NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued  The recoverable amount of an asset is the greater of its fair value less costs to sell (FVLCS) and its value-in-use (VIU). In assessing VIU, an asset’s estimated future cash flows are discounted to their present value using an appropriate  discount rate that reflects current market assessments of the time value of money and the risks specific to the  assets/CGUs. In addition, the Group considers market data related to recent transactions for similar assets. In  determining the fair value of the Group's investment in shale properties, the Group considers a variety of valuation  metrics from recent comparable transactions in the market. These metrics include price per flowing barrel of oil  equivalent and undeveloped land values per acre held. Where an asset does not generate cash flows that are largely  independent from other assets or groups of assets, the recoverable amount is determined for the cash-generating  unit to which the asset belongs.  For development and production assets, the estimated future cash flows for the VIU calculation are based on  estimates, the most significant of which are hydrocarbon reserves, future production profiles, commodity prices,  operating costs and any future development costs necessary to produce the reserves. Under a FVLCS calculation,  future cash flows are based on estimates of hydrocarbon reserves in addition to other relevant factors such as value  attributable to additional reserves based on production plans.  Estimates of future commodity prices are based on the Group’s best estimates of future market prices with reference  to external market analysts’ forecasts, current spot prices and forward curves. At 31 December 2014, future NYMEX  strip prices, adjusted for basis differentials, were applied in 2015 and gradually increased through 2016 to $75/bbl  in 2017 and thereafter. The discount rates applied to the future forecast cash flows are based on a third party participant’s post-tax weighted  average cost of capital, adjusted for the risk profile of the asset.  An impairment loss is reversed if there has been an increase in the estimated recoverable amount of a previously  impaired assets. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed  the carrying amount that would have been determined, net of depreciation or depletion if no impairment loss had  been recognized. The Company has not reversed an impairment loss during the years ended 31 December 2014 or  2013.  g) Foreign Currency Transactions and Balances  Functional and presentation currency  Transactions and Balances  Both the functional currency and the presentation currency of the Group is US dollars. Some subsidiaries have  Australian dollar functional currencies which are translated to the presentation currency. All operations of the Group  are incurred at subsidiaries where the functional currency is the US dollar as all oil and gas properties are located in  North America. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the  date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non- monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction.  Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were  determined.  - 65 - 