annual report 2016 for personal use only - asx · the tender process for the drilling rig was...

ANNUAL REPORT 2016

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OCTANEX NL ABN 61 005 632 315

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TABLE OF CONTENTS

Chairman’sLetter..................................................................................................................................................................2OperationalReview..............................................................................................................................................................4CorporateGovernanceStatement................................................................................................................................13Auditor’sIndependenceDeclaration..........................................................................................................................14AnnualFinancialStatements..........................................................................................................................................16Directors’Report.................................................................................................................................................................16RemunerationReport........................................................................................................................................................23DirectorsDeclaration.........................................................................................................................................................26IndependentAuditor’sReport.......................................................................................................................................27AdditionalInformation(unaudited)...........................................................................................................................64Glossary....................................................................................................................................................................................68Directory..................................................................................................................................................................................69

Cover:DepictsvariouselementsandstagesoftheOphirwellheadplatformfabrication

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Chairman’sLetterDearShareholders2015/16 was a year in which Octanex increased its exposure to production and developmentactivities. Given the ongoing downturn in oil price, we continued to moderate explorationactivities. Quite simply, high risk exploration cannot be justified in the current oil priceenvironment.FollowingtheapprovalbyPETRONASoftherevisedfielddevelopmentplanfortheOphiroilfield(offshorePeninsularMalaysia)constructionanddevelopmentactivitieshaveaccelerated.Octanexhasa50%interest intheOphirdevelopmentwhich isexpectedtocommenceproductioninthesecondhalfofnextyear.During the year the contract for the engineering, procurement, construction, installation andcommissioningofthewellheadplatformwastenderedandawarded,andthefabricationphaseisnownearingcompletion.Photographsthroughoutthisreportshowvariousstagesoffabricationofthewellheadplatform.Followingcompletionofreservoirstudies,drillingandcompletionsdesignworkwaspreparedforthe threeproposedproductionwells.Thisresulted in increasedestimatesofoilproductionandreducedcapitalcostestimates.Thetenderprocessforthedrillingrigwascommencedduringtheyearandthecontractwillsoonbeawardedforthedrillingof threeproductionwells inquartertwo2017.Boththewellheadplatformandthedrillingrigcontractsattractedratessignificantlybelowthoseinitially budgeted, and even below the reduced cost estimates adopted by the company in itsrevisedfielddevelopmentplaninAugust2015.Thecurrentlowoilpriceregimeisenablinglowdevelopmentcoststobecaptured.We have also advanced our pre-development assets, being the Greater Cornea Fields and theAscalon Gas discovery. For Cornea, both technical and commercial work was carried out.Technical work included drilling studies, particularly the use of technology to address keyuncertainties. However, economic modelling completed during the year demonstrated thefundamentalnegativeshift inthefield’scommercialityinthecurrentlowoilpriceenvironment.Accordingly, theCorneaJointVenturehasagreedtoapplytovarytheconditionsofWA-54-R inorderthattheworkprogrammeisfocussedonthe“oilprice”barriertodevelopmentthatwenowsquarelyface.During the year we lodged applications for Retention Leases in respect to the Ascalon gasdiscovery. This followed two Declaration of Locations during the year for an aggregate of 13graticularblocks. TheAscalongasdiscoveryisalargegasfieldintheBonaparteBasinwhichisnotpresentlycommercial.However, itsproximitytoboththeBayu-UndanandIchthyspipelinesmaybesignificanttoitsfuturecommerciality.Consistentwithourstrategyofsurrenderingordivestingexplorationacreagewhereresultshavebeen unfavourable or which has held out little hope of farmout or with onerous workcommitments, we exited PEP51906 in New Zealand during the financial year, followinginterpretationoftheKaka3Dseismicsurvey.InprioryearsinvestmentsweremadeinPeakoLimited,toassistPeakotofundseismicactivitiesat a time when a merger of Peako into Octanex was contemplated. The extent of theseinvestmentsreducedduringtheyear.Followingthereceiptofa$440,000partialloanrepaymentin July2015,wereachedagreementwithPeako inNovember2015whereby thebalanceof theloanoutstanding(whichwehadalreadyfullyimpaired)wassatisfiedthroughaproceedssharingarrangementwherebyOctanexwillshareinanyproceedsthatPeakomightreceiveinconnection

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with its disputedCadlao interests upuntilNovember 2017. Octanexdid not participate in thepro-ratanonrenounceablerightsissueconductedbyPeakoduringtheyear,andaccordingly,itsshareholdingwasdiluted.A number of new venture opportunities were considered during the yearwith significant duediligenceactivitiesundertaken.Asubstantialeffortwasmadetoacquireanexistingoperatingoilfield in the offshore Carnarvon Basin which had been offered by industry for tender. Octanexcontinuestoseekdevelopmentopportunitiesthataresynergeticwithitscorporatestrategyandportfolio. Although the current industry cycle invariably results in an increased number ofacquisition opportunities,many of these opportunities require aggressive oil price forecasts inordertogenerateattractivereturns.Octanexwillcontinuetoreviewopportunities,seekingarisk/rewardbalanceinassetsthatfitwithitsstrategyandforwardcapacity.SabahInternationalPetroleum(SIP),continueditssupportofOctanexandourinvolvementintheOphirproject.Following the revisionof the timetable for theOphirdevelopment, SIPagreed toextendthedatesapplicabletotheconvertiblenotes,commensuratewiththenewproposedfirstoilproductiondate.IextendmythankstoSIPfortheirongoingsupportofOctanexandtheOphirproject.Wecontinuedtomaintainextremefiscaldisciplineduringtheyear.Directorshaveagreedtoforgodirectorsfees.HavingbuiltanexcellentteaminMalaysia,capturedattractivedevelopmentcosts,anddevelopeda robust geological model, Octanex is now placed to realise financial rewards from its Ophirinterest.Moreover,thelessonslearnedfromOphirareofbenefittoourpre-developmentassets;CorneaandAscalon.IlookforwardtosharingwithyouthefutureprogressofthedevelopmentoftheOphiroilfieldandOctanex,generally.

EGAlbersMelbourne29September2016

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OperationalReviewSummaryofOperationsOctanex’s focus in 2015/16was in bringing the Ophir field closer to production, advancing itspre-development asset interests (Cornea and Ascalon), while maintaining its interest inexplorationpermitswithpotentialforhigh-impactdiscoveries.

StrategyWearefocusedongrowingthevalueofourportfolio.

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DevelopmentInterestOphirOilField,Malaysia,50%InterestOctanexhasa50%interestinOphirProductionSdnBhd(OPSB),thejointventurecompanythatholds the Risk Service Contract (RSC) for the development of the Ophir oil field, offshorePeninsularMalaysia.Under the terms of theRSC the Contractor (OPSB) is the service provider andOperator of thefield,whilePETRONASistheresourceowner.UpfrontinvestmentofcapitaliscontributedbytheContractorwiththeContractorcompensatedviathereimbursementofcostsplusaremunerationfeeforservicesrendered.Theremunerationfeeislinkedtoproductionvolumesandcapitalcosts.RSCtermsprovidethatreimbursementofapprovedcapitalandoperatingcostsisguaranteedbyPETRONAS.OPSB was formed by Octanex together with its two Malaysian joint venturers, Scomi EnergyServicesBhd(Scomi)andVestigoPetroleumSdnBhd(Vestigo).Octanexholdsa50%interestinOPSB with Scomi 30% and Vestigo 20%. Scomi is a Malaysian upstream oil and gas servicescompany listed on theMain Board of BursaMalaysia. Vestigo is awholly owned subsidiary ofPETRONASCarigaliSdnBhdwithafocusonmarginalfielddevelopment.

Octanex’sshareoftheOphirprojectisfully funded via OPSB’s 75% projectfinancing and Octanex’s $17MillionShare Placement and ConvertibleNote Agreement with SabahInternational Petroleum (SIP). SIP iswhollyownedbySabahDevelopmentBank Berhad ("SDB"). SDB itself iswholly owned by the Ministry ofFinanceSabah.

TheOphir development is nowbenefitting from current reduced industry costs and a low riskdevelopmentconceptinvolvingthreeproductionwells,asinglewellheadplatformandoilexportviaaleasedfloatingproductionstorageandoffloading(FPSO)unit.

Figure 1 Ophir Oil Field Location Map

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Figure 2 Ophir Development Schematic “FirstOil”fromtheOphirfieldisscheduledtobeproducedinthesecondhalfof2017,followinganagreementwithPetronastoextendtheprojectschedule.Thistimetableavoidsrisksassociatedwith themonsoon season, enabled greater cost savings to be realised and offers the project agreateropportunitytorealisehigheroilprices.During the year a contract for the Engineering, Procurement, Construction, Installation andCommissioning (EPCIC) of a Wellhead Platform for the Ophir Oil field offshore PeninsularMalaysiawasawardedtoMuhibbahEngineering(M)Bhd.The contract award followed a successful tender by Muhibbah, a large Malaysian engineeringcompanywitha trackrecordofplatformconstructionand installation.Significantprogresswasmadeonboththejacketandtopsidesconstructionduringtheyear.

Floa%ng(Produc%on(Storage(&(Offloading(Vessel((FPSO)(

FACILITIES)SCHEMATIC)

73m))

Wellhead(Pla;orm((WHP)(

Subsea(Pipeline(

Horizontal(Wells(

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SignificantworkwascompletedinrespecttoOphirdrillingandcompletions,withthewellbasisofdesigncompletedduringtheyear.Thedrillingrigprocurementprocesscommencedduringtheyear,inpreparationforthedrillingofthethreeOphirproductionwellsin2017.

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Pre-DevelopmentInterestsGreaterCorneaFields,WesternAustralia,18.75%interestThe company holds a 18.75% interest in the Cornea Joint Venture. The Cornea Joint Ventureownershipisthefollowing: Octanex 18.750% Enegex Limited (ASX: ENX) 14.875% Cornea Resources Pty Ltd (Operator) 13.100% Others 53.275% Theassetsof theCorneaJointVenturebeing,TheGreaterCorneaFields,comprisingtheCornea(Central and South), Focus and Sparkle Oil Fields and the Cornea North (Tear) Gas Field, arelocatedintheBrowseBasin,offshorefromWesternAustraliaandheldviaaRetentionLease(WA-54-R)over6graticularblocks,amountingtoanareaof497km2.The oil volumes in the Greater Cornea Fields aresuch that, if threshold production flow rates canbe demonstrated, but dependent on oil price, theeconomicsmay provide a reasonable expectationofcommercialdevelopment.

MiddleAlbianB&CSands

P90 P50 P10

OilIn-placemmbbl 298.0 411.7 567.2RecoveryFactor% 2 7 25Cont.OilResources 7.9 28.8 101.9Octanex18.75% 1.48 5.40 19.11Table 1 Cornea Central and South Fields - Probabilistic Contingent Oil Resources (no development risk applied) TheWA-54-Rworkprogramisaimedatovercomingthevariouschallenges likelytobefacedinbringingtheGreaterCorneaFieldsintocommercialproduction.At the time theRetentionLeasewas granted, productionuncertaintywas considered to be thegreatestbarriertothedevelopmentoftheGreaterCorneaFields.Giventhepotentialsizeoftheoilresource,andtheoilprice thenprevailing(in theorderofUS$110/bbl), itwasunderstoodthatresolving the production uncertainty could provide a reasonable expectation for futuredevelopment.Accordingly,theRetentionLeaseworkprogramsubstantiallyaddressedthetechnicalchallengesof the Fields; with the first three years of the Lease designed to support the quantification ofdrilling challenges, culminating in a Year-4 production test, with the Year-5 work programmeinvolvingreviewoftheYear-4outcomes.TheworkprogrammewasthusdesignedonthepremisethatCornea’schallengewaswhetheritwouldproduce,ratherthanwhetherproductionwouldbeeconomic.

Figure 3 Greater Cornea Fields Retention Lease location map

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An economic studywas completed during the yearwhich used assumptions based on presentdate oil price, capex and opex assumptions. The economic modelling demonstrated thefundamentalshiftinthefield’scommercialityinthecurrentsustainedlowoilpriceenvironment,aswellasdemonstratingthattheGreaterCorneaFieldsarenotpresentlyeconomic(evenweretheproductionuncertaintiesresolved).“Oilprice”wasidentifiedastheinputtowhichthefieldisnowmostsensitive,ratherthan“production”,whichwasthecasein2013.Recenttechnicalworkhasincludeddrillingstudies,particularlyfocusingontheuseoftechnologyto address key uncertainties. Additional field development concept work has focussed on anappropriateproductionsystem.ThepresentlypreferredconfigurationbeingaMobileDrillingandProductionUnit(MODPU)andtanker.

Figure 4 Preferred Cornea Field Development Concept using MODPU and FSO Ourstudies indicatethatthematerialandsustainedfall inthepriceofoilsincethegrantoftheRetentionLeasehasresulted inanassessment thatadevelopmentof theGreaterCorneaFieldswouldnotbepresentlycommercial,evenweretheproductionuncertaintiestoberesolved.Giventhe~60%decline inoilprice, themostsignificanthurdletocommercialityof theGreaterCorneaFieldsisnolongerproducibility,butis“oilprice”.Assuch,theWA-54-Rworkprogramnolonger appropriately addresses the Greater Cornea Fields’ most significant barrier todevelopment. Accordingly, the Cornea Joint Venture intends to apply to vary the conditions ofWA-54-Rinorderthattheworkprogrammeisfocussedonthe“oilprice”barriertodevelopmentnowfacedbytheGreaterCorneaFields.AscalonGasDiscovery,BonaparteBasin100%interestDiscovered in 1995 by Mobil, the Ascalon gasaccumulation is currently located mostly withinexploration permitWA-407-P and extending intothe adjacentWA-420-P. During the year OctanexreceivedDeclarationsofLocationinrespecttotheAscalon discovery extending across bothexploration permits over an aggregate 13graticularblocks.Octanex lodged applications forRetentionLicences in respect to eachLocation inMarch2016.

Figure 5 Ascalon Gas Discovery Retention Lease location map

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The gas is contained in a faultedhorst structurewithin shallowmarine sandstones of the LatePermian, Cape Hay Formation of the Hyland Bay Subgroup. Mapping on modern 3D seismicdatabase, which we acquired over the feature, and newly reprocessed 2D seismic, indicates aclosure over an area of 260km2with amaximum closure height of 380m. The lowest closingcontour appears coincident with lowest known gas defined from logs in the Ascalon-1Awell.Modernpetrophysicsindicatesa146mgrossgascolumnwithintheCapeHayFormationinthe Ascalon-1A well, which is located off the crest of the structure. The reservoir sandstoneswithin the Cape Hay Formation are tight, not unlike those in thenearby Petrel and Tern gasdiscoveries.Theprobabilisticallydetermined contingent resources estimates for theAscalonGasDiscovery,areshowninTable2below,andastatementfromaQualifiedPetroleumReservesandResourcesEstimatorisprovidedonpage64ofthisreport. P90 P50 P10Contingent gas resource -Octanex100%(TCF)

1.04 3.01 8.74

Table 2 Ascalon gas discovery – Probabilistic Contingent Gas Resources (no development risk applied) Thekey contingency that stands in thewayof classificationof theContingentResourcesof theAscalon gas accumulation as “Reserves”, is the distinction between commercial and sub-commercialaccumulations.OnthebasisoftheSPE/WPC/AAPGResourceClassificationSystem,itis clear that the Ascalon accumulationmust be assessed as commercial before any “Reserves”classificationshouldbeassignedtoit.ThecommercialityofAscalonisdependentongasmarketfactors;bothgasmarketdemand,andpricing, aswell as access tomarket. Located offshore from northern Australia, themost likelymarket for Ascalon’s gas is presently considered to be LNG,whichwould necessitate access topipelineandLNGinfrastructure.TheP50estimateofthecontingentresourceatAscalonis3TCFofnaturalgas,whichatcurrentLNGgaspriceswouldnotsupportastandaloneLNGdevelopment.Ascalon is located in proximity to a number of gas discoveries some ofwhichwill, ormay, becommercialised in coming years. The development of other nearby gas discoveries can beexpected to provide opportunities for Ascalon to be developed to tie-back to anotherdevelopment.

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ExplorationInterestsCarnarvonBasinExplorationInterestsOctanex has various interests in five high impact permits in the Dampier sub-basin and theExmouthPlateauof theNorthernCarnarvonBasin. Itsparticipation in fourof thesepermits ispresentlyfullycarried.

Figure 6 Carnarvon Basin interests DampierSub-BasinWA-323-P&WA-330-P25%interest,freecarriedbySantosasOperator

WA-323-PandWA-330-Pcompriseadiscreteprojectareaof640km²ontheParkerTerrace, inproximity to the onshoreDevils Creek gas processing facility. TheWinchester-1/ST1discoverywell was drilled from a location within WA-323-P during 2013. The estimated size of theWinchester discovery, by itself, is considered to be insufficient to be developed economically.Further contributions from possible deeper or adjacent hydrocarbon zones to theWinchesterlocationwould be required to augment the discovered resource. TheWinchester discovery islocated near existing pipeline and processing infrastructure and likely future infrastructureextensions.InterpretationofthereprocesseddataWinchester3Dseismicsurveybytheoperatoriscontinuingwith the Prospects and Leads inventory being updated to incorporate prospects and leadsidentified from the reprocessed Winchester 3D survey. Octanex is currently being carried bySantosthoughexplorationactivityineachpermit.

