2015

1. In the opinion of the Directors of Marion Energy Limited and its controlled entities (‘the Group’)

(a) As set out in Note 1(b), although the Directors have prepared the financial statements, notes thereto, and

the remuneration disclosures contained in the Remuneration Report in the Directors’ Report to the best of

their knowledge based on the information made available to them, they are of the opinion that it is not

possible to state that the financial statements, notes thereto, and the remuneration disclosures contained in

the Remuneration Report in the Directors’ Report, are in accordance with the Corporations Act 2001,

including:

(i) Giving a true and fair view of the Company’s financial position as at 30 June 2015 and of its performance for

the financial year ended on that date;

(ii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the

Corporations Regulations 2001; and

(iii) Complying with International Financial Reporting Standards.

2. Subject to the matters highlighted in Note 1 (c), there are reasonable grounds to believe that the Company will be

able to pay its debts as and when they become due and payable.

3. This declaration has been made after receiving the declaration required to be made to the directors in accordance

with Section 295A of the Corporation Act 2001 for the financial year ended 30 June 2015.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the

Directors by:

A member firm of Ernst & Young Global LimitedLiability limited by a scheme approved under Professional Standards Legislation

TD:MW:MAE

Ernst & Young11 Mounts Bay RoadPerth WA 6000 AustraliaGPO Box M939 Perth WA 6843

Tel: +61 8 9429 2222Fax: +61 8 9429 2436ey.com/au

Independent auditor's report to the members of Marion Energy Limited

Report on the financial report

We have audited the accompanying financial report of Marion Energy Limited and its controlled entities(‘the consolidated entity”), which comprises the consolidated statement of financial position as at 30June 2015, the consolidated statement of profit or loss and other comprehensive income, theconsolidated statement of changes in equity and the consolidated statement of cash flows for the yearthen ended, notes comprising a summary of significant accounting policies and other explanatoryinformation, and the directors' declaration of the consolidated entity comprising the company and theentities it controlled at the year-end or from time to time during the financial year.

Directors' responsibility for the financial report

The directors of Marion Energy Limited (“the company”) are responsible for the preparation of thefinancial report that gives a true and fair view in accordance with Australian Accounting Standards andthe Corporations Act 2001 and for such internal controls as the directors determine are necessary toenable the preparation of the financial report that is free from material misstatement, whether due tofraud or error. In Note 2(a), the directors state that they cannot form a view as to whether the financialstatements comply with International Financial Reporting Standards.

Auditor's responsibility

Our responsibility is to express an opinion on the financial report based on conducting the audit inaccordance with Australian Auditing Standards. Because of the matters described in the Basis forDisclaimer of Opinion paragraphs, we were not able to obtain sufficient appropriate audit evidence toprovide a basis for an audit opinion.

Independence

In conducting our audit we have complied with the independence requirements of the Corporations Act2001. We have given to the directors of the company a written Auditor’s Independence Declaration, acopy of which is included in the directors’ report.

Basis for disclaimer of opinion

1. As disclosed in Note 1(b) to the financial report, the financial report has been prepared by the currentDirectors who were not in office for the period presented in the 30 June 2015 financial report andaccordingly, did not have oversight or control over the consolidated entity’s financial reportingsystems, risk management systems, or internal control systems for the period presented.

Due to the above, the current Board of Marion Energy Limited has been unable to conclude withoutqualification, within its directors’ declaration, that the financial statements of the consolidated entityfor the financial year ended 30 June 2015 have been prepared in accordance with the CorporationsAct 2001 and Australian Accounting Standards, to give a true and fair view of the financial position ofthe consolidated entity as at 30 June 2015 and of its performance for the year ended on that date.

The representation letter provided to the auditors by the current Directors of the company has alsobeen qualified on the basis that they did not have oversight or control over the consolidated entity’sfinancial reporting systems, risk management systems, or internal control systems for the periodpresented.

54

TD:MW:MAE

As a result of the above matters, we were unable to obtain sufficient appropriate audit evidence forthe existence, measurement, valuation, rights and obligations, completeness and disclosures relatingto the assets, liabilities, equity, revenues, expenses and cash flows of the consolidated entity as at 30June 2015 and for the year then ended.

2. The financial statements of the consolidated entity for the financial year ended 30 June 2014 wasaudited by another auditor who in their audit report dated 19 November 2014 expressed a disclaimerof opinion on that financial report as follows:

The company’s wholly owned subsidiary, Marion Energy, Inc. (“MEI”) filed a voluntary petitionseeking to reorganise under chapter 11 of the US federal bankruptcy laws on 31 October 2014.That filing is currently the subject of a challenge by MEI’s major financier, TCS Funding SolutionsLLC, with court hearing scheduled for early December 2014.

