17 / 136
New Hope
Review of Group Entities
15
Queensland Bulk Handling (QBH)
QBH, New Hope’s 100% owned coal terminal at the Port of Brisbane, exported 7.0 million tonnes of coal on
90 vessels, a similar result to last year. QBH remains essentially a demurrage free port.
Bengalla Joint Venture
New Hope’s acquisition of a 40% interest in the Bengalla open cut coal mine in New South Wales’ Hunter Valley
region from Coal and Allied settled on 1 March 2016. Since settlement New Hope has played an active role in the
transition from Coal and Allied and the ongoing management of the Bengalla operation in conjunction with the
other joint venture participants (Wesfarmers 40%, Mitsui 10% and Taipower 10%).
The operational performance of the Bengalla mine has been consistent with New Hope’s pre-acquisition
expectations. Total coal production for the period 1 March 2016 to 31 July 2016 was 3.5 million tonnes.
New Hope Exploration Projects
New Hope continued its active exploration program utilising its own drill rigs during the year. Exploration activities
focused on resource definition in and around the New Acland project area for the revised New Acland stage 3
project. The drilling operations were supported by gravity and geochemical surveys.
Oil and Gas
Oil production for the year totalled 191,993 barrels (an average of 563 barrels per day) against the prior year
result of 158,884 barrels, an increase in production of 20.8%. Sales revenue for the year was $10.5 million against
$11.9 million last year, a decrease of 11.8%. The reduction in sales revenue was entirely a consequence of the
continued drop in the oil price through the first half of the year which reached a low in January 2016 of US$27
per barrel. The price subsequently increased and stabilised at circa US$45 per barrel at year end. The decline in oil
prices in US Dollar terms was partially offset by a declining AUD:USD exchange rate. The average price realised for
the 2016 year was A$56.6 per barrel compared to A$74.3 per barrel in 2015.
Despite difficult trading conditions Bridgeport was able to limit its EBITDA loss to $1.9 million before non-regular
items. Non-regular items included: impairments of oil producing assets of $10.5 million (after tax); impairments
of oil exploration assets of $8.4 million (after tax); and a loss of $3.4 million resulting from de-recognition of
petroleum resource rent tax balances.
Outlook
During the past year the material capital investment decision was made to invest a significant proportion of
available cash funds into a 40% interest in the Bengalla coal mine located in the Hunter Valley of New South
Wales. During the next financial year Bengalla should increase New Hope’s equity production of thermal coal by
approximately 3.5 million tonnes to a total of approximately 8.9 million tonnes. New Hope is working with its joint
venture partners and the Bengalla management team to improve operational efficiency and effectiveness at the
Bengalla operation.
The New Hope management team is focused on achieving the grant of the New Acland stage 3 mining leases as
expeditiously as possible in order to avoid the negative impacts of any delays in transition from mining stage 2
reserves to stage 3.
Bridgeport continues to seek opportunities to grow its production base and is now the second largest conven-
tional oil producer in Queensland. Following significant investment in seismic studies of its extensive exploration
portfolio Bridgeport is identifying drilling targets for oil exploration to take advantage of any increase in oil prices
in the future.
Since 31 July 2016 prices for Australian thermal coal on the seaborne market have reached levels around US$70
per tonne. This represents an increase of approximately 40% from the lows of just under US$50 per tonne which
prevailed during the 2016 financial year.
Contribution
New Hope contributed a net loss of $29.2 million (2015: $13.0 million loss 59.7% held) to the Group.
Its contribution to regular profit was $3.1 million (2015: $31.8 million 59.7% held).