Figure 7 Dampier Sub-basin permits

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ExmouthPlateauinterestsOctanex has interests in three permits in the Exmouth Plateau area of the Carnarvon Basin asshown.

Figure 8 Exmouth Plateau Permits ExmouthPlateauWA-362-P&WA-36333.33%interest,freecarriedbyEniasOperatorThe WA-362-P and WA-363-P permits are located on the northern margin of the ExmouthPlateau,300–400kmnorthwestof theWesternAustraliancoastlineandcompriseacombinedexplorationareaofapproximately10,956km².Theworkprograminbothpermitscallsforreprocessing,interpretationandmappingof2Ddatatogetherwithastudiesprogram,tobefollowedbyanew3Dseismicsurveyandanexplorationwell in the last twoyearsofeachpermit’s term. A tenderprocess for theseismic reprocessingwasconductedduringtheyearwithreprocessingworkhavingrecentlycommenced.Octanex is fully carried by Eni though all exploration activity, including the next well in eachpermit,shouldawellbedrilledineitherorbothofthepermits.ExmouthPlateauWA-387-P100%interestWA-387-P is considered to be prospective for gas within fluvial and deltaic sandstones of theTriassicMungarooFormation.Thisplay is themain reservoir in theWheatstoneandPlutogasfieldslocated35kmand45kmduesouthofthepermitrespectively.TheMungarooFormationisalso the reservoir for the giant Goodwyn gas field located 65km to the east of the permit. AsecondaryplayistheLateJurassic,OxfordianJanszSandstone,whichisthereservoirforthegiantJansz/Iogasdiscoverylocated35kmsouthwestofthepermit.Thecurrentworkprogramcallsfortheacquisitionof2Dseismicsurveysandstudies.Octanexisseekingparticipationofotherexplorationandspeculativeseismiccompaniestojoinwithitinthiswork.TaranakiBasin,NewZealandPEP5190635%interest,divestedOctanexexitedPEP51906offshoreNewZealandduringtheyear,followingourinterpretationoftheKaka3Dseismicsurvey.

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NewVenturesA number of new venture opportunities were considered during the year, with significant duediligenceactivitiesundertaken.Octanexcontinuestoseekopportunitiesthataresynergeticwithitscorporatestrategy,experienceandportfolio.Althoughthecurrentindustrycycleinvariablyresultsin an increased number of acquisition opportunities, many of these opportunities requireaggressiveoilpriceforecastsinordertogenerateattractivereturns.Octanexwillcontinuetoreviewopportunities,seekingarisk/rewardbalanceinassetsthatfitwithitsportfolioandstrategy.CorporateGovernanceStatementAcorporategovernancestatementreportingonOctanex’sgovernanceframework,principlesandpracticesisprovidedontheOctanexwebsitewww.octanex.com.au.

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The Rialto, Level 30 525 Collins St Melbourne Victoria 3000 Correspondence to: GPO Box 4736 Melbourne Victoria 3001 T +61 3 8320 2222 F +61 3 8320 2200 E [email protected] W www.grantthornton.com.au

Auditor’s Independence Declarat ion To the Directors of Octanex N.L. In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Octanex N.L. for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

Brad Taylor Partner - Audit & Assurance Melbourne, 29 September 2016

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AnnualFinancialStatementsDirectors’ReportDirectors MrGeoffAlbers LL.B,FAICDExecutiveChairmanAppointed2October1984MrAlbershasoverthirtyfiveyearsoilandgasindustryexperience,havingfirstbecameinvolvedin oil exploration in 1977. Mr Albers is a law graduate of the University of Melbourne andextensiveexperienceasadirectorandadministratorincorporatelaw,petroleumexplorationandresourcesectorinvestment.MrAlbersfoundedOctanexNLandisasubstantialshareholderinthecompany.On1October2015MrAlbersbecameadirectorintheASXlistedEnegexLimited(ASX:ENX).HeisalsoadirectorintheASX listed Peako Limited (ASX: PKO). Mr Albers is a substantial shareholder in both of thosecompanies. MrsRaeClark B.Bus(dist),CA,MAICD,AGIA,ACISExecutiveDirectorAppointed17October2014 Mrs Clark has more than fifteen years experience focussed primarily on the natural resourcesector. She has wide operational, commercial and project development knowledge and herexperience includesbusinessdevelopment, financialmodelling andanalysis, capital raising andmergersandacquisitions,aswellasmanagingjointventurepartners,government,regulatorandinvestorrelations.MrsClarkwaspreviouslyCommercialManagerofOctanex.Havingcommencedher careerwithDeloittein1997,MrsClarkhasworkedwithoilandgascompaniessince2005.SheisaDirectorand Company Secretary of Peako Limited (ASX: PKO).On12October 2015MrsClark became adirectorintheASXlistedEnegexLimited(ASX:ENX).Mrs Clark holds a Bachelor of Business (with distinction), a Graduate Diploma (ICAA) andGraduateDiplomainAppliedCorporateGovernanceand isamemberoftheAustralianInstituteofCompanyDirectors,theCharteredAccountantsAustraliaNewZealandandGovernanceInstituteofAustralia.

MrDavidCoombes LL.B,MTax,CTAIndependentNon-ExecutiveDirectorAppointed15May2012MrCoombesisapartnerinthelawfirm,GadensLawyers,andisamemberofthefirm’scorporateadvisoryandtaxgroup.Hispracticeinvolvesadvisingclientsonarangeofcorporate,commercialandtaxation lawmatters, trustsandsuperannuation lawandestateandsuccessionplanning. MrCoombes acts for a number of Australian and overseas listed and private clients in numerousindustrysectors.MrCoombeswasadmittedasabarristerandsolicitoroftheSupremeCourtofVictoriain1971aftergraduating from Melbourne University Law School in 1970. He has completed a postgraduatedegreeintaxationlaw,isaCharteredTaxAdvisorandhasbeenaccreditedasaTaxLawspecialistbytheLawInstituteofVictoria.Mr Coombes is a director of several charitable organisations including Wintringham Limited,WintringhamHousingLimitedandNewsboysFoundationLimited.HeisalsoadirectoroftheWynnGroupofCompanies.

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MrTinoGuglielmo B.Eng(Mech),FIEAust,GAICDIndependentNon-ExecutivedirectorAppointed18December2014 MrGuglielmo isaPetroleumEngineerwithover thirty threeyearsof technical,managerialandseniorexecutiveexperienceinAustraliaandinternationally.MrGuglielmowastheCEOandManagingDirectoroftwosuccessfulASXlistedcompanies;StuartPetroleumLtd for seven years andAmbassadorOil&Gas Ltd for three years. Both companiesmergedwithlargerASXlistedcompaniesgeneratingsignificantvalueforshareholdersfollowingthe identification of compelling resource potential in their respective petroleum resourceportfolios.Mr Guglielmo also worked at Santos Ltd, Delhi Petroleum Ltd, and internationally with NYSElistedSchlumbergerCorp.MrGuglielmoiscurrentlyamemberoftheResources&InfrastructureTask force and the Minerals & Energy Advisory Council, both South Australian Governmentadvisorybodies.HeisaFellowoftheInstitutionofEngineers,Australia,amemberoftheSocietyof Petroleum Engineers and Australian Institute of Company Directors. Mr Guglielmo is also adirector of ASX listed Bass Strait Oil Company Limited and during the past three years was adirectorofASXlistedAmbassadorOil&GasLimited.DatukKevinKowHowFCANon-ExecutivedirectorAppointed18December2014DatukKevinHowKowisadirectorofSabahDevelopmentBank.HeisamemberoftheMalaysianInstitute of Accountants, the Malaysian Institute of Certified Public Accountants and a fellowmember of the Institute of Singapore Chartered Accountants and the Institute of CharteredAccountantsinEngland&Wales.HewasmadeapartnerofErnst&Young(“EY”),Malaysiain1984and served as the partner-in-charge of EY’s offices in Sabah and Sarawak. Later, from 1996onwards,hewasthepartner-in-chargeofEY’spracticeinSabahandLabuanuntilhisretirementattheendof2003.HealsoservesasaDirectorofCahyaMataSarawakBerhad,K&NKenangaHoldingsBerhad,KenangaInvestmentBankBerhad,SahamSabahBerhad,SarawakCableBerhad,M3nergyBerhadandseveralprivatelimitedcompanies.MsSuhnyllaKler FCCA,BSc(Hons)MonetaryEconomicsNon-ExecutivedirectorAppointed18December2014MsKlerhasextensiveexperienceinthefinancialservicesindustry,havingworkedwiththeArab-MalaysianBankingGroup,HSBCBank (M)BerhadandABNAMRO.She is currentlyanExecutiveDirectorandCEOofSabahDevelopmentBankAssetManagementandalsoservesasaDirectorofM3nergyBerhadandGroup.Ms Kler is registered as Associate Member of Persatuan Kewangan Malaysia (PKM) or ForexAssociation of Malaysia, and is a member of the Corporate Finance Faculty of the Institute ofCharteredAccountantsofEngland&Wales(ICAEW).ShereceivedherBachelordegreeinMonetaryEconomics from the London School of Economics and Political Sciences (LSE) and subsequentlystudied Japaneseat theSchoolofOrientalandAfricanStudies(SOAS),U.K.HavingcompletedherstintwithKPMGPeatMarwick,sheisadditionallyregisteredasaCharteredAccountantandfellowoftheAssociationofCharteredCertifiedAccountants(FCCA).

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MrJamesWillis LL.M(Hons),DipAccIndependentNon-ExecutiveDirectorAppointed18August2009Previously an executive director of Octanex (2009-2011) Mr Willis is an upstream petroleumconsultantwhohasheldgovernancepositionswithandconsultedtovariousparticipantsintheoilandgasexplorationsector.MrWillisisaformerpartnerintheleadingNewZealandlawfirmofBellGullywhere his practice specialitywas in the upstream oil and gas area, particularly relating toissuesconcerninggascontractingandthedevelopmentofoilandgasreserves, jointventuresandupstreampetroleumrelatedacquisitions.MrWillisisadirectorofNewZealandEnergyCorp,acompanylistedontheTSXVentureexchange.CompanySecretariesMrJackTuohy BCA,CAMr Tuohy has almost thirty years experience of public and private company administration,especiallyasthisrelatestotheoilandgasexplorationsectorandtopubliclistedcompanyactivities,obligationsandrequirements.HehasactedasCompanySecretaryforanumberoflistedpubliccompanies,andhasbeenadirectorofvariouspubliccompanies.MrTuohyisacharteredaccountantinNewZealand.MrRobertWright BBus,CPAMrWright is a senior financial professional with over 25 years commercial experience in theresource, energy and manufacturing industries gained at various companies and locations,including14yearsatBHP.HeistheChiefFinancialOfficer(CFO)andtheCompanySecretaryofOctanexandCFOofseverallistedandunlistedexplorationcompanies.MrWrightisamemberofCPAAustralia.PrincipalActivitiesTheprincipalactivitiesoftheconsolidatedentityduringtheyearwerepetroleumexplorationanddevelopmentandinvestmentinthatsector.FinancialResults The net loss of the consolidated entity for the financial year was $1,815,272 (2015: loss of$11,524,294). DividendsNodividendwasdeclaredorpaidduringtheyearandtothedateofthisreport. ReviewofOperations A review of the consolidated entity’s Operations during the financial year is provided in theOperationalReview.

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Divestmentsandsurrenders Duringtheyear,Octanexdivestedits35%interestinPEP51906.ChangeinStateofAffairs Otherthanasdescribed intheseannual financialstatementstherehavebeennochanges inthestateofaffairsofthecompany.SubsequentEvents Sincetheendofthefinancialyeartherehavebeennosubsequentevents. Directors’Meetings The table below sets out the number ofmeetings held during the year and the number of thosemeetingsthatwereattendedbyeachdirector.

BoardMeetings AuditCommitteeMeetings

Nomination&Remuneration

CommitteeMeetings Eligible Attended Eligible Attended Eligible AttendedEGAlbers 4 4 2 2 RLClark 4 4 2 2 DCCoombes 4 4 2 2 2 2GGuglielmo 4 4 2 2 2 2KKHow 4 2 2 - -SKler 4 3 2 1 2 1JMDWillis 4 4 2 1 FutureDevelopmentsFuturedevelopmentsinthecompany’soperationsandtheexpectedresultfromthoseoperationsaredependentonexplorationanddevelopmentsuccess in thepermitareas inwhich thegroupholdsinterests.

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ShareCapital OrdinarySharesDuringtheyearended30June2016,avoluntarypaymentof$720,000wasreceived,comprisedof$0.10per sharepayment in respectof7,200,000partlypaid shares,makingeach share fullypaidto$0.25.Accordingly,Octanexnowhas7,200,000fewerpartlypaidordinarysharesonissueand7,200,000morefullypaidordinarysharesonissue.InSeptember2015thedirectorsresolvedthatnocallwouldbemadebeforethedatethatFirstOilisproducedattheOphiroil field,or31December2018,whichever isearlier,onaccountofanypartoftheunpaidamountof10centspershareonthepartlypaidshares.3,000,000 ordinary fully paid shareswere purchased from the Trustee of the Octanex TrusteeShare Scheme (Scheme) at a price of $0.10 per share pursuant to the Scheme. Octanex,accordingly, received $300,000 before costs as proceeds from the Trustee in respect to theseshares.Asat30June2016andtothedateofthisreportthenumberoffullypaidordinarysharesonissueis 202,465,561 (excluding the 30,000,000 trustee shares also quoted as ordinary fully paidshares). Asat30 June2016and to thedateof thisreport thenumberofpartlypaidordinarysharesonissueis67,078,910. TrusteeStockSchemeAsat30June2016andtothedateofthisreport,30,000,000ordinaryshares,previouslyissuedtotheTrusteepursuanttotheScheme,remainunsold.TheTrusteedoesnotexercisevotingrightsinrespectofthesharesheldpursuanttotheScheme.UnlistedOptionsNo optionswere granted during the year and to the date of this report. The following optionswere granted inprior years and remainedon issue at30 June2016 toOctanex staff andotherindividuals.Theoptiontermsaresummarizedbelow:Number ExpiryDate Exerciseprice Vestingcriteria7,600,000 15October2018 $0.1534 No1,000,000 19May2018 $0.15 No1,000,000 11June2018 $0.15 No1,000,000 11June2018 $0.15 Yes4,000,000 11June2018 $0.15 Yesandvaryingexpirydates250,000 1February2018 $0.20 No250,000 1February2018 $0.25 No 2016 2015 Options OptionsUnlistedOptionsBalanceatbeginningofyear 15,100,0004,850,000Optionsgranted - 18,100,000Optionssurrendered/cancelled -(7,285,000)Optionsexpired -____________- Balanceatendofyear 15,100,000 15,100,000 ========== ========

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ConvertibleNotes OctanexhasaUS$12Millionconvertiblenotefacility(Notes)withSabahInternationalPetroleum(SIP),acompanyultimatelywhollyownedbyMinistryofFinanceoftheMalaysianstateofSabah.The facilitywas approvedby shareholders inFebruary2015and consists of threeUS$4milliontrancheswithrightsofconversionintofullypaidordinarysharesoftheCompanyatpricesof15,20and25centspershareforeachofthetranches.TheNoteshaveamaturitydateof31December2018whentheymayberedeemedorconvertedatSIP’selection.ThefacilityisprimarilytobeutilizedtofundtheOphirdevelopment.Asat30June2016,andatthedateofthisreport,noamounthasasyetbeendrawnunderthefacility.IndemnificationofDirectorsandOfficeholders Duringtheyearandtothedateof thisreport, thecompanydidnotpaypremiumsinrespectofcontracts insuring officers or auditors of the company against liabilities arising from theirpositionofofficersorauditorofthecompany.TheCompanyhasenteredintoDeedsofAccessandIndemnitywitheachoftheDirectorsreferredtointhisreportwhoheldofficeduringtheyearindemnifyingeachagainstallliabilitiesincurredintheircapacityasdirectorsoftheCompanytothefullextentpermittedbylaw.RemunerationreportThisremunerationreportissetoutonpages23to25andformspartoftheDirectors’Reportforthefinancialyearended30June2016.CorporateGovernanceThe Board is responsible for the strategic�direction of the Company, the identification andimplementationofcorporatepoliciesandgoals,andthemonitoringofthebusinessandaffairsoftheCompanyonbehalfofitsshareholders.The Board delegates responsibility for the day-to-day management of Octanex to the ChiefExecutive Officer. All Directors have unrestricted access to Company records�and informationandreceivedetailedfinancial�andoperationalreports.TheBoardiscurrentlycomprisedoffiveNon-ExecutiveDirectorsandtwoExecutiveDirectors.InaccordancewiththeCompany’sConstitutionandtheASXListingRules,theDirectors(otherthantheChiefExecutiveOfficer)aresubjecttore-electionbyshareholderseverythreeyears.TheBoardmeets regularly throughout the year.Where appropriate, presentations are given totheBoard frommanagementwhomaybe questioneddirectly byBoardmembers on technical,operationalandcommercialissues.Details of the Company’s corporate governance practices are included in the CorporateGovernancestatementfoundontheCompany’swebsite.

