Impairment of production properties Impairment of production properties: $4.4 million. Refer to Note 11 of the Financial Report The key audit matter How the matter was addressed in our audit We identified the assessment of possible indicators of impairment and where required impairment testing as a key audit matter. This is due to the value of production properties and the complex auditor judgement and level of specialised skills needed to evaluate certain assumptions used in this process. The Group determined there were impairment indicators for certain of the Group’s Cash Generating Units (CGUs) and recognised impairment expenses of $3.4 million for Maari and $1.0 million for Sampang. The process for determining the recoverable amount of the CGUs uses forward looking assumptions which are inherently difficult to determine and require judgement to be applied. These conditions require additional scrutiny by us, in particular to address the objectivity of the inputs, and their consistent application. Key inputs into these forward looking estimates that we focused on, include: • Future oil and gas prices; • Future production volumes, reserves and end of field life. This drives additional audit effort around the feasibility of forecasts; and • Discount rates. These are complicated in nature and vary according to the conditions and environment that the CGUs are subject to from time to time. We involved valuation specialists to supplement our senior audit team members in assessing this key audit matter. Our procedures included: • evaluating the Group’s impairment indicator assessment utilising our knowledge of the Group and the Oil and Gas industry; • assessing the appropriateness of the impairment testing methodology applied by the Group against the requirements of accounting standards; • assessing the integrity of the impairment models including the accuracy of the underlying calculation formulas; • evaluating key inputs used in the Group’s impairment models by: – working with our valuation specialists, we evaluated future oil prices by comparing to published forecast prices and views of market commentators on future trends; – evaluating the competency and objectivity of the Group’s experts who produced reserve estimates and future production volumes used in the impairment model; – working with our valuation specialists, we assessed the Group’s discount rates against publicly available risk free rates and data from a group of comparable entities; – considering the sensitivity of the recoverable values of the CGUs to changes in key assumptions used in management’s impairment models by varying key assumptions, such as production volumes, and discount rates, within a reasonably possible range. We did this to identify those assumptions that have the greatest impact on the models to focus our further procedures; • re-calculating the impairment charge against the recorded amount disclosed; and • assessing the appropriateness of the Group’s disclosures in the financial report against the requirements of accounting standards. 63 76 Cue Energy Resources Limited Annual Report 2026
RkJQdWJsaXNoZXIy MjE2NDg3