- 70 -  t) Earnings Per Share  s) Parent Entity Financial Information  r) Rounding of Amounts  q) Change in Accounting Estimate  Stock Based Compensation  NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  The life of each item has regard to both its physical life limitations and present assessments of economically  recoverable reserves of the field at which the asset is located. Economically recoverable reserves are defined as  proved developed and probable developed reserves. These calculations require the use of estimates and  assumptions, including the amount of recoverable reserves and estimates of future capital expenditure. The  calculation of the units of production rate of depreciation or amortisation could be impacted to the extent that  actual production in the future is different from current forecast production based on total economically recoverable  reserves, or future capital expenditure estimates change. Changes to economically recoverable reserves could arise  due to change in the factors or assumptions used in estimating reserves, including the effect on economically  recoverable reserves of differences between actual commodity prices and commodity price assumptions and  unforeseen operational issues. Changes in estimates are accounted for prospectively.  The Group’s policy for stock based compensation is discussed in Note 1 (h). The application of this policy requires  management to make certain estimates and assumptions as to future events and circumstances. Stock based  compensation related to stock options use estimates for expected volatility of the Company’s share price and  expected term, including a forfeiture rate, if appropriate.  Effective 1 July 2013, the Company had a change in accounting estimate related to the economically recoverable  reserves in its Eagle Ford formation used in the units-of-production depletion calculation. Subsequent to the change,  the Company began to include management's best estimate of economically recoverable reserves associated with  developed properties, which include both proved developed and probable developed reserves. Prior to the change,  the Company used economically recoverable reserves associated only with proved developed reserves as probable  developed reserves were not significant. The Company is of a kind referred to in Class Order 98/100 issued by the Australian Securities and Investment  Commission, relating to rounding of amounts in the financial statements. Amounts have been rounded to the  nearest thousand.  The financial information for the parent entity, SEAL (“Parent Company”), also the ultimate parent, discussed in Note  34, has been prepared on the same basis, using the same accounting policies as the consolidated financial  statements, except for its investments in subsidiaries which are accounted for at cost in the individual financial  statements of the parent entity less any impairment. The group presents basic and diluted earnings per share for its ordinary shares. Basic earnings per share is calculated  by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number  of ordinary shares outstanding during the year. Diluted earnings per share is determined by adjusting the profit or  loss attributable to ordinary shareholders and the weighted average number of ordinary shares for the dilutive  effect, if any, of outstanding share rights and share options which have been issued to employees. 