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Auditorindependenceandnon–auditservices A copy of the auditor’s independence declaration, as required under Section 307C of theCorporationsAct2001,isattachedandformspartofthisDirectors’Reportfortheyearended30June2016.Nofeeswerepaidtotheauditorfornon-auditservices.ThisDirectors’Reportismadeinaccordancewitharesolutionofthedirectorsandformspartofthefinancialstatements.OnbehalfoftheDirectors:

EGAlbersDirector29September2016

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RemunerationReportThis Remuneration Report for the year ended 30 June 2016 outlines the key managementpersonnel remunerationarrangementsof theCompany inaccordancewith the requirementsoftheCorporationsAct2001(Act)anditsregulations.ThedisclosuresinthisRemunerationReporthavebeenauditedasrequiredbysection308(3C)oftheAct. KeyManagementPersonnel Forthepurposeofthisreport,KeyManagementPersonnel(KMPs)oftheCompanyaredefinedasthose persons having authority and responsibility for planning, directing and controlling themajoractivitiesoftheCompanydirectlyorindirectly.ThefollowinghavebeenidentifiedasKMPsforthepurposeofthisRemunerationReport:ExecutiveDirectors EGAlbers Chairman&ChiefExecutiveOfficerRLClark ChiefOperatingOfficerNon-executiveDirectors DCCoombes DirectorGGuglielmo DirectorKKHow DirectorSKKler DirectorJMDWillis DirectorTheboardofdirectorsisresponsiblefordeterminingandreviewingcompensationarrangementsfor the directors and executives. The board assesses the appropriateness of the nature andamount of emoluments on a periodic basis by reference to relevant employment marketconditions, with the overall objective of ensuring maximum stakeholder benefit from theretentionofahighqualityboardandexecutives.Remuneration levels fordirectors andexecutivesof the companyare competitively set to attractand retain appropriately qualified and experienced directors and executives. The remunerationstructures explained below are designed to attract suitably qualified candidates, reward theachievement of strategic objectives and achieve the broader outcome of creation of value forshareholders.Theremunerationstructuretakesintoaccount: • Thecapabilityandexperienceofthedirectorsandexecutives;• Theabilityofdirectorsandexecutivestocontroltheentity’sperformance;and• The requirement that directors apply a portion of their remuneration to the purchase of

shares inthecompany,atmarketprice,soastoalignthe interestsofdirectorswiththatofshareholders.

In accordance with the company’s constitution, directors’ non-executive remuneration wasapprovedbyshareholderson28November2014at$250,000perannum.During the year, non-executive director remuneration of $nil was paid and payable (2015:$166,375). Adjustments from the signing of deeds of release (see Note 1 to the remunerationtableonpage24)were$(95,305).Totaldirectorremuneration(exclusiveofconsultingfeeswhichare included at note 24) of $219,000was paid and payable during the year (2015: $395,759).Adjustmentsfromthesigningofdeedsofrelease(seeNote1totheremunerationtableonpage24)were$(151,104).Thereisnoperformancerelatedremunerationfordirectors.Remunerationpaidtodirectorscoversallboardactivities,includingservingoncommittees.

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Apart from a retirement benefit for the chairman and fourweeks annual leave forRL Clark, theotherdirectorsdonotreceiveemployeebenefitssuchasannual leaveand longservice leave,butremuneration may include the grant of options over shares of the company to align directors’interestswiththatoftheshareholders.Thereisnodirectrelationshipbetweenremunerationandthecompany’sperformanceforthelastfiveyears.Componentsofdirectors’compensationpaidandotherwisepayable(referNote(1))aredisclosedbelow.

Short Term Post Employment Equity Settled Total

Directors

Fees Salary Super- annuation

Retirement Benefits Options

$ $ $ $ $ $ EG Albers (1)(2) 2016 (30,000) - (2,850) - - (32,850)

2015 30,000 - 2,850 9,334 - 42,184 DC Coombes (1) 2016 (15,000) - (1,425) - - (16,425)

2015 30,000 - 2,850 - 10,991 43,841 JMD Willis (1) 2016 (32,850) - - - - (32,850) 2015 32,850 - - - 10,991 43,841 GA Menzies 2016 - - - - - - 2015 13,993 - 1,329 - 10,991 26,313 RL Clark (1) 2016 (20,959) 200,000 17,010 - - 196,051 2015 20,959 150,000 16,241 - - 187,200 S K Kler (1) 2016 (14,285) - - - - (14,285) 2015 17,460 - - - - 17,460 K K How (1) 2016 (14,285) - - - - (14,285) 2015 17,460 - - - - 17,460 G Guglielmo (1) 2016 (15,945) - (1,515) - - (17,460)

2015 15,945 - 1,515 - - 17,460

TOTAL 2016 (143,324) 200,000 11,220 - - 67,896 2015 178,667 150,000 24,785 9,334 32,973 395,759 (1) Allsevendirectorshavesignedadeedofreleaseeffective30June2016.ThisreleasestheCompanyfromanyobligationtopaythoseDirector’sFeesthathavenotbeenpaidandwouldhaveotherwisebeenpayablefrom1July2014.Allfeesandrelatedsuperannuationdisclosedat30June2015wereaccruedbutnotdeclaredorpaidforeachdirector, with the exceptions being David Coombes, who was paid $16,425 (fee $15,000 and superannuation$1,425)fortheperiod1July2014to31December2014,andKevinHowKowandSuhnyllaKler,whowereeachpaid$3,175inApril2015.(2)On29October1997,aDeedofAppointmentwassignedwithEGAlbers.Thedeeddetailedtermsofcontinuationof his appointment as chairman of OctanexNL. Among other things, it provides for a payment of a retirementbenefittoEGAlbersaschairman.InterestsinEquityInstrumentsofOctanexN.L.The disclosures relating to equity instruments of directors includes equity instruments of personallyrelatedentities,beingrelativesandthespousesofrelativesofthedirectorandanyentityunderthejointorseveralcontrolorsignificantinfluenceofthedirector.Allequitytransactionswithdirectors,otherthanoptionsgrantedasremuneration,havebeenenteredintoundertermsandconditions,applicabletoallshareholders.

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Interestsinfullypaidordinaryshares Balance Receivedas Options NetChange Balance Remuneration Exercised Other 01/07/2015 30/06/2016

EGAlbers 113,963,757 - - 7,797,684 121,761,441RLClark 57,551 - - - 57,551DCCoombes 165,000 - - - 165,000GGuglielmo - - - 3,000,000 3,000,000KKHow 50,000 - - - 50,000SKKler 50,000 - - - 50,000JMDWillis 2,398,130 - - - 2,398,130 Interestsinpartlypaidordinaryshares Balance Receivedas Options NetChange Balance Remuneration Exercised Other 01/07/2015 30/06/2016

EGAlbers 51,837,357 - - (7,200,000) 44,637,357RLClark - - - - -DCCoombes 41,500 - - - 41,500GGuglielmo 200,000 - - - 200,000KKHow - - - - -SKKler - - - - -JMDWillis 1,198,752 - - - 1,198,752 Interestsinunlistedoptions

Heldat Grantedas Other Heldat Vested Vestedand Compensation Exercised Changes 30June during exercisableat theyear 30June 1July2015 2016 2016

EGAlbers - - - - - - -RLClark 2,000,000 - - - 2,000,000 - 2,000,000DCCoombes 500,000 - - - 500,000 - 500,000JMDWillis 500,000 - - - 500,000 - 500,000GGuglielmo - - - - - - -KHKow - - - - - - -SKKler - - - - - - - EndofRemunerationReport.

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DirectorsDeclarationThedirectorsofthecompanydeclarethat:1. The financial statements, comprising the statement of profit or loss and othercomprehensive income, statement of financial position, statement of cash flows, statement ofchanges in equity, and accompanying notes, are in accordancewith the CorporationsAct 2001and: (a) complywith Australian Accounting Standards and the Corporations Regulations

2001;and (b) giveatrueandfairviewoftheconsolidatedentity’sfinancialpositionasat30June

2016andofitsperformancefortheyearendedonthatdate. (c) the financial report also complies with International Financial Reporting

StandardsasdisclosedinNote1(a).2. Inthedirectors’opinion,therearereasonablegroundstobelievethatthecompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable.3. Theremunerationdisclosuresincludedinpages23to25ofthedirectors’report,(aspartofauditedRemunerationReport),fortheyearended30June2016,complywithsection300AoftheCorporationsAct2001.4. The directors have been given the declarations by the chief executive officer and chieffinancialofficerrequiredbysection295A.ThisdeclarationismadeinaccordancewitharesolutionoftheBoardofDirectorsandissignedforandonbehalfofthedirectorsby:

EGAlbersDirectorMelbourne,29September2016

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The Rialto, Level 30 525 Collins St Melbourne Victoria 3000 Correspondence to: GPO Box 4736 Melbourne Victoria 3001 T +61 3 8320 2222 F +61 3 8320 2200 E [email protected] W www.grantthornton.com.au

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

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Independent Auditor’s Report To the Members of Octanex N.L. Report on the financial report We have audited the accompanying financial report of Octanex N.L. (the “Company”), which comprises the statement of financial position as at 30 June 2016, the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the company .

Directors’ responsibility for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001. The Directors’ responsibility also includes such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, the financial statements comply with International Financial Reporting Standards.

Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require us to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s opinion In our opinion:

a the financial report of Octanex NL is 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 2016 and of its performance for the year ended on that date; and

ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and

b the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements.

Report on the remunerat ion report We have audited the remuneration report included in pages 23 to 25 of the directors’ report for the year ended 30 June 2016. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

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Auditor’s opinion on the remunerat ion report In our opinion, the remuneration report of Octanex NL for the year ended 30 June 2016, complies with section 300A of the Corporations Act 2001.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

Brad Taylor Partner - Audit & Assurance Melbourne, 29 September 2016

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ConsolidatedStatementofProfitorLossandOtherComprehensiveIncomeYearEnded30June2016 NOTE 2016 2015 $ $ Revenue-interestreceived 4,867 9,818Otherincome 2 339,786 956,755Financecosts - (371,039)Expenses 3 (1,403,318)(12,192,533)ShareoflossofOphirProductionSdnBhd 8 (1,261,490) (1,738,234)Shareofprofit/(loss)ofPeakoLimited 9 237,960 (1,074,973)ImpairmentofinvestmentinPeakoLimited 9 (355,842) - ____________ ____________Lossbeforetax (2,438,037)(14,410,206)Incometaxbenefit 4 622,765 2,885,912 ____________ __________NetLossaftertax (1,815,272)(11,524,294) ____________ ___________OthercomprehensiveincomeItemsthatmaybereclassifiedsubsequentlytoprofitorlossExchangedifferencesontranslationofforeignoperation 101,884 765,937 Incometaxeffect - -ItemsthatwillnotbereclassifiedsubsequentlytoprofitorlossChangesinfinancialassetsatfairvaluethroughothercomprehensiveincome (1,179,797) (161,195) Incometaxonitemsofcomprehensiveincome 353,938 48,358 __________ __________Othercomprehensiveincomefortheyearnetoftax (723,975) 653,100 ____________ ____________Totalcomprehensiveincomefortheyear (2,539,247)(10,871,194) ========= ========Basiclosspershare(centspershare) 25(0.758)(5.415) Dilutedlosspershare(centspershare) 25(0.758)(5.415) TheaboveStatementofProfitorLossandOtherComprehensiveIncomeistobereadinconjunctionwith

theaccompanyingnotes.

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ConsolidatedStatementofFinancialPositionAsat30June2016 NOTE 2016 2015 $ $CURRENTASSETSCashandcashequivalents 5 3,147,294 5,832,084Tradeandotherreceivables 6 382,323 852,380 ___________ ___________ TOTALCURRENTASSETS 3,529,617 6,684,464 ___________ ___________NON-CURRENTASSETSTradeandotherreceivables 6 6,568,663 5,420,021Financialassetsatfairvaluethroughothercomprehensiveincome 7 21,235 126,830Investmentsinanassociateandajointventure 8,9 142,449 260,332Property,plantandequipment 10 - 1,832Explorationandevaluationassets 11 41,208,791 40,974,942 _____________ ______________TOTALNON-CURRENTASSETS 47,941,138 46,783,957 _____________ ______________TOTALASSETS 51,470,755 53,468,421 _____________ ______________CURRENTLIABILITIESTradeandotherpayables 12 634,419 1,257,408Provisions 13 130,176 125,068 ____________ ____________ TOTALCURRENTLIABILITIES 764,595 1,382,476 ____________ ____________NON-CURRENTLIABILITIESDeferredtaxliabilities 14 8,521,949 8,370,487 ____________ _____________TOTALNON-CURRENTLIABILITIES 8,521,949 8,370,487 ____________ _____________TOTALLIABILITIES 9,286,544 9,752,963 ____________ _____________NETASSETS 42,184,211 43,715,458 ========= =========EQUITYIssuecapital 15 68,856,339 67,848,339Reserves 16 1,572,649 2,296,624Accumulatedlosses (28,244,777)(26,429,505) ______________ _____________ TOTALEQUITY 42,184,211 43,715,458 ========= =========

TheaboveStatementofFinancialPositionistobereadinconjunctionwiththeaccompanyingnotes.

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ConsolidatedStatementofChangesinEquity

YearEnded30June2016

Contributed

equityAccumulated

losses

Financialassetsatfairvaluethrough

othercomprehensive

income

Foreigncurrencytranslationreserve

Optionreserve Total

$ $ $ $ $ $CONSOLIDATEDENTITY

At1July2015 67,848,339 (26,429,505) (1,505)

1,350,113

-

948,016 43,715,458

Lossaftertax - (1,815,272) - - - (1,815,272)

Othercomprehensiveincome

Exchangedifferencesoftranslationof

foreignoperationsnetoftax- - - 101,884 - 101,884

Changesinfairvalueonfinancialassetsat

fairvaluethroughothercomprehensive

incomenetoftax

- - (825,859) - - (825,859)

Totalothercomprehensiveincome - - (825,859) 101,884 - (723,975)

Totalcomprehensiveincomefortheyear - (1,815,272) (825,859) 101,884 - (2,539,247)

Transactionswithownersintheir

capacityasowners

Shareissue

Costofissue

1,020,000

(12,000)

-

-

-

-

-

-

-

-

1,020,000

(12,000)

At30June2016 68,856,339 (28,244,777) (827,364) 1,451,997 948,016 42,184,211

TheaboveStatementofChangesinEquityistobereadinconjunctionwiththeaccompanyingnotes.

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ConsolidatedStatementofChangesinEquityYearEnded30June2015

Contributed

equityAccumulated

losses

Financialassetsatfairvaluethrough

othercomprehensive

income

Foreigncurrencytranslationreserve

Optionreserve Total

$ $ $ $ $ $CONSOLIDATEDENTITY

At1July2014 61,602,959 (14,905,211) 111,332

584,176

763,494 48,156,750

Lossaftertax - (11,524,294) - - - (11,524,294)

Othercomprehensiveincome

Exchangedifferencesoftranslationof

foreignoperationsnetoftax- - - 765,937 - 765,937

Changesinfairvalueonfinancialassetsat

fairvaluethroughothercomprehensive

incomenetoftax

- - (112,837) - - (112,837)

Totalothercomprehensiveincome - - (112,837) 765,937 - 653,100

Totalcomprehensiveincomefortheyear - (11,524,294) (112,837) 765,937 - (10,871,194)

Transactionswithownersintheir

capacityasowners

SharePlacement

Costofissue

Sharebuyback

6,393,860

(128,485)

(19,995)

-

-

-

-

-

-

-

-

6,393,860

(128,485)

(19,995)

Share-basedpaymentsexpense - - - - 184,522 184,522

At30June2015 67,848,339 (26,429,505) (1,505) 1,350,113 948,016 43,715,458

TheaboveStatementofChangesinEquityistobereadinconjunctionwiththeaccompanyingnotes.

