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EXPLANATORY NOTES


INTRODUCTION

1 The private sector exploration statistics appearing in this publication have been collected and compiled from the Mineral Exploration and Petroleum Exploration quarterly censuses conducted by the Australian Bureau of Statistics. This publication contains actual and expected exploration expenditure.


SCOPE AND COVERAGE

2 The Mineral Exploration and Petroleum Exploration censuses cover private enterprises known to be engaged in exploration in Australia, and in Australian waters including the Joint Petroleum Development Area (JPDA), regardless of the main activity of the explorer.

3 The Joint Petroleum Development Area (JPDA) is an area in the Timor Sea, about 500 km north west of Darwin. The JPDA consists of the area previously referred to as Area A of the Zone of Cooperation (ZOC). A treaty was signed with Indonesia in 1989 to enable exploration for and development of petroleum resources in this area. Following East Timor's separation from Indonesia, arrangements continued on a transitional basis between Australia and the United Nations Transitional Administration in East Timor (UNTAET) on behalf of East Timor. On 20 May 2002, the newly independent East Timor and Australia accepted arrangements as proposed in the new Timor Sea Treaty (based on an 'Exchange of Notes' between the two countries). A new Treaty, which entered into force on the 2 April 2003, provides the necessary framework arrangements for companies to exploit resources in the JPDA.

4 The areas formerly known as Areas B and C of the Zone of Cooperation no longer exist under this arrangement. Since 20 May 2002, ZOCB is simply a part of Australia's waters, and ZOCC a part of East Timor's.

5 Exploration in the JPDA is included in estimates for the Northern Territory. Further, as a reflection of the joint Australia/East Timor administration of exploration and production activity in the JPDA, 50% of exploration expenditure in the JPDA is excluded from the estimates. The feature article 'Statistical Treatment of Economic Activity in the Timor Sea' published in the September Quarter 2003 issue of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) provides further details.

6 The tenements in the Ashmore and Cartier Islands are administered by the Northern Territory Department of Mines and Energy. Therefore all petroleum exploration expenditure in this area has been included with the Northern Territory data.


SEASONAL ADJUSTMENT

7 Seasonal adjustment is a means of removing the estimated effects of normal seasonal variation from the series so that the effects of other influences can be more clearly recognised. Seasonal adjustment does not aim to remove the irregular or non-seasonal influences which may be present in any particular series.

8 These irregular influences that are volatile or unsystematic can make it difficult to interpret the movement of the series even after adjustment for seasonal variation. This means that quarter-to-quarter movements of seasonally adjusted estimates may not be reliable indicators of trend behaviour.

9 In this publication, the seasonally adjusted estimates are produced by the concurrent seasonal adjustment method which takes account of the latest available original estimates. This method improves the estimation of seasonal factors, and therefore, the seasonally adjusted and trend estimates for the current and previous quarters. As a result of this improvement, revisions to the seasonally adjusted and trend estimates will be observed for recent periods. A more detailed review is conducted on an annual basis.

10 The revision properties of the seasonally adjusted and trend estimates can be improved by the use of autoregressive integrated moving average (ARIMA) modelling. ARIMA modelling relies on the characteristics of the series being analysed to project future period data. The projected values are temporary, intermediate values, that are only used internally to improve the estimation of the seasonal factors. The projected data do not affect the original estimates and are discarded at the end of the seasonal adjustment process. The Mineral Exploration collection uses ARIMA modelling where appropriate for individual time series. The ARIMA model is assessed as part of the annual review. For more information on the details of ARIMA modelling see the feature article: Use of ARIMA modelling to reduce revisions in the October 2004 issue of Australian Economic Indicators (cat. no. 1350.0).

11 In using the seasonally adjusted series for petroleum exploration offshore drilling and petroleum exploration in Western Australia, care should be exercised because of the difficulties associated with reliably estimating the seasonal pattern.


TREND ESTIMATES

12 The smoothing of seasonally adjusted series to create trend estimates reduces the impact of the irregular component of the seasonally adjusted series.

13 The trend estimates are derived by applying a 7-term Henderson moving average to the seasonally adjusted series. The 7-term Henderson average is symmetric but, as the end of a time series is approached, asymmetric forms of the average are applied. Unlike the weights of the standard 7-term Henderson moving average, the weights employed here have been tailored to suit particular characteristics of the individual series. While the asymmetric weights enable trend estimates for recent quarters to be produced, it does result in revisions to the estimates for the most recent three quarters as additional observations become available. There may also be revisions because of changes in the original data and as a result of the re-estimation of the seasonal factors.

14 Information Paper: A Guide to Interpreting Time Series, Monitoring Trends, an Overview (cat. no. 1349.0), can be obtained by contacting Time Series Analysis Canberra on (02) 6252 6345 or e-mail <time.series.analysis@abs.gov.au>.


EXPECTED EXPLORATION EXPENDITURE

15 Expected expenditure is collected in June and December quarter each year. Businesses are asked to report their expected expenditure for the next six months.

16 From the June quarter 2000 publication, the basis for the Expected Mineral Exploration Expenditure series changed. Prior to June 2000, the expected estimates released were simple aggregates of data compiled through the quarterly Mineral Exploration collection. However, these aggregates underestimated actual expenditure to a fairly consistent degree. The consistency with which the published data underestimated actual expenditure suggested that adjustments to improve the accuracy and usefulness of the estimates of expected expenditure would be possible.

17 In the period since June 2000, such adjustments have been made to reported expected exploration data resulting in estimates which better predict actual expenditure for the same period. For more information regarding the adjustments made to the Expected Mineral Exploration Expenditure series, see the feature article in the June quarter 2000 and the appendix in the December quarter 2002 issue of this publication. Since the June quarter 2003 issue, both unadjusted and adjusted expectations data have been presented in this publication.


ACKNOWLEDGMENT

18 ABS publications draw extensively on information provided freely by individuals, businesses, government and other organisations. Their continued cooperation is appreciated: without it a wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.


RELATED PUBLICATIONS

19 Users may also wish to refer to the following publications which are available from the ABS web site:

• Private New Capital Expenditure and Expected Expenditure, Australia (cat. no. 5625.0)
• Australian Mining Industry (cat. no. 8414.0)
• Mining Operations, Australia (cat. no. 8415.0)