Although MEI is currently operating as debtor-in-possession under the jurisdiction of theBankruptcy Court in the US, this event and circumstances relating to this event, including expiry offorbearance by its major financer on 31 October 2014, the company’s significant losses andaccumulated deficit indicate that the most likely outcome for the company are:

(i) sale of the MEI’s major oil & gas property assets under a plan approved by the court whilstunder chapter 11; or

(ii) the secured financier invoking its security over the assets of MEI should the current courtchallenge be successful or a plan not be approved under chapter 11.

We have not been able to obtain sufficient, appropriate audit evidence supporting the realisationvalue of the oil and gas properties which will be achieved under either an organised sale under anapproved plan whilst MEI is subject to chapter 11 or through the creditor enforcing their securityover the assets. As the oil & gas properties are pervasive, we are unable to obtain all theinformation and explanations we require in order to form an opinion on the financial report.

Since opening balances of assets and liabilities affect the determination of the consolidated entity’sfinancial performance for the year ended 30 June 2015, we were unable to determine whetheradjustments to the results of operations for the year ended 30 June 2015 were necessary. Further,the financial position of the consolidated entity at 30 June 2014 and its performance for the yearthen ended is shown as comparatives in the 30 June 2015 financial report.

3. The current Board of Marion Energy Limited has not been able to source and provide to ourselvesbooks and records of the company’s subsidiaries. As detailed in Note 1(b) to the financial report, thefinancial information of the subsidiaries has been deconsolidated from 1 July 2014. Under AustralianAccounting Standards, the financial information of subsidiaries is required to be consolidated. Hadthe financial information of the subsidiaries been consolidated, many elements in the accompanyingfinancial report may have been materially affected. The effects on the financial report of the failure toconsolidate the subsidiaries financial position as at 30 June 2015 and their performance as theyimpact the consolidated entity for the year then ended have not been able to be determined.

4. The current Board of Marion Energy Limited has not been able to source and provide to ourselvescertain books and records of the company. Without access to this documentation, we are unable toobtain sufficient appropriate audit evidence for the existence, measurement, valuation, rights andobligations, completeness and disclosures relating to the assets, liabilities, equity, revenues,expenses and cash flows of Marion Energy Limited as reflected in the financial statements as at 30June 2015 and for the year then ended.

55

TD:MW:MAE

5. As detailed in Note 1(b), the directors have reconstructed the financial records of the consolidatedentity using data extracted from the consolidated entity’s accounting system and the financialstatements do not contain all required information or disclosures in relation to transactionsundertaken by the consolidated entity. In particular, the disclosures in the financial statement forrelated party transactions, tax, financial risk management, impairment of assets and share basedpayments do not meet the requirements of Australian Accounting Standards.

Disclaimer of opinion

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, wehave not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.Accordingly, we do not express an opinion on the financial report.

Emphasis of matter

Without amendment to our disclaimer of opinion, we draw attention to Note 1(c) in the financial report.The conditions as set forth in Note 1(c) indicate the existence of a material uncertainty that may castsignificant doubt about the consolidated entity’s ability to continue as a going concern and therefore, theconsolidated entity may be unable to realise its assets and discharge its liabilities in the normal course ofbusiness.

Report on the remuneration report

We have audited the Remuneration Report included in the directors' report for the year ended 30 June2015. The directors of the company are responsible for the preparation and presentation of theRemuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility isto express an opinion on the Remuneration Report, based on our audit conducted in accordance withAustralian Auditing Standards.

Basis for disclaimer of opinion

1. As disclosed in Note 1(b) to the financial report, the financial report has been prepared by currentDirectors who were not in office for the period presented in the 30 June 2015 financial report andaccordingly, did not have oversight or control over the consolidated entity’s financial reportingsystems, risk management systems, or internal control systems for the period presented.

Due to the above, the current Board of Marion Energy Limited has been unable to conclude withoutqualification, within its directors’ declaration, that the remuneration report of the consolidated entityfor the financial year ended 30 June 2015 has been prepared in accordance with section 300A of theCorporations Act 2001.

The representation letter provided to the auditors by the current Directors of the company has alsobeen qualified on the basis that they did not have oversight or control over the consolidated entity’sfinancial reporting systems, risk management systems, or internal control systems for the periodpresented.