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ConsolidatedStatementofCashFlows YearEnded30June2016 NOTE 2016 2015 $ $CASHFLOWSFROMOPERATINGACTIVITIESAdministrationfeesreceived 42,120 432,500 Interestreceived 4,828 13,571 Taxpaid - (34,566)Paymentstosuppliers (1,948,108) (2,806,587) ___________ ___________

Netcashoutflowfromoperatingactivities (i) (1,901,160) (2,395,082) ___________ ____________CASHFLOWSFROMINVESTINGACTIVITIESPaymentstosuppliers-exploration (206,949) (996,475) Proceedsfromsaleofpermitinterest - 350,000 RepaymentofloanfromPeakoLimited 6,9 440,000 260,000LoantoPeakoOilLimited 6,9 - (1,047,038) LoanstoOphirProductionSdnBhd 8 (2,268,364) (4,931,924)Proceedsfromsaleofinvestments 53,964 - ____________ ___________

Netcashoutflowfrominvestingactivities (1,981,349) (6,365,437) ____________ ___________ CASHFLOWSFROMFINANCINGACTIVITIES Proceedsfromborrowing 12 - 6,637,991Proceedsfromshareissue 15 1,020,000 -Costofshareissue 15 (12,000) (128,485)Sharebuy-back 15 - (19,995) Repaymentofborrowing 12 - (1,316,483) ____________ ___________Netinflowfromfinancingactivities 1,008,000 5,173,028 ____________ ___________Netdecreaseincashandcashequivalents (2,874,509) (3,587,491) Exchangegains 189,719 913,001 Cashandcashequivalentsatbeginningoftheyear 5,832,084 8,506,574 ___________ ___________CASHANDCASHEQUIVALENTSAT30JUNE 5 3,147,294 5,832,084 ======== ========(i) RECONCILIATIONOFNETCASHFROMOPERATINGACTIVITIESWITHLOSSAFTERINCOMETAX Lossafterincometax (1,815,272)(11,524,294) Noncashitems: Impairmentofexplorationassets - 8,487,470 BorrowingCosts - 381,040 Exchangeratechangesonthebalancesheldinaforeigncurrency (229,603) (957,821) EmployeeProvisionsexpense 5,108 52,277 Depreciation 1,832 4,510 Lossofdisposalofasset - 19,939 Sharebasedpaymentsexpense - 184,522 ShareoflossandimpairmentofPeakoLimited 9 117,883 1,074,973 ShareoflossofOphirProductionSdnBhd 8 1,261,490 1,738,234 ImpairmentofloanreceivablefromPeak 6 - 1,274,381 OPSBtransactioncosts - (819,995) Changesinassetsandliabilities: Decreaseinreceivables 30,056 13,155 Increaseinpayables (649,889) 653,876 Decreaseintaxliabilities (622,765) (2,977,349) ____________ ____________ NetCashoutflowfromOperating Activities (1,901,160) (2,395,082) ======== ========

TheaboveStatementofCashFlowsistobereadinconjunctionwiththeaccompanyingnotes.

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NotestotheFinancialStatement30June2016 NOTE1SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESOctanexNL(“Octanex”or“thecompany”)isafor-profitcompanyincorporatedanddomiciledinAustraliawithitsregisteredofficeandprincipalplaceofbusiness locatedatLevel21,500CollinsStreet,Melbourne,Victoria3000.Theconsolidatedfinancialreportofthecompanyfortheyearended30June2016comprisesthecompanyanditssubsidiaries(togetherreferredtoasthe“consolidatedentity”or“thegroup”)andtheconsolidatedentity’sinterestinjointoperations.FinancialinformationforOctanexNLasanindividualentityisincludedinNote26.Thefinancialreportwasauthorisedbythedirectorsforissueon29September2016.(a)StatementofcomplianceTheconsolidatedfinancialreportisageneralpurposefinancialreportwhichhasbeenpreparedinaccordancewithAustralian Accounting Standards, including the Accounting Interpretations issued by the Australian AccountingStandardsBoard(‘AASB’)andtheCorporationsAct2001. Theconsolidatedfinancialstatementsandnotescomplywith International Financial Reporting Standards and Interpretations issued by the International AccountingStandardsBoard.(b)BasisofpreparationThe financial report is presented in Australian dollars, which is the consolidated group’s functional currency,rounded to the nearest dollar. It has been prepared under the historical cost convention as modified by therevaluationoftheavailableforsaleinvestmentsatfairvalue.ThepreparationofafinancialreportinconformitywithAustralianAccountingStandardsrequiresmanagementtomakejudgements,estimatesandassumptionsthataffecttheapplicationofpoliciesandreportedamountsofassetsandliabilities,incomeandexpenses.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandvariousotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasis ofmaking the judgements about carryingvaluesof assets and liabilities that arenot readily apparent fromothersources.Actualresultsmaydifferfromtheseestimates.Theestimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognisedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiod,orintheperiodoftherevisionandfutureperiodsiftherevisionaffectsbothcurrentandfutureperiods.Judgements made by management in the application of Australian Accounting Standards that have a significanteffect on the financial report and estimates with a significant risk of material adjustment in the next year arediscussedinnote1(q).Theaccountingpoliciessetoutbelowhavebeenappliedconsistentlytoallperiodspresentedinthefinancialreport. (c)EarlyadoptionofstandardsFrom1July2010thegrouphaselectedtoapplyAASB9FinancialInstruments(asissuedinDecember2009)andAASB2009-11AmendmentstoAustralianAccountingStandardsarisingfromAASB9from1July2010,becausethenewaccountingpoliciesprovidemorereliableandrelevantinformationforuserstoassesstheamounts,timinganduncertaintyof futurecash flows. Inaccordancewith the transitionprovisions, comparative figureshavenotbeenrestated.ReferNote1(k)forfurtherdetailsontheimpactofthechangeinaccountingpolicy.As permitted under the transitional provisions, the group has elected not to adopt the December 2010 revisedversionofAASB9,whichaddressestheaccountingforfinancialliabilitiesandderecognitionoffinancialassetsandliabilities.Classification–from1July2010Asfrom1July2010,thegroupclassifiesitsfinancialassetsinthefollowingmeasurementcategories:those to bemeasured subsequently at fair value and those to bemeasured at amortised cost. The classificationdepends on the entity’s businessmodel formanaging the financial assets and the contractual terms of the cashflows.(d)PrinciplesofconsolidationTheconsolidatedentityfinancialstatementsconsolidatethoseofthecompanyandallofitssubsidiariesasatyearend.

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NotestotheFinancialStatement30June2016 NOTE1SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(Continued)(i)SubsidiariesThecompanycontrolsasubsidiaryifitisexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththesubsidiary and has the ability to affect those returns through its power over the subsidiary. The financialstatementsofthesubsidiariesarepreparedforthesamereportingperiodastheparentcompanyusingconsistentaccountingpolicies.The financial statementsof subsidiariesare included in theconsolidated financial statementsfromthedatethatcontrolcommencesuntilthedatethatcontrolceases.Investmentsinsubsidiariesarecarriedattheircostofacquisitionintheparententitynote.All transactionsandbalancesbetween companieswithin the consolidatedentity areeliminatedon consolidation,includingunrealisedgainsandlossesontransactionsbetweengroupcompanies.Whereunrealisedlossesonintra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from aconsolidatedentityperspective. Amountsreported in the financialstatementsofsubsidiarieshavebeenadjustedwherenecessarytoensureconsistencywiththeaccountingpoliciesadoptedbytheconsolidatedentity.Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year arerecognisedfromtheeffectivedateofacquisition,oruptotheeffectivedateofdisposal,asapplicable.(ii)InvestmentsinassociatesandjointventuresAssociatesarethoseentitiesoverwhichtheconsolidatedentityisabletoexertsignificantinfluencebutwhicharenotsubsidiaries.PeakOil&GasLimitedisanAssociateofOctanexforthepurposesoftheseaccounts.Ajointventureisanarrangementthattheconsolidatedentitycontrolsjointlywithoneormoreotherinvestors,andoverwhichtheconsolidatedentityhasrightstoashareofthearrangement’snetassetsratherthandirectrightstounderlyingassetsandobligations forunderlying liabilities. A jointarrangement inwhich theconsolidatedentityhasdirectrightstounderlyingassetsandobligationsforunderlyingliabilitiesisclassifiedasajointoperation.OphirProductionSdnBhdistreatedasajointventurecompanyforthepurposesoftheseaccounts.Investments in associates and joint ventures are accounted for using the equity method. Interests in jointoperationsareaccountedforbyrecognisingtheconsolidatedentity’sassets(includingitsshareofanyassetsheldjointly),itsliabilities(includingitsshareofanyliabilitiesincurredjointly),itsrevenuefromthesaleofitsshareoftheoutputarisingfromthejointoperation,itsshareoftherevenuefromthesaleoftheoutputbythejointoperationanditsexpenses(includingitsshareofanyexpensesincurredjointly).Anygoodwillorfairvalueadjustmentattributabletotheconsolidatedentity’sshareintheassociateorjointventureisnotrecognisedseparatelyandisincludedintheamountrecognisedasinvestment.Thecarryingamountoftheinvestmentinassociatesandjointventuresisincreasedordecreasedtorecognisetheconsolidatedentity’sshareoftheprofitorlossandothercomprehensiveincomeoftheassociateandjointventure,adjustedwherenecessarytoensureconsistencywiththeaccountingpoliciesoftheconsolidatedentity.When the consolidated entity’s share of losses exceeds its interest in the associate or joint venture the entitydiscontinues recognising its share of further losses. The interest in an associate or joint venture is the carryingamountoftheinvestmentintheassociateorjointventure(referNotes8and9)togetherwithlong-termintereststhatinsubstanceformpartoftheentity’snetinvestmentintheassociateorjointventure(referNote6).Unrealisedgainsand losseson transactionsbetweentheconsolidatedentityand itsassociatesand jointventuresare eliminated to the extent of the consolidated entity’s interest in those entities. Where unrealised losses areeliminated,theunderlyingassetisalsotestedforimpairment.(iii)JointoperationsJointlycontrolledoperationsandassetsTheinterestofthecompanyandoftheconsolidatedentityinunincorporatedjointoperationsandjointlycontrolledassetsarebrought toaccountbyrecognising in its financialstatements theassets itcontrols, the liabilities that itincurs, theexpenses it incursand itsshareof incomethat itearns fromthesaleofgoodsorservicesby the jointoperation.Thefinancialstatementsofthejointlycontrolledoperationsandassetsarepreparedforthesamereportingperiodastheparentcompanyusingconsistentaccountingpolicies.

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NotestotheFinancialStatement30June2016 NOTE1SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(Continued) (iv)TransactionseliminatedonconsolidationIntragroup balances and any unrealised gains and losses or income and expenses arising from intragrouptransactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising fromtransactions with associates are eliminated to the extent of the consolidated entity’s interest in the entity withadjustmentsmadetothe‘Investmentinassociates’and‘Shareofassociates’netprofitaccounts.Unrealisedlossesareeliminatedinthesamewayasunrealisedgains,butonlytotheextentthatthereisnoevidenceofimpairment.Gainsandlossesarerecognisedasthecontributedassetsareconsumedorsoldbytheassociatesor,ifnotconsumedorsoldbytheassociate,whentheconsolidatedentity’sinterestinsuchentitiesisdisposedof. (e)TaxesIncomeTaxIncometaxesareaccountedforusingthecomprehensivebalancesheetliabilitymethodwhereby:

• Thetaxconsequencesofrecovering(settling)allassets(liabilities)arereflectedinthefinancialstatements;• Currentanddeferredtaxisrecognisedasincomeorexpenseexcepttotheextentthatthetaxrelatedtoequity

itemsortoabusinesscombination;• Adeferredtaxassetisrecognisedtotheextentthatitisprobablethatfuturetaxableprofitwillbeavailableto

realisetheasset;• Deferredtaxassetandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheperiodwhere

theassetisrealisedortheliabilitysettled.

GoodsandServicesTax(GST)Revenues,expensesandassetsarerecognisednetoftheamountofGST,exceptwheretheamountofGSTincurredisnot recoverable from the taxationauthority. In these circumstances, theGST is recognisedaspart of the cost ofacquisitionoftheassetoraspartoftheexpense.ReceivablesandpayablesarestatedwiththeamountofGSTincluded.ThenetamountofGSTrecoverablefrom,orpayableto,theATOisincludedasacurrentassetorliabilityinthebalancesheet.Cashflowsareincludedinthecashflowstatementonagrossbasis.TheGSTcomponentsofcashflowsarisingfrominvestingandfinancingactivitieswhicharerecoverablefrom,orpayableto,theATOareclassifiedasoperatingcashflows.CommitmentsandcontingenciesaredisclosednetoftheamountofGSTrecoverablefrom,orpayableto,thetaxationauthority.TaxConsolidationThe company and itswholly owned resident entities are part of a tax-consolidated group. As a consequence, allmembers of the tax-consolidated group are taxed as a single entity. The head entitywithin the tax-consolidatedgroupisOctanexNL.Currenttaxexpense/income,deferredtaxliabilitiesanddeferredtaxassetsarisingfromtemporarydifferencesofthemembersofthetax-consolidatedgrouparerecognisedintheseparatefinancialstatementsofthemembersofthe tax-consolidated group using the ‘separate taxpayer within group’ approach by reference to the carryingamountsoftheassetsandliabilitiesintheseparatefinancialstatementsofeachentityandthetaxvaluesapplyingundertaxconsolidation.Anycurrenttaxliabilities(orassets)anddeferredtaxassetsarisingfromunusedtaxlossesofthesubsidiariesareassumedbytheheadentityinthetax-consolidatedgroupandarerecognisedbytheCompanyasamountspayable(receivable) to / (from) other entities in the tax-consolidated group in conjunction with any tax fundingarrangement amounts. Any difference between these amounts is recognised by the Company as an equitycontributionordistribution.TheCompanyrecognisesdeferredtaxassetsarisingfromunusedtaxlossesofthetax-consolidatedgrouptotheextentthatisprobablethatfuturetaxableprofitsofthetax-consolidatedgroupwillbeavailableagainstwhichtheassetcanbeutilised.

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NotestotheFinancialStatement30JUNE2016 NOTE1SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(Continued) Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revisedassessmentsoftheprobabilityofrecoverabilityisrecognisedbytheheadentityonly.(f)ForeignCurrencyTranslationThefunctionalandpresentationcurrencyofOctanexNLanditsAustraliansubsidiariesisAustraliandollars(A$).Foreigncurrencytransactionsaretranslatedintothefunctionalcurrencyusingtheexchangeratesrulingatthedateofthetransaction.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesareretranslatedattherateofexchange rulingat the reportingdate.Foreignexchangegainsand losses resulting fromsettling foreigncurrencytransactions,aswellasfromrestatingforeigncurrencydenominatedmonetaryassetsandliabilities,arerecognisedin the Statementof Profit or Loss andOtherComprehensive Income, exceptwhen they aredeferred in equity asqualifyingcashflowhedgesorwheretheyrelatetodifferencesonforeigncurrencyborrowingsthatprovideahedgeagainstanet investment ina foreignentity.Non-monetary itemsmeasuredat fairvalue ina foreigncurrencyaretranslatedusingtheexchangeratesatthedatewhenfairvaluewasdetermined.GroupcompaniesOnconsolidation,theassetsandliabilitiesof foreignoperationsaretranslatedintodollarsattherateofexchangeprevailing at the reporting date and their Statements of Profit or Loss and Other Comprehensive Income aretranslated at exchange rates prevailing at the dates of the transactions. The exchange differences arising ontranslationforconsolidationarerecognisedinothercomprehensiveincome.Ondisposalofaforeignoperation,thecomponentofothercomprehensive incomerelating to thatparticular foreignoperation is recognised inprofitorloss.(g)ReceivablesTradereceivablesarerecognisedatoriginalinvoiceamountslessanallowanceforuncollectibleamountsandhaverepaymenttermsbetween30and90days.Collectabilityoftradereceivablesisassessedonanongoingbasis.Debtswhich are known to be uncollectible are written off. An allowance is made for doubtful debts where there isobjective evidence (such as significant financial difficulties on the part of the counterparty or default) that thecompanywillnotbeabletocollectallamountsdueaccordingtotheoriginalterms.(h) CashandcashequivalentsCashandcashequivalentscomprisecashbalancesandatcallbankdeposits.Bankoverdraftsthatarerepayableondemandandformanintegralpartofthecompany’scashmanagementareincludedasacomponentofcashandcashequivalentsforthepurposeofthecashflowstatement.(i) PayablesTrade,accrualsandotherpayablesarerecordedinitiallyatfairvalueandsubsequentlyatamortisedcost.Tradeandotherpayablesarenon-interestbearingandarenormallysettledon60-dayterms.(j) AssetsHeldforsaleWhen thegroup intends to sell anon-current assetor a groupof assets (adisposal group), and if salewithin12monthsishighlyprobable,theassetordisposalgroupisclassifiedas‘heldforsale’andpresentedseparatelyinthestatementoffinancialposition.Liabilitiesareclassifiedas‘heldforsale’andpresentedassuchinthestatementoffinancialpositioniftheyaredirectlyassociatedwithadisposalgroupAssetsclassifiedas ‘held forsale’aremeasuredat the lowerof theircarryingamounts immediatelyprior to theirclassification as held for sale and their fair value less costs to sell. However, some ‘held for sale’ assets such asfinancialassetsordeferredtaxassets,continuetobemeasuredinaccordancewiththegroup'saccountingpolicyforthoseassets.(k) EquityinvestmentsAllequityinvestmentsaremeasuredatfairvalue.Equityinvestmentsthatareheldfortradingaremeasuredatfairvaluethroughprofitorloss.Forallotherequityinvestments,thegroupcanmakeanirrevocableelectionatinitialrecognition of each investment to recognise changes in fair value through other comprehensive income (“OCI”)ratherthanprofitorloss.

