NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
 
NOT E 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued  
 
The recoverable amount of an asset is the greater of its fair value less costs to sell (FVLCS) and its value-in-use (VIU).  
In assessing VIU, an asset’s estimated future cash flows are discounted to their present value using a n appropriate 
discount rate th at reflects current market assessments of the time value of money and the risks specific to the 
assets/CGUs.  In addition, the Group considers market data related to recent transactions for similar assets. In 
determining the fair value of the Group's inves tment in shale properties, the Group considers a variety of valuation 
metrics from recent comparable transactions in the market. These metrics include price per flowing barrel of oil 
equivalent and undeveloped land values per acre held.  Where an asset does not generate cash flows that are largely 
independent from other assets or groups of assets, the recoverable amount is determined for the cash -generating 
unit to which the asset belongs. 
 
For development and production assets, the estimated future cash fl ows for the VIU calculation are based on 
estimates, the most significant of which are hydrocarbon reserves, future production profiles, commodity prices, 
operating costs and any future development costs necessary to produce the reserves.  Under a FVLCS  calculation, 
future cash flows are based on estimates of hydrocarbon reserves in addition to other relevant factors such as value 
attributable to additional reserves based on production plans. 
 
Estimates of future commodity prices are based on the Group’s best estimates of future market prices with reference 
to external market analysts’ forecasts, current spot prices and forward curves.  At 31 December 2014, future NYMEX 
strip prices, adjusted for basis differentials, were applied in 2015 and gradually inc reased through 2016 to $75/bbl 
in 2017 and thereafter.  
The discount rates applied to the future forecast cash flows are based on a third party participant’s post-tax weighted 
average cost of capital, adjusted for the risk profile of the asset.  
 
An impairment loss is reversed if there has been an increase in the estimated recoverable amount of a previously 
impaired assets.  An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed 
the carrying amount that w ould have been determined, net of depreciation or depletion if no impairment loss had 
been recognized.  The Company has not reversed an impairment loss  during the years ended 31 December 2014 or 
2013. 
 
g) Foreign Currency Transactions and Balances 
 
Functional and presentation currency 
Both the functional currency and the presentation currency of the Group is US dollars.  Some subsidiaries have 
Australian dollar functional currencies which are translated to the presentation currency.  All operations of the Group 
are incurred at subsidiaries where the functional currency is the US dollar as all oil and gas properties are located in 
North America.  
 
Transactions and Balances 
Foreign currency transactions are translated into  the functional currency using the exchange rates prevailing at the 
date of the transaction. Foreign currency monetary items are translated at the yea r-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. 
 
  
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