2. The current Board of Marion Energy Limited has not been able to source and provide to ourselvescertain books and records of the company and its subsidiaries. Without access to this documentation,we are unable to obtain sufficient appropriate evidence for the occurrence, accuracy, completenessand disclosures relating to the remuneration report for the year ended 30 June 2015.

56

TD:MW:MAE

3. As detailed in Note 1(b), the directors have reconstructed the financial records of the consolidatedentity using data extracted from the consolidated entity’s accounting system and therefore, theremuneration report does not contain all the required information or disclosures in relationtransactions undertaken by the consolidated entity. In particular, the disclosures in the remunerationreport do not meet the requirements of section 300A of the Corporations Act 2001.

Disclaimer of opinion

Because of the significance of the matters described in the basis for disclaimer of opinion paragraphs, wehave not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.Accordingly, we do not express an opinion on the remuneration report.

Report on other legal and regulatory requirements

Due to the matters described in the basis for disclaimer of opinion paragraphs, we have not been given allinformation, explanation and assistance necessary for the conduct of the audit; and we are unable todetermine whether the company has kept:

a) financial records sufficient to enable the financial report to be prepared and audited; and

b) other records and registers as required by the Corporations Act 2001.

Ernst & Young

T G DachsPartnerPerth7 December 2015

57



CORPORATE GOVERNANCE STATEMENT

58

The Company’s Board of Directors is responsible for establishing the corporate governance framework of the Company and

its related bodies corporate. In establishing this framework, the Board has considered and reports against the Principles of

Corporate Governance and Best Practice Recommendations (3rd Edition) as published by the ASX Corporate Governance

Council (“ASX Corporate Governance Principles”).

The Company's securities were suspended from official quotation on 3 October 2011 due to the non-lodgement of its financial

report for the year ended 30 June 2011, and have remained suspended since that date.

On 2 February 2015, the Company announced that the Board resolved to appoint Mr James (Jim) Downey of JP Downey & Co

as voluntary administrator of the Company.

On 19 March 2015, the Company announced that at a meeting of creditors of the Company, the creditors resolved that the

Company execute a deed of company arrangement (Original DOCA) and that Mr James Downey be appointed as

administrator of the deed of company arrangement (Deed Administrator). The purpose of the Original DOCA was to put in

place a moratorium on all unsecured debts until the end of a further creditors’ meeting which was required to be called after

conclusion of a US bankruptcy process with respect to the Company's subsidiary or by 19 March 2016 (whichever was the

later).


Company executed a varied deed of company arrangement (DOCA), which embodied a proposal by Otsana Capital for the

recapitalisation of the Company. On 30 September 2015 the Shareholders approved the necessary resolutions to effectuate

the DOCA. The DOCA was effectuated on 28 October 2015, at which time the Administrator resigned and control and

management of the Company reverted to the Directors appointed by the Administrator on 28 October 2015 pursuant to the

terms of the DOCA. Further information on the history of the Company and the DOCA can be found in sections 3.1 and 3.2

of the Company's previous notice of general meeting released to ASX on 28 August 2015.

As the current Board was appointed on 5 November 2015, it is unable to comment on the extent to which the Company

followed the applicable ASX Corporate Governance Principles prior to this date, whether any recommendation was not

followed or the reason for the departure, if any. On 1 December 2015, the Board adopted a documented Corporate

Governance Plan which is based on the ASX Corporate Governance Principles.

This Corporate Governance Statement has been approved by the Board and summarises the corporate governance practices

and procedures incorporated in the Corporate Governance Plan from 1 December 2015 and to the date of this statement. In

addition to the information contained in this statement, the Company’s website contains a copy of its Corporate Governance

Plan.

The ASX Listing Rules require listed companies to include in their Annual Report or website a statement disclosing the extent

to which they have complied with the ASX Corporate Governance Principles in the reporting period. The recommendations

are not prescriptive and if a company considers that a recommendation is inappropriate having regard to its particular

circumstances, the company has the flexibility not to adopt it. Where the Company considered it was not appropriate to

presently comply with a particular recommendation, the reasons are set out in the relevant section of this Corporate

Governance Statement.

With the exception of the departures detailed in this Corporate Governance Statement, the corporate governance practices

of the Company from 21 December 2015 were compliant with the ASX Corporate Governance Principles. The table below

provides a summary of the Company’s compliance with each of the eight ASX Corporate Governance Principles:




59

Recommendation Comply Yes/No/

Partly

Principle 1 – Lay solid foundations for management and oversight 1.1 A listed entity should disclose:

(a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to

management.

Yes Yes

1.2 A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward

to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant

to a decision on whether or not to re-elect a director.