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NotestotheFinancialStatement30JUNE2016 NOTE1SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(Continued) (k)Equityinvestments(continued)Atinitialrecognition,thegroupmeasuresafinancialassetatitsfairvalueplus,inthecaseofafinancialassetnotatfair value throughprofit or loss, transaction costs that aredirectly attributable to the acquisitionof the financialasset.Transactioncostsoffinancialassetscarriedatfairvaluethroughprofitorlossareexpensedasprofitorloss.The group subsequentlymeasures all equity investments at fair value. Thedirectors have elected to present fairvaluegainsandlossesonequityinvestmentsinOCI.Thereisnosubsequentreclassificationoffairvaluegainsandlossestoprofitorloss.Dividendsfromsuchinvestmentscontinuetoberecognisedinprofitorlossasotherrevenuewhenthegroup’srighttoreceivepaymentsisestablishedandaslongastheyrepresentareturnoninvestment.(l) Property,plantandequipmentComputerandotherequipmentComputer and other equipment (comprising fittings and furniture) are initially recognised at acquisition cost ormanufacturing cost, including any costs directly attributable to bringing the assets to the location and conditionnecessary for it to be capable of operating in the manner intended by the Group’s management. Computerequipment and other equipment are subsequently measured using the cost model, cost less subsequentdepreciationandimpairmentlosses.Depreciationisrecognisedonastraight-linebasistowritedownthecostlessestimatedresidualvalueofcomputerequipmentandotherequipment.Thefollowingusefullivesareapplied:

• Computerequipment: 4years• Otherequipment: 10years

Gainsorlossesarisingonthedisposalofproperty,plantandequipmentaredeterminedasthedifferencebetweenthedisposalproceedsandthecarryingamountoftheassetsandarerecognisedinprofitorlosswithinotherincomeorotherexpenses.(m) SharecapitalOrdinarysharecapitalisrecognisedatthefairvalueoftheconsiderationreceivedbythecompany. Transactionscostsarisingonthe issueofordinarysharesarerecogniseddirectly inequityasareductionof theconsiderationreceived,netofanyincometaxbenefit.Ordinarysharesareclassifiedasequity.Costsdirectlyattributabletotheissueofnewsharesoroptionsareshownasadeductionfromtheequityproceeds,netofanyincometaxbenefit.Costsdirectlyattributabletotheissueofnewsharesoroptionsassociatedwiththeacquisitionofabusinessareincludedaspartofthepurchaseconsideration(n)ImpairmentAt each reporting date the Group assesses whether there is any indication that individual assets are impaired.Whereimpairmentindicatorsexist,recoverableamountisdeterminedandimpairmentlossesarerecognisedintheprofitorlosswheretheasset'scarryingvalueexceedsitsrecoverableamount.(i)CalculationofrecoverableamountRecoverableamountisthegreateroffairvaluelesscoststosellandvalueinuse.Itisdeterminedforanindividualasset,unlesstheasset’svalueinusecannotbeestimatedtobeclosetoitsfairvaluelesscoststosellanditdoesnotgenerate cash inflows that are largely independent of those from other groups or assets, in which case, therecoverableamountisdeterminedfortheclassofassetstowhichtheassetbelongs.(ii)ReversalsofimpairmentImpairmentlossesarereversedwhenthereisanindicationthattheimpairmentlossmaynolongerexistandtherehasbeenachangeintheestimateusedtodeterminetherecoverableamount.An impairment loss is reversedonly to the extent that the asset’s carrying amountdoesnot exceed the carryingamount that would have been determined, net of depreciation or amortisation, if no impairment loss had beenrecognised.

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NotestotheFinancialStatement30JUNE2016 NOTE1SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(Continued) (o) Restoration,rehabilitationandenvironmentexpenditureRestoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities areprovidedforaspartof thecostof thoseactivities.Costsareestimatedonthebasisofcurrent legalrequirements,anticipatedtechnologyandfuturecoststhathavebeendiscountedtotheirpresentvalue.Estimatesoffuturecostsarereassessedateachreportingdate.(p) ExplorationandevaluationassetsExplorationandevaluationassets,includingthecostsofacquiringpermitsorlicences,arecapitalisedasexplorationandevaluationassetsonanareaofinterestbasis.Explorationandevaluationassetsareonlyrecognisediftherightstotenureoftheareaofinterestarecurrentandeither:(i) theexpendituresareexpected tobe recouped through successfuldevelopmentandexploitationof theareaofinterest,oralternatively,byitssaleorpartialsale:or(ii) activities in the area of interest have not at the reporting date, reached a stagewhich permits a reasonableassessmentoftheexistenceorotherwiseofeconomicallyrecoverablereservesandactiveandsignificantoperationsin,orinrelationto,theareaofinterestarecontinuing.Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technicalfeasibilityandcommercialviability,and(ii)factsandcircumstancessuggestthatthecarryingamountexceedstherecoverableamount.Proceeds from the saleof explorationpermitsor recoupmentof exploration costs from farminarrangementsarecredited against exploration costs previously capitalised. Any excess of the proceeds overs costs recouped areaccountedforasagainondisposal.FarmoutsintheexplorationandevaluationphaseThegroupdoesnotrecordanyexpendituremadebythefarmineeonitsaccount.Italsodoesnotrecogniseanygain or loss on its exploration and evaluation farmout arrangements, but redesignates any costs previouslycapitalised in relation to the whole interest as relating to the partial interest retained. Any additional cashconsiderationreceiveddirectlyfromthefarmineeiscreditedagainstcostspreviouslycapitalisedinrelationtothewholeinterest,withanyexcessaccountedforasagainondisposal.(q)AccountingestimatesandjudgementsManagementdeterminethedevelopment,selectionanddisclosureofthecompany’scriticalaccountingpoliciesandestimates and the application of these policies and estimates. There are no estimates and judgements that areconsidered to have a significant risk of causing a material adjustment to the carrying amounts of assets andliabilitieswithinthenextfinancialyear.Thereis,however,ariskthatactualexpendituretoachieveminimumworkobligationscoulddifferfromestimatesdisclosedinthenotestothefinancialstatements(seeNote17).Theestimatedamountsrepresentthehigherendofpossible futureexpenditure. Workrequirementsachievedby farm-insmaterially reduce the levelofexpenditureincurredbythecompanytocomplywithworkprogramcommitments.PerNotes1(p),managementexercisesjudgementastotherecoverabilityofexplorationexpenditure.Anyjudgmentmay change as new information becomes available. If, after having capitalised exploration and evaluationexpenditure,management concludes, onceactivities in the areaof interesthave reacheda stagewhichpermits areasonableassessmentoftechnicalfeasibilityandcommercialviability,thatthecapitalisedexpenditureisunlikelytoberecoveredbyfuturesaleorexploitation,thentherelevantcapitalisedamountwillbewrittenoffthroughthestatementofprofitorlossandothercomprehensiveincome.Theconsolidatedentityissubjecttoincometaxesinnumerousjurisdictions.Thedeterminationoftheconsolidatedentity'sprovisionforcurrentincometaxaswellasdeferredtaxassetsandliabilitiesinvolvessignificantjudgementsandestimateson certainmatters and transactions, forwhich theultimateoutcomemaybeuncertain. If the finaloutcome differs from the consolidated entity's estimates, such differences will impact the current and deferredincometaxassetsandliabilitiesintheperiodinwhichsuchdeterminationismade.

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NotestotheFinancialStatement30JUNE2016 NOTE1SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(Continued) (q)Accountingestimatesandjudgements(continued)Management has assessed the company’s investment in Ophir Production Sdn Bhd (OPSB) and Peako Limited(Peak).ManagementhasconcludedthatOPSBisajointventurecompanyandthatPeakmeetsthedefinitionofanassociate.AASB128requirestheuseofequityaccountingforinvestmentinjointventurecompaniesandassociates.ManagementhasassessedrecoverabilityoftheadvancetoOphirProductionSdnBhd(“OPSB’)andhasdecideditscarryingvalue tobeappropriate (ReferNote6). Indetermining the recoverableamountmanagementhavemadeassumptionsandestimatesregarding thepresentvalueof futurecashflowsbasedonthe latestdata; includingoilprices, production levels, interest rates and an appropriate risk based discount rate. These cash flows areparticularlysensitivetofutureproductionandoilprices.(r)RevenueRevenueisrecognisedatthefairvalueofconsiderationreceivedorreceivable.Amountsdisclosedasrevenuearenetofreturns,tradeallowancesanddutiesandtaxespaid.Thefollowingspecificrecognitioncriteriamustalsobemetbeforerevenueisrecognised:InterestRevenueisrecognisedasinterestaccruesusingtheeffectiveinterestmethod.Theeffectiveinterestmethodusestheeffectiveinterestratewhichistheratethatexactlydiscountstheestimatedfuturecashreceiptsovertheexpectedlifeofthefinancialasset.(s)Share-basedpaymenttransactionsEquitysettledtransactionsThe fair valueof options grantedare recognisedas an expensewith a corresponding increase in equity.The fairvalueismeasuredatgrantdateandrecognisedovertheperiodduringwhichthegranteebecomeunconditionallyentitledtotheoptions.Thefairvalueatgrantdateisindependentlydeterminedusinganoptionpricingmodelthattakesintoaccounttheexercise price, the term of the option, the impact of dilution, the share price at grant date and expected pricevolatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of theoption.Thefairvalueoftheoptionsgrantedisadjustedtoreflectmarketvestingconditions,butexcludestheimpactofanynon-marketvestingconditions(forexample,profitabilityandsalesgrowthtargets).Non-marketvestingconditionsareincludedinassumptionsaboutthenumberofoptionsthatareexpectedtobecomeexercisable.Ateachreportingdate,theentityrevisesitsestimateofthenumberofoptionsthatareexpectedtobecomeexercisable.Theexpenserecognisedeachperiodtakesintoaccountthemostrecentestimate.Theimpactoftherevisiontooriginalestimates,if any, is recognised in the statement of profit or loss and other comprehensive income with a correspondingadjustmenttoequity.(t)FairvalueFairvaluesmaybeusedforfinancialassetandliabilitymeasurementaswellasforsundrydisclosures.Fairvaluesforfinancialinstrumentstradedinactivemarketsarebasedonquotedmarketpricesatreportingdate.Thequotedmarketpriceforfinancialassetsisthecurrentbidpriceandthequotedmarketprice.The fair value of financial instruments that are not traded in an active market are determined using valuationtechniques. Assumptions used are based on observable market prices and rates at reporting date. Estimateddiscountedcashflowsareusedtodeterminefairvalueoftheremainingfinancialinstruments.Thecarryingvaluelessimpairmentprovisionoftradereceivablesandpayablesareassumedtoapproximatetheirfairvaluesduetotheirshort-termnature.Thefairvalueoffinancialliabilitiesfordisclosurepurposesisestimatedbydiscountingthefuturecontractualcashflowsatthecurrentmarketinterestratethatisavailabletothecompanyforsimilarfinancialinstruments.

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NotestotheFinancialStatement30JUNE2016NOTE1SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(Continued)(u)BorrowingCostsBorrowingcostsincurredfortheconstructionofaqualifyingassetarecapitalisedduringtheperiodoftimethatitisrequiredtocompleteandpreparetheassetforitsintendeduseorsale.Otherborrowingcostsareexpensedwhenincurred.(v)EarningsperShareBasicearningspershareBasic earningsper share is calculatedbydividing theprofit attributable tomembersofOctanexby theweightedaveragenumberofordinarysharesoutstandingduringthefinancialyear,adjustedforbonuselementsinordinarysharesduringtheyear.Incalculatingtheweightedaveragenumberofordinarysharesoutstanding,thepartlypaidsharesareaccountedforonapro-ratabasisaccordingtotheamountofcalloutstandinginrelationthereto.DilutedearningspershareEarningsusedtocalculatedilutedearningspersharearecalculatedbyadjustingthebasicearningsbytheafter-taxeffectofdividendsandinterestassociatedwithdilutivepotentialordinaryshares.Theweightedaveragenumberofsharesusedisadjustedfortheweightedaveragenumberofordinarysharesthatwouldbeissuedontheconversionofallthedilutivepotentialordinarysharesintoordinaryshares.(w)NewandrevisedaccountingstandardsissuednotyeteffectiveThe company has adopted all of the new and revisedAccounting Standards issued by theAustralianAccountingStandardsBoard(AASB)thatarerelevanttoitsoperationsandeffectiveforannualreportingperiodsbeginningon1July2015.TheDirectorsdonotbelievethatnewandrevisedstandardsissuedbyAASBthatarenotyeteffectivewillhaveanymaterialfinancialimpactonthefinancialstatements. Consolidated NOTE 2016 2015 $ $NOTE2OTHERINCOMESundryincome–directorrelated 20 18,840 234,556 Netforeignexchangegain 271,943 604,483 Sundryincome-other 49,003 117,716 __________ ___________Totalincome 339,786 956,755 ======= ======== F

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NotestotheFinancialStatement30JUNE2016 Consolidated NOTE 2016 2015 $ $NOTE3EXPENSESAuditfees 22 66,955 79,292 Consulting 191,246 534,824 Directors’remuneration 19 (151,104) 189,203 Directors’retirementbenefit - 9,334 Explorationexpensed 575 6,031 Legalfees - 11,343 Managementfees 75,000 96,500 Reporting,registryandstockexchange 41,383 90,113 Officeexpenses 234,622 459,809 Otherexpenses 200,069 416,591Projectcosts 206,939 - Salaries 412,100 353,120 Sharebasedpayments:fairvalueof -optionsatgrantdate-directors 15 - 32,973 -optionsatgrantdate–otherindividuals 15 - 151,549 Impairmentofexplorationassets 125,533 8,487,470ImpairmentofloanreceivablefromPeakoLimited 6 - 1,274,381 _____________ ____________Totalexpenses 1,403,318 12,192,533 ========= =========NOTE4INCOMETAXComponentsofincometaxbenefitCurrenttaxexpenseCurrentperiod (351,418)(2,885,912) Adjustmentforpriorperiod (271,347) - DeferredtaxexpenseOriginationandreversaloftemporarydifferences - - ___________ ___________Total (622,765) (2,885,912) ======== =======Reconciliationbetweentaxbenefitandpre-taxlossLossbeforetax (2,438,037)(14,410,206) Incometaxbenefitusingstatutoryincometaxrateof30% (731,411) (4,323,062) Taxeffectofadjustmentrecognisedintheperiodfor:Prospectuscosts (3,005) (12,152) Adjustmentforpriorperiods (271,347) - Non-assessableincome (108,220) (304,421) Othernon–deductibleexpenses 491,218 1,679,390 Effectofdifferenttaxratesinforeignjurisdictions - 74,333 ___________ ___________ Incometaxbenefit (622,765) (2,885,912) ======== ======= Frankingcreditbalance: Frankingaccountbalanceasatendofyear 1,741,532 1,741,532 ___________ ___________

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NotestotheFinancialStatement30JUNE2016 Consolidated NOTE 2016 2015 $ $ NOTE5CASHANDCASHEQUIVALENTSCashatbankandonhand 3,417,294 5,832,084 Bankdepositsatcall - - ____________ ___________ 3,417,294 5,832,084 ======== =========Cash at bank and on hand includes $2,346,405 held with the OCBC Bank in Singapore (2015: $5,023,806l). AsrequiredbythefinancingarrangementwithSabahInternationalPetroleumLtd(“SIP”),therearerestrictionsontheuse of these funds such that they are primarily to be used to fund cash calls for the Ophir project or to repayborrowingsfromSIP.Cashandcashequivalentsaresubjecttointerestrateriskastheyearnfloatingrates.Intheyearto30June2016theaveragefloatingratefortheconsolidatedentitywas0.1%(2015:0.1%).DetailsofinterestrateriskandsensitivitycanbefoundinNote21.At30June2016allbankdepositsareatcall. NOTE6TRADEANDOTHERRECEIVABLESCURRENTOtherreceivables 367,044 375,013LoantoPeakoLimited9,20 - 440,000 Director-relatedentities-otherreceivables 20 15,279 37,367 __________ __________ 382,323 303,173 ======= =======NONCURRENTAdvancetoOphirProductionSdnBhd 8 6,568,663 5,420,021 ======= ======= Thecarryingamountofallreceivablesisequaltotheirfairvalueastheyareshortterm.The current loan to Peako Limited was impaired down from $1,714,381 to $440,000 at 30 June 2015; animpairment loss of $1,274,381 (2015: Nil). The impaired value of $440,000was received in full on 2 July 2015.Octanex reached agreement with Peako in November 2015 whereby the balance of the loan outstanding($1,274,381 prior to impairment) was satisfied through a proceeds sharing arrangement whereby Octanex willshare in any proceeds that Peakomight receive in connectionwith its Cadlao interests up untilNovember 2017(Note28).At30June2016noreceivablesareimpairedorpastdueexceptfortheimpairmentofthenon-currentadvancetoOphirProductionSdnBhd(Note8).The maximum credit risk for the company is the gross value of all receivables. All receivables are non-interestbearing.

