Going Concern

From Note 1 in todays FY Report

1. Summary of significant accounting policies (continued)
Going Concern
The financial report has been prepared on the going concern basis which assumes the continuity of normal business
activity and the realisation of assets and the settlement of liabilities in the normal course of business for a period of at
least 12 months from the date of signing the financial report.
The primary activities of the consolidated entity comprise the exploration for and development and production of oil and
gas in the shallow water offshore Louisiana in the Gulf of Mexico.
For the year ended 30 June 2021 the consolidated entity reported a profit before tax of US$5,854,375 after recognising
impairment and dry hole expenses of US$595,951 and generated net cash inflows from operating activities of
US$21,352,060. As at 30 June 2021 the consolidated entity reported a working capital deficiency of US$8,851,403. This
deficiency principally arises from:-
(i) Existing borrowings from third parties totalling US$9,442,633 that are due for repayment in the next twelve
months;
(ii) Existing borrowings from certain directors totalling US$3,578,780 that are due for repayment in the next twelve
months; and
(iii) Excess cashflow generated by the group over the year ended 30 June 2021 has been invested in various
exploration and development activities which are presented as non-current assets at year end.
The consolidated entity has prepared a Board approved forecast for the 12 months ending 30 September 2022 which
highlights that the consolidated entity has sufficient cash reserves to continue normal business operations as planned. The
cashflow forecast is based on certain key assumptions including the successful completion and production of additional
wells over the forecast period, the up-front payment for future oil production from a key customer, as well as the sales
prices to be realised on unhedged oil and gas sales. To the extent these assumptions do not occur as planned or the
expected timings of the forecast events are delayed, the consolidated entity may be required to source additional funding
to continue operations and settle its obligations with existing suppliers and financiers.
For the year ended 30 June 2021 and in prior periods the consolidated entity has raised sufficient funding to continue
operating as planned through various means including:
(i) Equity capital;
(ii) Interest bearing debt finance;
(iii) Extended terms of trade with certain key service industry suppliers; and
(iv) Farm-outs.
Having considered all relevant facts the directors are satisfied that is appropriate to prepare the financial report on the
going concern basis. However, in the event that the consolidated entity is unsuccessful in the matters set out above, a
material uncertainty would exist that may cast significant doubt as to whether the consolidated entity will be able to
continue as a going concern and therefore whether it will realise its assets and discharge its liabilities in the normal course
of business and at the amounts stated in the financial report.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset
amounts or to the amounts and classification of liabilities that might be necessary should the consolidated entity not
continue as a going concern.
BYRON ENERGY LIMITED