Yes

Yes

1.3 A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment

Yes

1.4 The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.

Yes

1.5 A listed entity should: (a) have a diversity policy which includes requirements for the board or a relevant

committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them;

(b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for

achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either:

(1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); and

(2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined and published under that Act.

Yes

Yes No

Yes

Not applicable

1.6 A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the

board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance

evaluation was undertaken in the reporting period in accordance with that process.

Yes

Yes

1.7 A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its

senior executives; and (b) disclose, in relation to each reporting period, whether a performance

evaluation was undertaken in the reporting period in accordance with that process.

Yes

Yes

Principle 2 – Structure the board to add value

2.1 The board of a listed entity should: (a) have a nomination committee which:

(1) has at least three members, a majority of whom are independent directors; and

(2) is chaired by an independent director, and disclose (3) the charter of that committee; and (4) as at the end of each reporting period, the number of times the

committee met throughout the period and the individual attendances of members at those meetings; or

(b) if it does not have a nomination committee, disclose that fact and the

processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience,

Not applicable

Yes




60

independence and diversity to enable it to discharge its duties and responsibilities effectively.

2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.

Yes

2.3 A listed entity should disclose: (a) the names of the directors considered by the board to be independent

directors; (b) if a director has an interest, position, association or relationship of the type

described in Box 2.3 of the ASX Recommendations, but the board is of the opinion it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and

(c) the length of service of each director.

Yes

Yes

Yes 2.4 A majority of the board of a listed entity should be independent directors. No

2.5 The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.

No

2.6 A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.

Yes

Principle 3 – Act ethically and responsibly

3.1 A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it.

Yes

Yes Principle 4 – Safeguard integrity in corporate reporting

4.1 The Board of a listed entity should: (a) have an audit committee which:

(1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and

(2) is chaired by an independent director, who is not the chair of the board, and disclose:

(3) the charter of the committee; (4) the relevant qualifications and experience of members of the committee;

and (5) in relation to each reporting period, the number of times the committee

met throughout the period and the individual attendances of the

members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it

employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.

Not applicable

Yes

4.2 The board of a listed entity should, before it approves the entity’s financial statements

for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

No

4.3 A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.

Yes

Principle 5 – Make timely and balanced disclosure 5.1 A listed entity should:

(a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and

(b) disclose that policy or a summary of it.

Yes

Yes

Principle 6 – Respect the rights of security holders

6.1 A listed entity should provide information about itself and its governance to investors via its website.

Yes




61

6.2 A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.

Yes

6.3 A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.

Yes

6.4 A listed entity should give security holders the option to receive communications from, and send communication to, the entity and its security registry electronically.

Yes

Principle 7 – Recognise and manage risk

7.1 The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which:


(2) is chaired by an independent director; and disclose (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee

met throughout the period and the individual attendances of the members at those meetings; or

(b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.

Not applicable

Yes

7.2 The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself

that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken

place.

Yes

No review

7.3 A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role

it performs; or (b) if it does not have an internal audit function, that fact and the processes it

employs for evaluation and continually improving the effectiveness of its risk management and internal control processes.

Not applicable

Yes

7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risk and, if it does, how it manages or intends to manage those risks.

Yes

Principle 8 – Remunerate fairly and responsibly

8.1 The Board of a listed entity should: (a) have a remuneration committee which:


(2) is chaired by an independent director, and disclose (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the

committee met throughout the period and the individual attendances of the members at those meetings; or

(b) if it does not have a remuneration committee, disclose that fact and the processes it employees for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.

Not applicable

Yes

8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.

Yes

8.3 A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions

(whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and

(b) disclose that policy or a summary of it.

Yes

Yes




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Board Responsibilities

The Company has established the functions that are reserved to the Board. The Board acts on behalf of the shareholders and is therefore accountable to the shareholders. It also has other obligations of a regulatory or ethical nature. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to appropriately manage those risks.

The Board’s role is to provide overall strategic guidance and effective oversight of management. Without limiting the generality of that stated role, the key matters reserved specifically for the Board include: Driving the strategic direction of the Company, ensuring appropriate resources are available to meet objectives and

monitoring management’s performance. Appointment, and where necessary, the replacement, of the Chief Executive Officer/Managing Director and other

senior executives and the determination of their terms and conditions including remuneration and termination.

Approving the Company’s remuneration framework. Monitoring the timeliness and effectiveness of reporting to Shareholders.

Reviewing and ratifying systems of audit, risk management and internal compliance and control, codes of conduct and legal compliance to minimise the possibility of the Company operating beyond acceptable risk parameters.