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NotestotheFinancialStatement30JUNE2016 Consolidated 2016 2015 $$ NOTE7OTHERFINANCIALASSETS(NON-CURRENT) FinancialAssetsatfairvaluethroughothercomprehensiveincomeInvestmentindirector-relatedequities 7(a) 21,234 57,744 Investmentinotherlistedequities - 69,085 ________ ________ 7(b) 21,234 126,829 Atcost:Sharesincontrolledentities 7(c) 1 1 ________ ________ 21,235 126,830 ======= =======(a)Director-relatedEntities: MobyOil&GasPtyLtd Principalactivityisoilandgasexploration - 57,744 ======= =======EnegexLimited Principalactivityisoilandgasexploration(Note20) 21,234 - ======= =======(b)Reconciliationofthecarryingamountof FinancialAssetsatfairvaluethroughothercomprehensiveincome Balanceatbeginningofyear 126,830 288,025 Netrevaluation(decrement)increment (105,595) (161,195) ________ ________ 21,235 126,830 ======= ========DetailsofmarketpriceriskandsensitivitycanbefoundinNote21.(c)SharesinControlledEntities

UnitedOil&GasPtyLtd 1 1

_______ _______ UnitedOil&GasPtyLtd,acompanyincorporatedinAustralia,isowned50%byOctanexand50%byafullyownedsubsidiaryofOctanex,StrataResourcesPtyLtd.The consolidated entity did not consolidate United Oil & Gas Pty Ltd on the grounds that balances were notconsideredmaterial.Summaryfinancialinformationislistedbelow:

Non- Non- Current Current Total Current Current Total Profit assets assets assets Liabilities Liabilities Liabilities Revenue Expenses (Loss)

$ $ $ $ $ $ $ $ $2016 - - 2,000 - 2,000 - - -2015 904 - 904 2,000 - 2,000 - 12 (12)

NOTE8INVESTMENTINAJOINTVENTURECOMPANYTheconsolidatedentityhasa50%(2015:50%)interest inOphirProductionSdnBhd(OPSB),a jointlycontrolledentity,incorporatedinMalaysiaandinvolvedwithoffshoreoilfielddevelopmentinMalaysia.The consolidated entity’s interest inOPSB is accounted forusing the equitymethod in the consolidated financialstatements.Summarisedfinancialinformationinthejointventure,basedonMalaysianaccountingstandards,andareconciliation with the carrying amount of the investment in the consolidated financial statements are set outbelow:

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NotestotheFinancialStatement30JUNE2016 NOTE8INVESTMENTINAJOINTVENTURECOMPANY(Continued) Consolidated Note 2016 2015CurrentAssets(includingcash$2,582,720(2015:$3,769,319) 3,345,180 4,135,444 Non-CurrentAssets 26,519,092 13,562,837 Currentliabilities (2,712,944) (2,722,212)Non-CurrentLiabilities (30,704,191)(16,395,509 ___________ __________Equity (3,552,862) (1,419,440) ======== =======Proportionoftheconsolidatedentity’sownership50%50% ======= =======Costoftheinvestment 1,458,920 1,458,920Shareofequityaccountedlossrequiredbyaccountingstandards (1,458,920) (1,458,920) ___________ __________Carryingamountoftheinvestment - - ======= =======Theinvestmentiscarriedatnilcostat30June2016duetotheapplicationofaccountingstandardswhichrequiresthe company to apply its 50%shareofOPSB’s losses to the carrying valueof the investment inOPSB.Once thatinvestment value is extinguished to nil value, the losses then are applied to the advancemade to OPSB to fundOctanex’sshareofOPSB’sdevelopmentandrelatedexpenditure,asitrepresentspartoftheGroup’snetinvestmentinOPSB.ThecostoftheinvestmentinOPSBandtheadvancetoOPSBare,howeverexpectedtoberecoveredfromcapital return and revenue in the formof dividends fromproduction following the development of theOphir oilfield.AdvancetoOphirProductionSdnBhdAdvance 8,109,467 5,699,335Shareofequityaccountedlossrequiredbyaccountingstandards (1,540,804) (279,314) ___________ __________Carryingamountofadvance 6,20 6,568,663 5,420,021 ======== =======SummarisedstatementofprofitorlossofOphirProductionSdnBhdRevenue 13,194,382 13,031,461Expenses (15,717,362)(16,507,929) ____________ ___________Lossbeforetax (2,522,980) (3,476,468) ___________ ___________Incometaxbenefit - - ____________ ___________Lossaftertax (2,522,980) (3,476,468) ================Consolidatedentity’sshareoflossfortheyear (1,261,490) (1,738,234) ================Therearenocontingentliabilitiesinthejointventure.On4November2014,OPSBexecutedaFacilitiesAgreementforsyndicatedtermloanfacilitiesofuptoUS$118.76million for75%of theplannedcapital expenditure for thedevelopmentof theOphir field,75%of the first threequarters of operating expenditure and a bank guarantee facility of US$13.5 million. On 4 January 2016 asupplemental letterwas signed reducing the facility toUS$84.0millionand thebankguarantee facility toUS$9.0million. The loan term is up to four years and Octanex has provided a proportionate corporate guarantee andundertaking in respect of the facilities. Octanex has also provided a proportionate corporate undertaking toPETRONASforthecontractperformanceobligationsofOPSBinrelationtotheOphirRiskServiceContract.On4December2014OctanexexecutedaSharePlacementandConvertibleNoteFacilitywithSabahInternationalPetroleumLtdforUS$12million.TheFacilityremainsunusedat30June2016andtothedateofsigningthisreport.ItissecuredbyachargeoverthesharesofOctanexPteLtd;theentitywhichholdsthe50%interestinOphirforthegroup.

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NotestotheFinancialStatement30JUNE2016 NOTE8INVESTMENTINAJOINTVENTURECOMPANY(Continued) Consolidated Note 2016 2015Capitalcommitmentsare:Payablenotlaterthanoneyear 20,243,839 847,666 Payablelaterthanoneyearbutnotlaterthanthreeyears - - _____________ ________

20,243,839 847,666 ========= ========NOTE9INVESTMENTINANASSOCIATEThecompanyhasa13.96%(2015:20.94%)interestinPeakoLimited(“Peako”),anAustralianSecuritiesExchangelistedcompanyinvolvedwithnaturalresourcesexploration.Thecompany’sinterestinPeakoisaccountedforusingtheequitymethodintheconsolidatedfinancialstatements.Thefollowingtableillustratesthesummarisedfinancialinformationofthecompany’sinvestmentinPeako: Consolidated NOTE 2016 2015CurrentAssets 279,606 620,022 Non-CurrentAssets 6,850 10,201 Currentliabilities (41,342) (1,775,778) ___________ ___________Equity 245,114 (1,145,555) ======= =======Costoftheinvestment 1,335,305 1,335,305Shareofequityaccountedlossrequiredbyaccountingstandards (837,013) (1,074,973)Impairmentofinvestment (355,843) - ___________ ___________Carryingamountoftheinvestment 142,449 260,332 ======= =======TherearenocontingentliabilitiesintheassociateExplorationcommitmentsare:Payablenotlaterthanoneyear - - Payablelaterthanoneyearbutnotlaterthanthreeyears - - _________ ________

- - ======= ======== NOTE10PROPERTY,PLANT&EQUIPMENT OfficeEquipmentAtcost 7,258 7,258 Accumulateddepreciation (7,258) (5,426) ________ ________ - 1,832 ====== =======Balanceatbeginningofyear 1,832 26,281 Additions - - Depreciation (1,832) (4,469)DisposalofAssets - (19,980) ________ ________Balanceatendofyear - 1,832 ====== =======

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NotestotheFinancialStatement30JUNE2016NOTE11EXPLORATIONANDEVALUATIONASSETS Carryingamountatbeginningofyear 40,974,942 48,842,991 Impairmentofexplorationassets (125,533)(8,487,470)ExchangerevaluationofNZDexplorationandevaluationasset-(156,885) Costincurredduringtheyear 359,3821,126,306Costsrecovered -(350,000) ____________ ____________Carryingamountatendofyear 41,208,791 40,974,942 ======== =========Explorationandevaluationassetsrelatetotheareasofinterestintheexplorationphaseforpetroleumexplorationpermitsandaretentionlease.

30/06/2016 30/06/2015

Permits PermitsWA-323-P WA-323-PWA-330-P WA-330-PWA-362-P WA-362-PWA-363-P WA-363-PWA-387-P WA-387-PWA-407-P WA-407-PWA-420-P WA-420-P- PEP51906 RetentionLease

RetentionLease

WA-54-R WA-54-RWA-54-R, WA-323-P, WA-330-P, WA-362-P and WA-363-P are held through joint operations and details of theinterestsheldintheretentionleaseandsixtheexplorationpermitscanbefoundinNote19.WA-407-PandWA-420-Pare100%heldbythewholly-subsidiary,GoldsboroughEnergyPtyLtd.WA-387-Pisheld100%bythewholly-ownedsubsidiary,ExmouthExplorationPtyLtd.Ultimaterecoveryofexplorationandevaluationassetsisdependentuponexplorationsuccessand/orthecompanymaintainingappropriatefundingtosupportcontinuedexplorationactivities.

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NotestotheFinancialStatement30JUNE2016 Consolidated NOTE 2016 2015 $ $NOTE12TRADEANDOTHERPAYABLES FinancialliabilitiesatamortisedcostCurrentTradecreditorsandaccruals 361,381 548,384 Director-relatedentities-otherpayables 20 273,038 709,024 __________ __________ 634,419 1,257,408 ======== =======Trade and other payables are current liabilities ofwhich the fair value is equal to the current carrying amount.Information about the company’s exposure to foreign exchange risk in relation to trade payables, includingsensitivitiestochangesinforeignexchangerates,isprovidedinNote21.NOTE13PROVISIONSCurrentAnnualLeave 16,644 15,207Directors’retirementbenefit(1) 82,125 82,125Longserviceleave 31,407 27,736 ________ ________ 130,176 125,068 ======= ======= (1) On the 29th October 1997 a deed of appointment was signed by EG Albers. The deed detailed terms ofcontinuationofhisappointmentaschairmanofOctanexNL.Amongstother things, itprovides forapaymentofaretirementbenefittoEGAlbersaschairman.Adeedofvariationwassigned16August2016,andeffective30June2016,thatvariedthetermsofcalculationoftheRetirementBenefitundertheoriginalDeed.Theamountreflectsthe23yearsofserviceEGAlbershasprovidedtothecompany.NOTE14DEFERREDTAXLIABILITIES

DeferredTaxAssets DeferredTaxLiabilities NetDeferredTax

Consolidated

2016$

2015$

2016$

2015$

2016$

2015$

Investmentrevaluations

(1,593) (775,820) - - (1,593) (775,820)

Explorationcosts - - 12,844,311 13,046,016 12,844,311 13,046,016Interestreceivable - - - 24,589 - 24,589Accruedexpenses (9,000) (9,450) - - (9,000) (9,450)Provisions (39,053) (36,534) - - (39,053) (36,534)Carriedforwardtaxlosses

(4,272,716) (3,878,314) - - (4,272,716) (3,878,314)

_____________(4,322,362)========

_____________(4,700,118)========

_____________12,844,311========

_____________13,070,605========

____________8,521,949========

____________8,370,487========

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NotestotheFinancialStatement30JUNE2016 NOTE14DEFERREDTAXLIABILITIES(Continued) Opening Charged/ Charged/ Closing Balance (credited) (credited) Balance At1July toIncome directlyto atJune 2015 Statement Equity 2016 $ $ $ $ConsolidatedInvestmentrevaluations (775,820) - 774,227 (1,593) Explorationcosts 13,046,016 (201,705) - 12,844,311 Interestreceivable 24,589 (24,589) - - Accruedexpenses (9.450) 450 - (9,000) Provision (36,534) (2,519) - (39,053) Carriedforwardtaxlosses (3,878,314) (394,402) - (4,272,716) 8,370,487 (622,765) 774,227 8,521,949 Opening Charged/ Charged/ Closing Balance (credited) (credited) Balance At1July toIncome directlyto atJune 2014 Statement Equity 2015 $ $ $ $ConsolidatedInvestmentrevaluations (727,462) - (48,358) (775,820) Explorationcosts 14,979,205 (1,933,189) - 13,046,016 Interestreceivable 1,126 23,463 - 24,589 Accruedexpenses (9,810) 360 - (9,450) Provision (21,837) (14,697) - (36,534) Carriedforwardtaxlosses (2,815,747) (1,062,567) - (3,878,314) 11,405,475 (2,986,630)(48,358) 8,370,487 NOTE15CONTRIBUTEDEQUITYIssuedCapital 2016Shares 2015Shares 2016

$2015$

Ordinarysharesfullypaid(a) 202,465,561 192,265,561 58,894,364 56,806,364Ordinarysharespartlypaid(b) 67,078,910 74,278,910 9,961,975 11,041,975Ordinarysharesissuedpursuanttotrusteestockscheme(c)

30,000,000

33,000,000

-

-

Balanceatendofyear

_____________299,544,471=========

_____________299,544,471=========

____________68,856,339=========

____________67,848,339=========

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NotestotheFinancialStatement30JUNE2016 NOTE15CONTRIBUTEDEQUITY(Continued) 2016

Shares2015Shares

2016$

2015$

(a)Ordinarysharesfullypaid Movementsduringtheyear

BalanceatbeginningofyearTrusteeshareissue(1)Issuecosts

192,265,5613,000,000

-

152,122,898--

56,806,364300,000(12,000)

50,560,984--

Shareplacement - 40,332,663 - 6,393,860PlacementcostsPartlypaidsharesfullypaid(2)

-7,200,000

--

-1,800,000

(128,485)-

Sharebuyback - (190,000) - (19,995)Balanceatendofyear

_______________202,465,561=========

_______________192,265,561=========

______________58,894,364=========

______________56,806,364=========

(1)3,000,000ordinary fullypaid shareswereacquiredbyanentityassociatedwithOctanexdirectorMrGuistinoGuglielmopursuant to theOctanexTrusteeShareScheme inaccordancewithapprovalofshareholders ingeneralmeetingon26November2015.Theshareswereissuedon29January2016. (2)On6 January2016, the company’s share registerwas updated to reflect that inDecember2015NationalGasAustralia Pty Ltd (NGA), a company associated with Octanex Chairman Mr Geoffrey Albers made a voluntarypayment of the unpaid amount of 10c per share on the partly paid shares (previously paid to 15c)making suchsharesfullypaid.Fullypaidordinarysharescarryonevotepershareandcarrytherighttodividends.(b)Ordinarysharespartlypaid(i)Movementsduringtheyear

Balanceatbeginningofyear 74,278,910 74,278,910 11,041,975 11,041,975Partlypaidsharesfullypaid(1) (7,200,000) - (1,080,000) -Balanceatendofyear

_______________67,078,910=========

_______________74,278,910=========

______________9,961,975

=========

______________11,041,975=========

(1)On6 January2016, the company’s share registerwasupdated to reflect that inDecember2015NationalGasAustralia Pty Ltd (NGA), a company associated with Octanex Chairman Mr Geoffrey Albers made a voluntarypayment of the unpaid amount of 10c per share on the partly paid shares (previously paid to 15c)making suchsharesfullypaid.(i)Thepartlypaidsharesarepaidto15cents;withthebalanceof10centsdueinoneormorecallspayablenotbeforethedatethatFirstOilisproducedattheOphirfield,or31December2018,whicheverisearlier. (c)OrdinarySharesIssuedPursuanttoTrusteeStockScheme Movementsduringtheyear

Balanceatbeginningofyear 33,000,000 33,000,000 - -Trusteeshareissue(1) (3,000,000) - - -Balanceatendofyear

_______________30,000,000=========

_______________33,000,000=========

______________-

=========

______________-

=========

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NotestotheFinancialStatement30JUNE2016 NOTE15CONTRIBUTEDEQUITY(Continued)(1)3,000,000ordinary fullypaidshareswereacquiredbyanentityassociatedwithOctanexdirectorMrGuistinoGuglielmopursuant to theOctanexTrusteeShareScheme inaccordancewithapprovalofshareholders ingeneralmeetingon26November2015.Theshareswereissuedon29January2016.InNovember2015,themembersofOctanexvotedtoextendtheexistingtrusteestockschemebyfiveyears.Whenthetrusteesellsthosesharesthetrusteemustpassthenetproceedsoftheirsaletothecompany.Thecompanyhasunlimitedauthorisedcapitalwithnoparvalue.TermsandConditionsofContributedEquityOrdinarysharesconferontheholdertherighttoreceivedividendsasdeclaredand,intheeventofwindingupthecompany, to participate in the proceeds from the sale of all surplus assets in proportion to the number of(irrespective of the amounts paid up on) shares held. Ordinary shares entitle their holder to one vote, either inpersonorbyproxy,atameetingofthecompany.TrusteeStockSchemeOctanexispartytoaTrusteeStockScheme,pursuanttowhichordinarysharesrankingequallywithotherordinarysharesonissuewereissuedtoatrustee.WhenthosesharesaresoldbythetrusteethenetproceedsarepaidtotheCompanybywayofsubscriptionmoneys. Atreportingdateallsharesissuedtothetrusteeremainedunsold.Thetrusteedoesnotexercisevotingrightsinrespectofsharesheldpursuanttothescheme.UnlistedOptions-(ShareBasedPayment)Nooptionsweregrantedduringtheyear.ExistingoptionsareNumber ExpiryDate Exerciseprice Vestingcriteria7,600,000 15October2018 $0.1534 No1,000,000 19May2018 $0.15 No1,000,000 11June2018 $0.15 No1,000,000 11June2018 $0.15 Yes4,000,000 11June2018 $0.15 Yesandvaryingexpirydates250,000 1February2018 $0.20 No250,000 1February2018 $0.25 No 2016 2015 Options OptionsUnlistedOptionsBalanceatbeginningofyear 15,100,0004,850,000Optionsgranted -18,100,000Optionssurrendered/cancelled -(7,850,000) ______________ ___________Balanceatendofyear 15,100,00015,100,000 ========== ======== Consolidated 2016 2015 $ $NOTE16RESERVESFinancialassetsatfairvaluethroughothercomprehensiveincomereserve (827,364) (1,505)Optionreserve 948,016948,016Foreigncurrencytranslationreserve 1,451,9971,350,113 ___________ __________ 1,572,6492,296,624 ======== =======