Approving and monitoring the progress of major capital expenditure, capital management and significant acquisitions and divestitures.

Approving and monitoring the budget and the adequacy and integrity of financial and other reporting such that the financial performance of the company has sufficient clarity to be actively monitored.

Approving the annual, half yearly and quarterly accounts.

Approving significant changes to the organisational structure.

Approving decisions affecting the Company’s capital, including determining the Company’s dividend policy and declaring dividends.

Recommending to shareholders the appointment of the external auditor as and when their appointment or re-appointment is required to be approved by them (in accordance with the ASX Listing Rules if applicable).

Ensuring a high standard of corporate governance practice and regulatory compliance and promoting ethical and responsible decision making

Procuring appropriate professional development opportunities for Directors to develop and maintain the skills and knowledge needed to perform their role as Directors effectively.

For a complete list of the functions reserved to the Board and a copy of the Board’s charter, please refer to the Corporate Governance section of the Company’s website.

Due to the size of the Board and the stage of the Company’s operations, the Board has opted not to establish an Audit and Risk Committee or a Remuneration or Nomination Committee. These duties and responsibilities are discharged by the full Board, in accordance with the Audit and Risk Committee and Remuneration and Nomination Committee Charters that have been adopted by the Board.

Refer to the Corporate Governance section of the Company’s website for a copy of the Committee charters.

Responsibilities of Senior Executives

The responsibility for the day to day operation and administration of the Company, in accordance with the direction of the Board, is delegated by the Board to the Managing Director and the executive team. The Board ensures that this team is appropriately qualified and experienced to carry out their responsibilities and has in place procedures to assess the performance of the Managing Director and the executive team.

At present the Board is made up of three experienced non-executive directors. Following completion of the Acquisition, the Board will consider the appointment of a Managing Director at the appropriate time once the Company's operations reach an appropriate stage.

Performance evaluation of Board and Senior Executives

The Board has adopted a policy for evaluating the performance of the Board and Directors, a copy of which is available on its website. The Board did not conduct a formal evaluation of the Board and its Directors in the reporting period as it has only been in place since 5 November 2015.




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The Board is responsible for an annual evaluation of the Managing Director, to be coordinated by the Chairman. There is currently no Managing Director but the Board intends that if and when a Managing Director is appointed, the Managing Director’s performance objectives will be equivalent to the Company’s performance objectives and will be set by the Board based on qualitative and quantitative measures. The Managing Director’s performance against these objectives will then be reviewed annually by the Board and reflected in the Managing Director’s remuneration structure.

For further information regarding the Company’s Performance Evaluation Policy please refer to the Corporate Governance section of the Company’s website.

Structure of the Board and Skills Matrix

To ensure the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination, selection, induction and ongoing professional development of Directors. These guidelines include a requirement to undertake appropriate background checks prior to the appointment of a person as a Director, including but not limited to undertaking police and solvency checks, a formal induction program to enable new Directors to build their knowledge and make an effective contribution in a timely manner, and the provision of appropriate professional development opportunities for Directors to develop and maintain the skills and knowledge needed to perform their roles as Directors effectively.

The Directors in office and the term of their appointment at the date of this Corporate Governance Statement are:

Name Position Date of Appointment

B. Hardcastle Chairman, Non-executive Director 5 November 2015 F. Ismail Non-executive Director 28 October 2015 T. Bahen Non-executive Director (Independent) 5 November 2015

The skills, experience and expertise relevant to the position of Director held by each Director at the date of this Statement are included on pages 7 and 8 of this Annual Report.

The composition of the Board will be reviewed regularly by the Board to ensure that the Directors between them bring the range of skills, knowledge and experience necessary to direct the Company’s operations. The Board has developed a skills matrix considered suitable for the Company at its current stage and into the future, taking into account its current strategy, operations and expectations for changes in the nature and scope of its activities. The Board skills matrix identifies a mix of areas the Board should collectively hold across its membership, including experience in the financial services industry, legal industry, software and other technology, finance and executive management. The Board is satisfied that the identified skills are well represented in the current Board.

The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with the proper

functioning of the Board. All Directors have unfettered access to the Company Secretary. In addition, Directors are entitled, in furtherance of their duties, to seek independent professional advice at the Company’s expense.

Independence

Recommendation 2.4 requires a majority of the Board to be independent Directors. The ASX guidance on factors relevant to an assessment of independence includes interests, positions, associations or relationships which might interfere with, or reasonably be seen to interfere with, a director’s capacity to bring independent judgement to bear on issues before the Board and to act in the best interests of the entity and its security holders generally. In accordance with this guidance, and for the reasons set out below, the Board does not comply with this recommendation as only Mr Tom Bahen is considered

independent.