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NotestotheFinancialStatement30JUNE2016 Consolidated 2016 2015 $ $NOTE16RESERVES(Continued)FinancialassetsatfairvaluethroughothercomprehensiveincomereserveBalanceatbeginningoffinancialyear (1,505) 111,332Changesinfairvalueonfinancialassetsatfairvaluethroughothercomprehensiveincome (1,179,797)(161,195)Incometaxonothercomprehensiveincome 353,938 48,358 ___________ _________ (827,364) (1,505) ======== =======Thefinancialassetsatfairvaluethroughothercomprehensiveincomereserverepresentsthechangesinfairvalueonthegroup’sequityinstrumentsincludingrealisedgainsorlossesonthoseinvestments.FurtherinformationontheinvestmentsissetoutinNotes7and21.OptionreserveBalanceatbeginningoffinancialyear 948,016763,964Sharebasedpaymentexpense - 184,522 __________ ________ 948,016 948,016 ======= ======= Theoptionsreserverelatestoshareoptionsgrantedtothecompanysecretary,thedirectorsandindividuals(Note15).ForeigncurrencytranslationreserveBalanceatbeginningoffinancialyear 1,350,113 584,176Movementfortheyear 101,884 765,937 __________ __________ 1,451,9971,350,113 ======= =======Theforeigncurrencytranslationreserverelatestotheconsolidationofforeigncurrencydenominatedfullyownedsubsidiary entities. At 30 June 2016 the following companies and currencies held in those companies wereconsolidated.OctanexNZLimited–NewZealandDollarsOctanexPteLtd–UnitedStatesDollarsOctanexMalaysiaSdnBhd–MalaysianRinggitsNOTE17EXPLORATIONEXPENDITURECOMMITMENTSThe consolidated entity share of minimum work requirements in exploration permit interests held by theconsolidatedentityorinjointoperationsisestimatedatreportingdate:Payablenotlaterthanoneyear 116,406 1,557,292 Payablelaterthanoneyearbutnotlaterthanthreeyears 1,758,594 490,625 ___________ ___________ 1,875,000 2,047,917 ======== =========

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NotestotheFinancialStatement30JUNE2016NOTE18INTERESTINUNINCORPORATEDJOINTOPERATIONSTheconsolidatedentityhasaninterestintheassets,liabilitiesandoutputofjointoperationsfortheexplorationanddevelopment of petroleum in Australia. The consolidated entity has taken up its share of joint operationstransactions based on its contributions to the joint operations. The consolidated entity’s interests in the jointoperations: 2016 2015JointOperation Interest Interest PermitsHeld WinchesterProject 25% 25% WA-323-P&WA-330-PNorthernDeeps 33.33% 33.33% WA-362-P&WA-363-P Cornea 18.75% 18.75% WA-54-RMatuku(1) - 22.5% PEP51906 (1)Duringtheyear,followingpreliminaryinterpretationoftheKaka3DseismicsurveyoverPEP51906intheTaranakiBasinoffshoreNewZealand,Octanexexittedthepermit.Assetsandliabilitiesofthejointoperationsareincludedinthefinancialstatementsasfollows: NOTE 2016 2015 $ $CURRENTASSETSCashandcashequivalents 12,411 1,231 Receivables 6 249 1,259 NON-CURRENTASSETSExplorationandevaluationassets 11 30,731,805 30,664,632 CURRENTLIABILITIESPayables 12 5738 728 Payables–director-relatedentity 12,20 11,968 17,854 Consolidated 2016 2015 $ $Therearenocontingentliabilitiesinanyofthejointoperations.Minimumworkrequirementsinexplorationpermitinterestsheldinjointoperationsisestimatedatreportingdate:Payablenotlaterthanoneyear 116,406 103,125 Payablelaterthanoneyearbutnotlaterthanthreeyears 58,594 140,625 _________ ________ 175,000 243,750 ======== ======== F

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NotestotheFinancialStatement30JUNE2016NOTE19KEYMANAGEMENTPERSONNELExecutiveDirectors Non-ExecutiveDirectorsEGAlbers DCCoombes SKKlerRLClark GGuglielmo JMDWillis KKHow IndividualcompensationdisclosuresInformation regarding individual director’s compensation is provided in the remuneration report section of thedirectors’ report. Therearenoemployeeswhomeet thedefinitionof keymanagementpersonnelother than theexecutivedirectorsofthecompany.Asummaryoftheremunerationreportisshownbelow.

ShortTerm PostEmployment EquitySettled Total

DirectorsFees Salary Super RetirementBenefits Options $ $ $ $ $ $

TOTAL 2016 (143,324) 200,000 11,220 - - 67,896 2015 178,667 150,000 24,785 9,334 32,973 395,759

NOTE20RELATEDPARTYDISCLOSURES

TheconsolidatedfinancialstatementsoftheGroupinclude: 2016 2015Name Interest Interest CountryofIncorporation OctanexOperationsPtyLtd 100% 100% AustraliaStrataResourcesPtyLtd 100% 100% Australia ExmouthExplorationPtyLtd 100% 100% AustraliaUnitedOil&GasPtyLtd 100% 100% AustraliaOctanexNZLimited 100% 100% NewZealandGoldsboroughPtyLtd 100% 100% AustraliaGoldsboroughEnergyPtyLtd 100% 100% AustraliaBraveheartEnergyPtyLtd 100% 100% AustraliaCorneaEnergyPtyLtd 100% 100% AustraliaWinchesterResourcesPtyLtd 100% 100% AustraliaWinchesterExplorationPtyLtd 100% 100% AustraliaOctanexPteLtd 100% 100% SingaporeOctanexMalaysiaSdnBhd 100% 100% Malaysia

Director-relatedEntitiesCompaniesinwhichanOctanexdirectorcontrolsorsignificantlyinfluences,thatprovideservicestothegrouportoa joint operation inwhich the grouphas an interest, or that also hold an interest in those joint operations or inwhichthegroupholdsaninvestment.(i)ProvidersofServicesbyRelatedPartyDuringtheyearservicesand/orfacilitieswereprovidedundernormalcommercialtermsandconditionsby:ExoilPtyLtd,(Exoil),adirector-relatedentityofEGAlbersGreshamManagementPtyLtd(Gresham),adirector-relatedentityofGAMenziesupto18Dec2014NaturalResourcesGroupPtyLtd(NRG),adirector-relatedentityofEGAlbersUpstreamConsultingLimited,(Upstream),adirector-relatedentityofJMDWillisPeakoLimited,(Peak),adirector-relatedentityofEGAlbersandRLClarkPetroleumAdvisors(PA),adirectorrelatedentityofGGuglielmo

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NotestotheFinancialStatement30JUNE2016NOTE20RELATEDPARTYDISCLOSURES(Continued)Consolidated ServiceProvided 2016 2015 $ $ Exoil OfficeservicesandamenitiesinMelbourne 234,875 326,618Peak ConsultingservicestoOphirproject - 162,398NRG ManagementandadministrationservicestotheGroup 80,000 96,500NRG Managementofexplorationtenements 59,000 104,438NRG ManagementservicestoOphirproject 120,000 120,000Gresham ManagementandconsultingservicestotheGroup - 190,745PA ManagementservicestoOphirproject 28,000 18,500Upstream ManagementandconsultingservicestotheGroup - 7,029Upstream Managementofexplorationtenements 7,188 11,738Upstream ManagementservicestoOphirproject 3,000 68,599Upstream ProvisionofofficeservicesandamenitiesinNZ - 6,419

Thegroupholdsinterestsinpetroleumexplorationjointoperationswithcertaindirector-relatedentities:AsaparticipantoftheCorneaJointVenturewithCorneaPetroleumPtyLtd,CorneaOil&GasPtyLtd,ColdronPtyLtd,CorneaEnergyPtyLtd,MobyOil&GasPtyLtd,EnegexLimited,CorneaResourcesPtyLtdandAuralandiaPtyLtd,alldirector-relatedentitiesofEGAlbers..Amountspayabletorelatedpartiesincludingthoseunderjointoperationarrangements:

Consolidated 2016 2015 $ $PayablesExoilPtyLtd 72,288 83,230NaturalResourcesGroupPtyLtd 195,750 623,044PetroleumAdvisors 5,000 2,750 _________ __________ 273,038 709,024 ======= =======(ii)ProvidersofServicestoRelatedPartyDuringtheyearaccountingserviceswereprovidedundernormalcommercialtermsandconditionsto:CorneaResourcesPtyLtd,adirector-relatedentityofEGAlbersEnegexLimited,adirector-relatedentityofEGAlbersPeakoLimited,adirector-relatedentityofEGAlbersSundryRevenueMobyOil&GasPtyLtd - 4,420 AlphaNaturalResourcesPtyLtd - 10,107EnegexLimited 11,210 -CorneaResourcesPtyLtd–OperatorCorneaJV 520 6,470SeaquestPetroleumPtyLtd - 6,601OphirProductionSdnBhd(Note20(iv) - 124,995Peako(Note20(iii)&(iv)) 7,110 81,963 _________ __________ 18,840 234,556 ======= ======

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NotestotheFinancialStatement30JUNE2016 Consolidated 2016 2015 $ $NOTE20RELATEDPARTYDISCLOSURES(Continued)Receivablesfromrelatedparties: CorneaResourcesPtyLtd–OperatorCorneaJV 572 572MobyOil&GasPtyLtd - 4,862EnegexLimited 6,886 -PeakoLimited 7,821 -OphirProductionSdnBhd - 31,933 _________ __________ 15,279 37,367 ======= =======(iii)LoantoPeakoLimited Carryingamountatbeginningofyear 440,000954,613 Drawdowns -1,047,038Accruedinterest -81,963 Applicationoftradepayablestoloan -(109,233)Loanrepayments (440,000)(260,000)Impairmentofloan -(1,274,381) ____________ __________Carryingamountatendofyear - 440,000 ======== =======PeakoLimitedisadirector-relatedentityofEGAlbers.Theimpairedvalueof$440,000wasreceivedinfullon2July2015. Octanex reached agreementwith Peako inNovember 2015whereby the balance of the loan outstanding($1,274,381 prior to impairment) was satisfied through a proceeds sharing arrangement whereby Octanex willshare in any proceeds that Peakomight receive in connectionwith its Cadlao interests up untilNovember 2017(Note28).(iv)AdvancetoOphirProductionSdnBhdAt30June2016,thecompanyhasagrossadvancetoOphirProductionSdnBhdof$8,109,467(2015$5,699,335).Afterimpairment,theadvanceis$6,568,663(2015$5,420,021)(Note8).Theadvanceisexpectedtoberecoveredfromcapital returnandrevenue in the formofdividends fromproduction fromthedevelopmentof theOphiroilfield.Thegroupholds50%ofOphirProductionSdnBhd.(v)Investmentsindirector-relatedcompaniesAt30 June2016, thecompanycarriedan investment inanASX listedcompanyPeako(formerlynamePeakOil&Gas)Limited,(Note9),whichisadirector-relatedentityofEGAlbers.At30June2016,thecompanycarriedaninvestmentinanASXlistedcompanyEnegexLimited,(Note7),whichisadirector-relatedentityofEGAlbers.

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NotestotheFinancialStatement30JUNE2016 Consolidated 20162015 $$NOTE21FINANCIALINSTRUMENTSCategoriesofFinancialInstruments FinancialAssets Cash&cashequivalents 3,147,294 5,832,084Atfairvaluethroughothercomprehensiveincome 21,235 126,830Tradeandotherreceivables–currentexprepayments 86,064 556,121Tradeandotherreceivables–noncurrent 6,568,663 5,420,021 9,823,256 11,935,056FinancialLiabilitiesatamortisedcostTradeandotherpayables 634,419 1,257,408 634,419 1,257,408RecognitionandderecognitionPurchases and sales of financial assets and financial liabilities are recognised on tradedatewhich is the date onwhichtheconsolidatedentitycommitstopurchaseorsellthefinancialassetsorfinancialliabilities.Financialassetsare derecognised when the rights to receive cash flows from the financial assets have expired or have beentransferredandthegrouphastransferredsubstantiallyalltherisksandrewardsofownership.Exposuretocredit,interest rate, liquidity, foreign currency, market price and currency risks arises in the normal course of theconsolidatedentity’sbusiness.Theconsolidatedentity’soverallriskmanagementapproachisto identifytherisksand implement safeguardswhich seek tominimise potential adverse effects on the financial performance of theconsolidatedentity’sbusiness.Theboardofdirectorsareresponsibleformonitoringandmanagingthefinancialrisksoftheconsolidatedentity.FairvalueThefairvalueoffinancialassetsandfinancialliabilitiesmustbeestimatedforrecognitionandmeasurementorfordisclosurepurposes.AASB13requiresdisclosureoffairvaluemeasurementsbylevelofthefairvaluehierarchy,asfollows:Level1:quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilitiesLevel2:inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly(i.e.asprices)orindirectly(i.e.derivedfromprices)Level3:inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).Theconsolidatedentity’sfinancialassetsmeasuredandrecognisedatfairvalueat30June2016and30June2015onarecurringbasisareasfollows:

30June2016 Level1 Level2 Level3 Total $ $ $ $ Assets Listedsecuritiesand

debentures 21,235 - - 21,235

Unlistedsecuritiesanddebentures - - - -

Total 21,235 - - 21,235 Netfairvalue 21,235 - - 21,235

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NotestotheFinancialStatement30JUNE2016NOTE21FINANCIALINSTRUMENTS(Continued)

30June2015

Level1 Level2 Level3 Total

$ $ $ $ Assets Listedsecuritiesanddebentures 69,085 - - 69,085 Unlistedsecuritiesand

debentures 57,745 57,745

Total 69,085 - 57,745 126,830 Netfairvalue 69,085 - 57,745 126,830

CreditriskCreditriskistheriskoffinanciallosstothecompanyifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligations.Atthereportingdatetherewereisnocreditriskastheconsolidatedentityhasnotradesalesortradereceivables.InterestrateriskAll financial liabilitiesandfinancialassetsatfloatingratesexposethecompanytocashflowinterestrateriskTheconsolidatedentityhasnoexposureto interestrateriskatreportingdate,otherthaninrelationtocashandcashequivalentswhichattractaninterestrate.SensitivityAnalysisAt reporting date a 1% (100 basis point) increase/decrease in the interest rate would increase/decrease theconsolidatedentityby$22,031(2015:$10,824).Liquidityrisk Liquidityriskistheriskthatthegroupwillnotbeabletomeetitsfinancialobligationsastheyfalldue.Liquidityriskismonitoredtoensuresufficientmoniesareavailabletomeetcontractualobligationsasandwhentheyfalldue.The following are the contractualmaturities of the financial liabilities, including interest payments. Contractualamountshavenotbeendiscounted. Carrying

AmountContractualcashflows

0-12months

1-2years 2-10years

$ $ $ $ $30June2016: Consolidated Non-derivative FinancialLiabilities

Tradeandotherpayables 634,419 634,419 634,419 - -Noncurrentpayables - - - - - 634,419 634,419 634,419 - -30June2015: Consolidated Non-derivative FinancialLiabilities

Tradeandotherpayables 1,257,408 1,257,408 1,257,408 - -Noncurrentpayables - - - - - 1,257,408 1,257,408 1,257,408 - -

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NotestotheFinancialStatement30JUNE2016NOTE21FINANCIALINSTRUMENTS(Continued)ForeigncurrencyriskTheconsolidatedentity isexposed to foreigncurrencyriskarising frompurchasesofgoodsandservices thataredenominated in a currency other than the Australian dollar functional currency. The consolidated entity incursseismic, exploration, development andwell drillings costs inUSdollars. To this extent, the consolidated entity isexposedtoexchangeratefluctuationsbetweentheAustralianandUSdollar.At30June2016theconsolidatedentityhasaforeigncurrencyexposurebyholdingUSdollarsinbankaccountstotallingUS$2,237,216(2015:$4,384,787)and an advance to Ophir Production Sdn Bhd of US$6,022,090 (2015: $4,377,090). A one centmovement in theUSD/AUD exchange rate would move consolidated equity by AUD$103,448 (2015: $102,649). Loans to OphirProductionSdnBhdareinUSDandfutureprofitintheOphirinvestmentwillbeinUSD.EquitypricerisksEquity price risk applies to at fair value through other comprehensive income investments. The portfolio ofinvestmentsismanagedinternallybyOctanexmanagementwhobuyandsellequitiesbasedontheirownanalysesofreturns.Theinvestmentsaresubjecttomovementsinpricesoftheinvestmentmarkets. 2016 2015 $ $FinancialAssetsatfairvaluethroughothercomprehensiveincomeInvestmentsinlistedequitiesOilBasinsLimited - 69,085EnegexLimited 21,235 - ________ ________ 21,235 69,085 InvestmentsinunlistedequitiesMobyOil&GasPtyLtd - 57,745 ________ ________ - 57,745 ________ ________ 21,235 126,830 ======= =======TheconsolidatedentityandcompanyinvestmentsinlistedequitiesarelistedontheAustralianSecuritiesExchange.A 10% increase / decrease at the reporting date in closing share price of each share held would haveincreased/decreasedconsolidatedequityby$2,123(2015:$6,909).Therewouldhavebeennoeffectonprofit.CapitalManagementWhenmanagingcapital, thedirectors’objective is toensure theentitycontinuesasagoingconcernaswellas tomaintainoptimalreturnstoshareholdersandbenefitsforotherstakeholders.Itisthecompany’splanthatcapital,asandwhenrequired,further,willberaisedbyanyoneoracombinationofthefollowing manners: placement of shares to excluded offerees, pro-rata issue to shareholders, the exercise ofoutstandingoptions,and/orafurtherissueofshares.Shouldthesemethodsnotbeconsideredtobeviable,orinthebest interests of shareholders, then it would be the consolidated entity’s intention to meet its explorationobligationsbyeitherpartialsaleofitsinterestsorfarmout.Nocompanyintheconsolidatedentityissubjecttoanyexternallyimposedcapitalrequirements.

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NotestotheFinancialStatement30JUNE2016 NOTE22AUDITOR’SREMUNERATION Consolidated 2016 2015 $ $Amountsreceivedordueandreceivableby:GrantThorntonAuditPtyLtd-Auditoroftheconsolidatedentityandcompany 56,730 67,863Relatedpracticesoftheparentcompanyauditor Auditandreviewofthefinancialreports SJGrantThornton–AuditorofOctanexMalaysiaSdnBhd 1,652 2,802FooKonTanGrantThornton–AuditorofOctanexPteLtd - 8,627GrantThorntonSingapore–AuditorofOctanexPteLtd 8,573 - Taxservices SJGrantThornton-OctanexMalaysiaSdnBhd 1,324 - ________ _______ 68,279 79,292 ======= =======NOTE23SEGMENTINFORMATIONUnderAASB8OperatingSegments,segmentinformationispresentedusinga'managementapproach',i.e.segmentinformation is provided on the same basis as information used for internal reporting purposes by the board ofdirectorsAtregular intervalstheboardisprovidedmanagement informationatagrouplevel forthegroup’scashposition,thecarryingvaluesofexplorationpermitsandagroupcashforecastforthenexttwelvemonthsofoperation. Onthisbasis,nosegmentinformationisincludedinthesefinancialstatements.All interest received has been derived in Australia, except for $579 from New Zealand. All exploration andevaluationassetsareheldinAustralia.NOTE24EVENTSAFTERTHEENDOFTHEREPORTINGPERIOD

Therearenosignificantafterbalancedateeventstothedateofsigningofthisreport. Consolidated 2016 2015 $ $NOTE25LOSSPERSHAREThefollowingreflectstheincomeandsharedatausedinthecalculationsofbasicanddilutedearningspershare:

Netloss (1,815,272) (11,524,294) Numberof

SharesNumberofShares

WeightedaveragenumberofsharesIncalculatingtheweightedaveragenumberofsharesforthepurposesofcalculatingbasicanddilutedearningspershare,thepartlypaidsharesareaccountedforonapro-ratabasisaccordingtotheamountofcalloutstandinginrelationthereto.

239,487,044 212,827,246

Unlistedoptionsoutstandingduringtheyear(ReferNote15)arenotdilutiveatthe30thJune2016astheexercisepriceishigherthantheaveragesharepricefortheyearthenended.

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NotestotheFinancialStatement30JUNE2016 NOTE26PARENTENTITYINFORMATION The following details information related to the parent entity, Octanex NL at 30 June 2016. The informationpresentedherehasbeenpreparedusingconsistentaccountingpoliciesaspresentedinNote1,exceptfortheuseofthecostmethodforinvestmentinsubsidiarycompaniesbytheparent. 2016 2015 $ $Currentassets 3,510,120 6,407,769 Non-currentassets 67,579,803 65,233,828 ____________ ____________ Totalassets 71,089,923 71,641,597 ____________ ____________Currentliabilities 654,535 1,287,533 Non-currentliabilities 13,115,577 13,536,052 ____________ ____________Totalliabilities 13,770,112 14,823,585 ____________ ____________Contributedequity 68,856,339 67,848,339 Optionsreserve 948,016 948,016 Financialassetsatfairvaluethroughothercomprehensiveincomereserve (639,113) (435,163)Accumulatedlosses (11,845,431)(11,543,180) ____________ ____________Totalequity 57,319,811 56,818,012 ____________ ____________Lossfortheyear (302,251)(7,550,528)Othercomprehensiveincomefortheyear (203,950)(88,063) ____________ ____________ Totalcomprehensiveincomefortheyear (506,201) (7,638,591) ____________ ____________Thecompanyhasnocontingentliabilities.Nodividendswerepaidbytheparententityin2016(2015:Nil). The company’s share ofminimumwork requirements contracted for under exploration permit interests held injointoperationisestimatedatreportingdate: 2016 2015 $ $Payablenotlaterthanoneyear 63,635 56,375 Payablelaterthanoneyearbutnotlaterthanthreeyears 32,031 76,875 ________ ________ 95,666 133,250 ________ ________

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NotestotheFinancialStatement30JUNE2016NOTE27CONTINGENTLIABILITIESPerformanceGuaranteeOctanex has provided a proportionate corporate undertaking to PETRONAS for the contract performanceobligationsofOPSBinrelationtotheOphirRSC.CorporateGuaranteeOctanexhasprovidedaproportionatecorporateguaranteetoOPSB’slendersinconnectionwithOPSB’stermloanfacilities.Thefacilitiesareheldwithasyndicateofthreebanks(MalayanBankingBerhad(Maybank),RHBBank(L)LtdandUnitedOverseasBankLimitedOffer)for75%oftheplannedcapitalexpenditureforthedevelopmentoftheOphirOilFieldaswellas75%ofthefirstthreequartersoftheplannedoperatingexpenditure,andabankguaranteeinfavourofPETRONAS.NOTE28CONTINGENTASSETPeakoLimitedLoan–ProceedsSharingAgreementIn lieu of the balance ofmonies of $1,284,744owing on thePeakoLimited (“Peako”) loan (Note6),Octanexhasagreed toacceptaproceeds sharingarrangementwithPeakowherebyOctanexwill shareproportionately inanyproceedsreceivedbyPeakoinrelationtoanyofitsCadlaointerestsintheperiodto26November2017uptoalimitof$1,603,683.Theloanwasfullyimpairedat30June2015.

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AdditionalInformation(unaudited)Asat15September2016OctanexholdsthefollowinginterestsinPetroleumTenements:OctanexLicencesPermit Location Octanexinterest% OperatorOphirSFRSC

MalayBasin.OffshorePeninsularMalaysia

50%(viaOctanexPteLtd) OphirProductionSdnBhd

WA-330-P DampierSubBasin,CarnarvonBasin,OffshoreWesternAustralia

25%viaWinchesterResourcesNL SantosOffshorePtyLtd

WA-323-P DampierSubBasin,CarnarvonBasin,OffshoreWesternAustralia

25%viaWinchesterResourcesNL SantosOffshorePtyLtd

WA-362-P ExmouthPlateau,CarnarvonBasin,OffshoreWesternAustralia

33.33%comprisedof:11.667%viaOctanexNL11.667%viaStrataResources9.999%viaExmouthExplorationPtyLtd

EniAustraliaLimited


33.33%comprisedof:11.667%viaOctanexNL11.667%viaStrataResources9.999%viaExmouthExplorationPtyLtd

EniAustraliaLimited


100%viaExmouthExplorationPtyLtd ExmouthExplorationPtyLtd

WA-420-P BonaparteBasin,OffshoreWesternAustralia

100%viaGoldsboroughEnergyPtyLtd GoldsboroughEnergyPtyLtd

WA-407-P BonaparteBasin,OffshoreWesternAustralia

100%viaGoldsboroughEnergyPtyLtd GoldsboroughEnergyPtyLtd

WA-54-R BrowseBasin,OffshoreWesternAustralia

18.75%(10.25%viaOctanexNLand8.5%viaCorneaEnergyPtyLtd)

CorneaResourcesPtyLtd

OctanexResourceStatementEconomicInterestContingentResources(probabilistic,nodevelopmentriskapplied) 1C 2C 3C Oil

(MMBBL)Gas(TCF)

Oil(MMBBL)

Gas(TCF)

Oil(MMBBL)

Gas(TCF)

Cornea 1.48 5.4 19.11 Ascalon 1.04 3.01 8.74StatementofaQualifiedPetroleumReservesandResourcesEvaluatorThe resources information in this statement is based on, and fairly represents, information andsupportingdocumentationpreparedbyMrTimMorison,adirectorandprincipal technicianofAbraxasPetroleumPtyLtd.AbraxasPetroleumPtyLtdisageologicalinterpretationconsultancybasedinVienna,Austria. Mr Morison has been a consultant to Octanex since 2007 and has sufficient experience tocompilethatinformationasaQualifiedPetroleumReservesandResourcesEvaluator.The resources information in Octanex’s 2016 annual report has been issued with the prior writtenconsentofMrMorisonintheformandcontextinwhichitappears.Mr Morison is a graduate of the University of Adelaide and holds a Bachelor of Science, majoring inGeology&Geophysics.Hehasover35yearsinternationalandAustralasianexplorationanddevelopment

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experience in the oil and gas industry, including over 33 years estimating reserves and resources.Mr Morison is a member of the American Association of Petroleum Geologists (AAPG), FormationEvaluation Society ofAustralia (FESAus) (exPresident) andEuropeanAssociationofGeoscientists andEngineers(EAGE).

ShareholderInformationCompiledasat22September20161.OrdinarysharecapitalAsat22September2016thecompanyhadonissuethefollowingshares:FullyPaidOrdinaryShares

PartlyPaidOrdinaryShares

TrusteeShares

202,465,561 held by 1,369shareholders

67,078,910 held by 344shareholders

30,000,000 held byDoravale Enterprises PtyLtd(theTrustee)1

All issued fully paidordinary shares carry onevotepershare

For each partly paid share,only the fraction of onevotewhichtheamountpaid(not credited)on the sharebears to the total amountspaid and payable on theshare (excluding amountscredited)

Other than in extremelylimited circumstances, theTrusteehasbounditselfbythe deed of covenantentered into in associationwiththeSchemenottovoteatthemeetingsofmembersofOctanex.

2.OptionsAs at 22 September 2016 the company had on issue 15,100,000 options held by 16 option holders.Optionsdonotcarryanyvotingrightorrightstodividends.3.Distributionofholders NumberofHoldersofHolding as at 22September2016

Fullypaidordinaryshares

Partlypaid

ordinaryshares

TrusteeShares

Options

1-1,000 165 53 - -1,001-5,000 650 62 - -5,001-10,000 146 43 - -10,001-100,000 331 126 - -Over100,001 77 60 1 16Total 1,369 344 1 16Number holding less thanmarketableparcel

1,033 310 - -

1TheseordinaryshareswereissuedtotheTrusteeontrustforsaleinaccordancewithaschemeofarrangementapprovedbytheSupremeCourtofVictoriaon17November2010inMatterSCI21004962(theScheme).AspreviouslyadvisedtotheASXandtomembers,thosesharesareordinarysharesheldontrustforsalebythetrusteeonthebasisthatthenetproceedsofsalewillpresentthesubsectionmoneysthereof.Thesharesmaybesoldasfullypaiduporaspartlypaidup.Untilsold,bythetermsoftheScheme,theTrusteewillnotparticipateindividendsordistributionsaretotheaccountofthemembersofOctanexproratatheirrespectiveshareholdings.

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4.SubstantialshareholdersSubstantial shareholders as disclosed in substantial shareholding notices given to the Company are asfollows:Shareholder Interestin

votingrights%

ofVotingRights

TheAlbersGroup 152,260,730 55.83SabahInternationalPetroleum 40,332,663 14.955.Twentylargestshareholdersasat22September2016FullypaidordinarysharesHolder Fullypaid

ordinaryshares%ofFully

PaidSharesSabahInternationalPetroleumLtd 40,332,663 19.92GascorpAustraliaPtyLtd 30,926,968 15.28MrErnestGeoffreyAlbers&MrsPamelaJoyAlbers 21,093,399 10.42SacrosanctPtyLtd 12,050,960 5.95MrErnestGeoffreyAlbers 9,593,765 4.74NationalGasAustraliaPtyLtd 7,200,000 3.56GreatMissendenHoldingsPtyLtd 6,918,568 3.42GreatAustraliaCorporationPtyLtd 5,265,000 2.60BassStraitGroupPtyLtd 4,033,058 1.99TheAlbersCompaniesIncorporatedPtyLtd 3,780,491 1.87FugroExplorationPtyLtd 3,691,721 1.82CuePetroleumPtyLtd 3,511,634 1.73AuralandiaPtyLtd 3,152,603 1.56MrsPamelaJoyAlbers 3,062,500 1.51AustralisFinancePtyLtd 3,046,250 1.50MillerAndersonPtyLtd 3,000,000 1.48GreatMissendenGroupPtyLtd 2,765,060 1.37SeaquestPetroleumPtyLtd 2,248,000 1.11AlbersFamilyCustodianPtyLtd 2,152,500 1.06BondStreetCustodiansLimited 2,125,010 1.05Total 169,950,150 83.94

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PartlypaidordinarysharesHolder Partlypaid

ordinaryshares

%ofPartlyPaidShares

GreatMissendenHoldingsPtyLtd 10,045,726 14.98MrErnestGeoffreyAlbers&MrsPamelaJoyAlbers 7,957,724 11.86GascorpAustraliaPtyLtd 7,121,742 10.62SacrosanctPtyLtd 3,975,201 5.93CuePetroleumPtyLtd 3,752,871 5.59BassStraitGroupPtyLtd 3,376,651 5.03AuralandiaPtyLtd 2,097,335 3.13MrErnestGeoffreyAlbers 2,025,420 3.02GreatAustraliaCorporationPtyLtd 1,710,000 2.55TrocaEnterprisesPtyLtd 1,504,750 2.24AustralisFinancePtyLtd 1,211,562 1.81AppledoreSuperannuationPtyLtd 1,157,502 1.73RivermorePtyLimited 1,055,969 1.57MrNeilCliffordMasseyAbbott 958,960 1.43MrsPamelaJoyAlbers 765,625 1.14AlbersFamilyCustodianPtyLtd 650,625 0.97MrJohnCumming 618,221 0.92MrDavidHugoRankin 612,259 0.91WilstermereCorporationPtyLtd 577,500 0.86DrPaulMarkHalley 565,914 0.84Total 51,741,557 77.14

TrusteeordinarysharesHolder Fullypaid

ordinaryshares

%ofTrusteeShares

DoravaleEnterprisePtyLtd 33,000,000 100

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GlossaryASX AustralianSecuritiesExchange

AUD/A$ Australiancurrency

Bbl(s) Barrel(s),anoilbarrelisequivalentto0.159cubicmetres

BCF Onebillioncubicfeetofnaturalgas

BOE Barrelofoilequivalent.Thefactorusedtoconvertgastooilequivalent isbaseduponanapproximate

energyvalueof6,000cubicfeetperbarrelandnotpriceequivalenceatthetime

BOPD Barrelofoilperday

Contingentresources

Quantitiesofpetroleumestimated,asofagivendate,tobepotentiallyrecoverablefrom known accumulations, but the applied project(s) are not yet consideredmatureenoughforcommercialdevelopmentduetooneormorecontingencies

Economicinterest

Theworkinginterestshareofproductionwhichisadjustedforproductionthatisdeliveredtohostgovernmentsunderthepetroleumcontracts

FDP FieldDevelopmentPlan

Group Parententityanditssubsidiaries

GST Goodsandservicestax

IFRS InternationalFinancialReportingStandards

MMBBL Onemillionbarrels

MMBOE Onemillionbarrelsofoilequivalent

MMCFD Onemillionstandardcubicfeetofnaturalgasperday

Octanexorcompany

OctanexNLandincludes,wherethecontextrequires,itssubsidiaries

PRMS PetroleumResourcesManagementSystem

RSC RiskServiceContract

TCF Onetrillioncubicfeetofnaturalgas

SPE SocietyofPetroleumEngineers

USD/US$ UnitedStatescurrency

WI% WorkingInterestPercentage

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DirectoryBoard of directors

MrGeoffreyAlbersChairman&ChiefExecutiveOfficerMrsRaewynClarkExecutiveDirectorMrDavidCoombesIndependentNonExecutiveDirectorMrGuistinoGuglielmoIndependentNonExecutiveDirectorDatukKevinKowHowNon-executiveDirectorMsSuhnyllaKlerNon-executiveDirectorMrJamesWillisIndependentNonExecutiveDirectorCompanySecretariesMrRobertWrightMrJohnTuohy

Share Registry LinkMarketServiceLimitedTower4,727CollinsStreetMelbourne,Victoria3008Australia61(03)96159947Auditor GrantThorntonAuditPtyLtdLevel30,525CollinsStreetMelbourne,Victoria3000AustraliaStock Exchange

ASXLimitedLevel45,SouthTower,Rialto,525CollinsStreet,MelbourneVictoria3000AustraliaASXCodes: OXX FullyPaid OXXCB PartlyPaid

Registered office

Level21,500CollinsStreet,Melbourne,Victoria3000Telephone:+61(03)86104702Facsimile:+61(03)86104799E-mail:[email protected]:www.octanex.com.auIncorporation Incorporated in Victoria on 13 March1980.

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annual report 2016 for personal use only - asx · the tender process for the drilling rig was...

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