Mr Hardcastle, Non-Executive Chairman is a principal of Bellanhouse Legal, a legal firm engaged by the Company for the provision of legal services with respect to the Company's re-compliance listing. As a result of this position, the Board is of the opinion that Mr Hardcastle does not fit the criteria of independence. In addition, as Mr Hardcastle is the Chairman the Company does not presently comply with Recommendation 2.5 which requires the chair of the board to be independent. The Board considers Mr Hardcastle's commercial and technical experience will assist the Company in meeting its objectives.




64

Mr Ismail, Non-Executive Director is associated with companies that provide various corporate, capital raising and accounting services and office accommodation to the Company and therefore is not considered independent. The Board considers Mr Faldi's commercial experience will assist the Company in meeting its objectives, and will review the composition of the Board as the Company's operations develop.

The Company does not have a CEO. Due to the limited size and complexity of the Company's operations the Board does not deem it necessary to appoint a CEO at the current time. This will be reviewed as the Company develops.

Nomination and Remuneration Committee

The Board has adopted a Nomination and Remuneration Committee Charter however at this stage has not established a Nomination or Remuneration Committee and the full Board currently undertakes the responsibilities for determining and reviewing compensation arrangements for the Directors and senior executives and ensuring that the Board continues to operate within the established guidelines, including when necessary, selecting candidates for the position of Director. For further details regarding the procedure for the nomination, selection and appointment of new Directors and re-election of incumbents, as well as a copy of the Nomination and Remuneration Committee Charter, please refer to the Corporate Governance section of the Company’s website.

For further details on the remuneration policy of the Company, including a description of the structure of Non-executive Directors’ remuneration and Executive Directors’ and senior executives’ remuneration, see the Directors’ Report of this Annual Report.

The Company has established a Performance Rights Plan pursuant to which the Company may offer long term equity incentive rights to Directors and employees. The rights are usually issued for nil consideration and typically only vest under certain conditions. The performance rights cannot be transferred without the approval of the Company’s Board and are not quoted on the ASX. Holders may not enter into any transaction designed to remove the “at risk” aspect of a performance right before it is exercised.

The Company acknowledges that the guidelines to ASX Principle 8.2 recommend that Non-executive Directors do not receive equity incentives with performance hurdles attached. However, in the Company’s current circumstances, the Directors consider rights to be a cost effective and efficient means for the Company to provide a reward and incentive, as opposed to alternative forms of incentive, such as the payment of additional cash consideration that would be necessary for someone with the experience of the Directors, and may from time to time resolve to issue performance rights to Non-executive Directors, including with performance hurdles, subject to regulatory and shareholder approval.

There is no scheme to provide retirement benefits (other than superannuation) for Non-executive Directors.

For additional details please refer to the Corporate Governance section of the Company’s website.

Audit Committee

The Board has adopted an Audit Committee Charter however given the current size of the Board, a separate Audit Committee has not been established and the full Board currently undertakes the responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes such as the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information, as well as non-financial considerations including the benchmarking of operational key performance indicators. The Board is also responsible for the nomination of the external auditor and reviewing the adequacy

of the scope and quality of the annual statutory audit and half year audit review.

For further details regarding the procedures for selection, appointment and rotation of external audit partners, as well as a copy of the Audit Committee’s Charter, please refer to the Corporate Governance section of the Company’s website.




65

Communication with Shareholders

Pursuant to Principle 6, the Board aims to ensure that the shareholders are provided with full and timely information about the Company’s activities. To promote effective communication with shareholders, the Company has designed a Shareholder Communication Strategy. Information is communicated to the shareholders through, among other ways:

the Annual Report which is made available to all shareholders;

announcements made through the ASX companies announcements platform; the Company’s website which has a dedicated Announcements section for the purpose of publishing all important

Company information and relevant announcements made to the market; and the annual general meeting and any other meetings called to obtain approval for Board action as appropriate.

In addition, shareholders are encouraged to make their views known or to seek clarification on information available in the public arena by contacting the Company (including the Company’s share registry, which facilitates electronic correspondence) or attending the annual general meeting. The external auditors also attend, and are available to answer queries on the preparation and content of the independent Audit Report, the accounting policies adopted by the Company in relation to the preparation of accounts and the independence of the Auditor in relation to the conduct of the audit at the Company’s annual general meetings.

For further information regarding the Company’s Shareholder Communication Policy please refer to the Corporate Governance section of the Company’s website.

Diversity Policy

The Board is committed to promoting equality and diversity in the workplace and aims to be an organisation where diversity is valued, respected and celebrated. All decisions relating to employees will be based strictly on merit, without regard to gender, ethnicity, age, relationship status or any other irrelevant factor not applicable to the position.

Pursuant to Recommendation 1.5, the Company has established a Diversity Policy. However due to the small size of the organisation and its current stage of operations, the introduction of specific measurable objectives at this stage has not been implemented. The Company currently has no employees and therefore does not report on the proportion of women in the whole organisation, women in senior executive positions and women on the Board.

Whilst the Board strongly endorses the concept of gender diversity, until the Company’s human resource base has grown to a point where fully implementing specific measurable objectives will become more meaningful, the Company will, in accordance with its Diversity Policy, continue to recruit the best person for each role, regardless of gender, ethnicity, age, relationship status or any other irrelevant factor not applicable to the position.

Share Trading

The Constitution of the Company permits Directors and officers to acquire shares in the Company.

In accordance with the provisions of the Corporations Act and the Listing Rules, Directors must advise the Company and the ASX of any transactions they conduct in securities of the Company.

The Company has established a Securities Trading Policy concerning trading in the Company’s securities by Directors and employees. This policy provides a brief summary of the law on insider trading and other relevant laws, sets out the restrictions on dealing in securities by people who work for or who are associated with th e C om pan y, and is intended to assist in

maintaining market confidence in the integrity of dealings in the Company’s securities.

The policy stipulates that the only appropriate time for a Director or employee to deal in the Company’s securities is when he or she is not in possession of ‘price sensitive information’ that is not generally available to the share market. A Director wishing to deal in the Company’s securities may only do so after first having received approval from the Chairman. All staff wishing to deal must obtain approval from the Managing Director.

Trading in the Company’s securities is also subject to specified blackout periods, which are set out in the Company’s Trading Policy or as otherwise determined by the Board from time to time.

The Company prohibits Directors and employees from entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity-based remuneration schemes.




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A copy of the Company’s Trading Policy is available in the Corporate Governance section of the Company’s website.

Integrity of Financial Reporting and Risk Management Policies

The Board has primary responsibility to ensure that the Company presents and publishes accounts which present a true and fair view of its results and financial position and that the accounting methods adopted are appropriate to the Company and consistently applied in accordance with relevant accounting standards and the applicable laws.

Under section 295A of the Corporations Act, the Managing Director and the person who performs the Chief Financial Officer function are each required to provide a written statement to the Board that the Company’s annual financial report presents a true and fair view, in all material respects, of the Company’s financial condition and operational results and that it is in accordance with the relevant accounting standards. Recommendation 4.2 extends this requirement such that it applies to financial statements for any financial period and that the Managing Director and the person who performs the Chief Financial Officer function must also confirm that this statement is founded on a sound system of risk management and internal compliance which implements the policies adopted by the Board and that the Company’s risk management and internal compliance and control system is operating effectively in all material respects.

This financial report has been prepared by Directors who were not in office for the periods presented in this report, nor were they parties involved with the Company and did not have oversight or control over the Group’s financial reporting systems including but not limited to being able to obtain access to complete accounting records of the Company and its subsidiaries. The Directors who prepared this financial report were appointed on or after 5 November 2015. Every reasonable effort has been made by the Directors to ascertain the true position of the Company as at relevant financial year however, although the Directors have prepared this financial report to the best of their knowledge based on the information made available to them, they are of the opinion that it is not possible to state that this financial report has been prepared in accordance with Australian Accounting Standards including Australian interpretations, other authoritative pronouncements of the Australian Accounting Standard Board and the Corporations Act 2001, nor is it possible to state this financial report gives a true and fair view of the Group’s financial position.

Due to the size of the Company and its current level of activity and operations, the Company does not have a formal internal audit function. Periodically, internal reviews of the Company’s financial systems, documents and processes will be undertaken and any recommendation for improvement reported to the Board as part of the Company’s risk management processes.

The new Board is committed to the management of risks throughout its operations to protect all of its stakeholders. Risk management is carried out through the full Board and the processes and procedures mentioned above.

The Company’s Risk Management Policy deals with the management and oversight of material business risks and provides the guiding principle for management in the identification of risks across the organisation as a whole, and within individual

business units. Going forward, the Board intends to review the risk management framework at least annually.

The current Board is unaware of how risk management was carried out prior to 5 November 2015. However, the newly adopted Risk Management Policy provides a framework for systematically understanding and identifying the types of material business risks that may threaten the Group as a whole or specific business activities within the Company and includes risk mitigation strategies. The new Board intends to develop specific frameworks for risk, applicable to the Company’s proposed new direction.

The Board has formed the view that the Company does not currently have any material exposure to economic, environmental or social sustainability risks.

For a summary of the Company’s Risk Management Policy, please refer to the Corporate Policies section of the Company’s website.

Code of Conduct and Continuous Disclosure Policy

The Company has a Code of Conduct and Continuous Disclosure Policy, which can be found in the Corporate Governance

section of the Company’s website. The Company’s Continuous Disclosure Policy facilitates compliance with the ASX

continuous disclosure requirements.



ADDITIONAL ASX INFORMATION AS AT 4 DECEMBER 2015

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Ordinary Share Capital

51,926,409 shares are held by 5,315 individual holders.

Voting Rights

The voting rights attaching to ordinary shares are that on a show of hands every member present in person or by proxy shall have one vote and upon a poll each share shall have one vote. Options do not carry any voting rights.

Restricted Securities

The Company has no restricted securities on issue.

Distribution of Holders of Equity Securities

Fully Paid Ordinary Shares

Holders Total Units %

1 - 1,000 5,063 408,936 0.79

1,001 - 5,000 192 421,998 0.81

5,001 - 10,000 37 262,069 0.50

10,001 - 100,000 14 382,496 0.74

100,001 and over 9 50,450,910 97.16

Totals 5,315 51,926,409 100

Unlisted Options exercisable at $0.02 on or before 4 November 2019

Holders Total Units %

1 - 1,000 0 0 0

1,001 - 5,000 0 0 0

5,001 - 10,000 0 0 0

10,001 - 100,000 0 0 0

100,001 and over 6 25,000,000 100

Totals 6 25,000,000 100

Unmarketable Parcels

Holdings of less than a marketable parcel of ordinary shares at 1 December 2015:

Holders: 5,302

Units: 1,226,889

On-market Buy Back

There is no current on-market buy-back.



ADDITIONAL ASX INFORMATION AS AT 4 DECEMBER 2015

68

Substantial Shareholders

Name Number of Shares %

JAMES PATRICK DOWNEY <MARION ENERGY CREDITORS A/C> 10,000,000 19.26

BLU BONE PTY LTD 6,666,667 12.84

SEAMIST ENTERPRISES 6,666,667 12.84

CYM HOLDINGS PTY LTD <GCM TRUST> 6,666,667 12.84

KONKERA PTY LTD 6,666,667 12.84

GREGORY JAMES MASON 6,666,666 12.84

DR BRENDAN DEKAUWE <ATOLLO INVESTMENT A/C> 6,666,666 12.84

Twenty Largest Holders of Quoted Shares

Name Number %

1 JAMES PATRICK DOWNEY <MARION ENERGY CREDITORS A/C> 10,000,000 19.26

2 BLU BONE PTY LTD 6,666,667 12.84

3 SEAMIST ENTERPRISES 6,666,667 12.84

4 CYM HOLDINGS PTY LTD <GCM TRUST> 6,666,667 12.84

5 KONKERA PTY LTD 6,666,667 12.84

6 GREGORY JAMES MASON 6,666,666 12.84

7 DR BRENDAN DEKAUWE <ATOLLO INVESTMENT A/C> 6,666,666 12.84

8 KM CUSTODIANS PTY LTD 347,456 0.67

9 JEFFREY CLARKE 103,454 0.20

10 KAREL LOUMAN & TING HUI LOUMAN 98,711 0.19

11 PETER THOMAS COLLERY 91,199 0.18

12 STEPHEN WATTS & SARAH WATTS <S & S WATTS SUPER FUND A/C> 31,200 0.06

13 ODYSSEY ENERGY LIMITED 27,500 0.05

14 NAZDALL PTY LTD 22,784 0.04

15 PARK END LTD 14,678 0.03

16 SMART STEP LIMITED 14,000 0.03

17 NETHERIDGE PTY LTD 13,440 0.03

18 STEDA NOMINESS PTY LTD <STEDA SUPER FUND A/C> 12,870 0.02

19 ALEXANDER GORDON SCOTT GEMMELL & WENDY MARGARET GEMMELL <AGS GEMMELL S/F PENSION A/C> 11,600 0.02

20 WELLS RETIREMENT PTY LTD <D WELLS SUPER FUND A/C> 11,485 0.02

TOTAL 50,800,377 97.83

marion energy limited

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