VOLTAIC STRATEGIC RESOURCES LTD — Annual Report 2010

Feb 27, 2011

Incremental Oil and Gas Ltd

A.B.N. 66 138 145 114

Preliminary Final Report for the period from 7 July 2009 to 31 December 2010

RESULTS FOR ANNOUNCEMENT TO THE MARKET

	2010	There are no prior comparative amounts	There are no prior comparative amounts	There are no prior comparative amounts
	$
Revenue	**6,057,792 **
Net profit after tax	588,870

Directors have not proposed a dividend and no dividend has been paid since incorporation

2010

Earnings per share 0.91 Cents

Net tangible assets per share 10.2 Cents

This report is based on accounts which have not yet been audited or reviewed.

Incremental Oil and Gas Ltd Preliminary Final Report for the period from 7 July 2009 to 31 December 2010

COMMENTARY ON RESULTS

This consolidated financial report of Incremental Oil and Gas Limited covers the first twelve months of operations at Sheep Springs and the operations in Australia from the formation of the Company on 7 July 2009.

Incremental acquired 100% of the Sheep Springs oilfield effective from 1 January 2010. Production from the Sheep Springs oilfield has been continuous throughout the year. Total production of oil and gas was 85,195 barrels of oil equivalent.

Profit before tax amortisation and depreciation for the year was $2,402,038.

Since the date of incorporation the company raised funds from founders, seed capital providers and convertible note holders. The company made an Initial Public Offer in December 2010 and listed on the Australian Securities Exchange in January 2011.

Development of production at the Sheep Springs oilfield continues. In February 2011 the Company completed its first well in the Round Mountain oilfield.

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Incremental Oil and Gas Ltd Preliminary Final Report for the period from 7 July 2009 to 31 December 2010

Condensed consolidated statement of comprehensive income for the period from 7 July 2009 to 31 December 2010

Oil and Gas income Interest income Royalties Depreciation Amortisation Exploration Lease operating expenses General Administration and other costs Employee benefits expense Share based payments Interest paid Profit before income tax Income tax expense Profit for the period Other comprehensive income/(loss) for the period Foreign currency translation differences Total comprehensive income/(loss) Profit for the period attributable to members of the entity Total comprehensive loss for the period attributable to members of the entity Basic earnings per share attributable to ordinary equity holders of the entity (cents)	2010 $
	6,057,792 23,473 (939,640) (69,787) (688,468) (105,554) (833,180) (925,230) (719,501) (156,123) (536,279)
	1,107,503 (518,633)
	588,870
	(1,686,559)
	(1,097,689)
	588,870
	(1,097,689)
	0.91

Diluted earnings per share is not shown as no options were dilutive during the year

Incremental Oil and Gas Ltd Preliminary Final Report for the period from 7 July 2009 to 31 December 2010

Condensed consolidated statement of financial position at 31 December 2010

Note Current assets Cash assets 1 Receivables 2 Total current assets Non-current assets Cash assets Oil properties 3 Exploration and evaluation Fixed assets 4 Total non-current assets Total assets Current liabilities Trade and other payables 5 Convertible notes 6 Total current liabilities Non-current liabilities Convertible notes 6 Deferred tax liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital 7 Reserves 9 Retained earnings 10 Total equity	2010 $
	5,117,919 518,864
	5,636,783
	98,193 10,851,476 381,772 571,170
	11,902,611
	17,539,394
	751,539 2,750,000
	3,501,539
	2,250,000 518,633
	2,768,633
	6,270,172
	11,269,222
	12,366,911 (1,686,559) 588,870
	11,269,222

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Incremental Oil and Gas Ltd Preliminary Final Report for the period from 7 July 2009 to 31 December 2010

Condensed consolidated statement of cash flows for the period from 7 July 2009 to 31 December 2010

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid Net cash provided by operating activities 11 Cash flows from investing activities Payments for bonds Payments for property, plant and equipment Payments for oilfield and enhancements Payments for exploration Net cash used in investing activities Cash flows from financing activities Proceeds from issues of equity securities Proceeds from issue of convertible notes Proceeds of borrowings Repayment of borrowings Net cash provided by/(used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the end of the period	2010 $
	5,472,034 (3,602,600) 21,841 (164,996)
	1,726,279
	(108,719) (700,808) (12,900,428) (422,696)
	(14,132,651)
	12,377,093 5,000,000 6,330,860 (6,183,662)
	17,524,291
	5,117,919
	5,117,919

Incremental Oil and Gas Ltd Preliminary Final Report for the period from 7 July 2009 to 31 December 2010

Condensed consolidated statement of changes in equity for the period from 7 July 2009 to 31 December 2010

Profit attributable to members of the entity Share option reserve Other comprehensive income Total income/expense for the period Issue of share capital Cost of issue of share capital At 30 June 2010	Issued capital Retained Earnings Other reserves Total equity $ $ $ $
	- 588,870 - 588,870 - - 35,123 35,123 - - (1,721,682) (1,721,682)
	- 588,870 (1,686,559) (1,097,689) 12,784,365 - - 12,784,365 (417,454) - - (417,454)
	12,366,911 588,870 (1,686,559) 11,269,222

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Incremental Oil and Gas Ltd Preliminary Final Report for the period from 7 July 2009 to 31 December 2010

Notes to the financial statements

1.Cash and cash equivalents for the purposes of the statement of cash flows, cash and cash equivalents comprise the following: Cash at bank and on hand 2.Trade and other receivables Oil and gas sales debtors 3.Oil properties Cost of acquisition and enhancements Accumulated amortisation 4.Fixed assets Cost Depreciation 5.Trade and other payables Trade payables and accruals Interest on convertible notes 6.Convertible notes Current Non-current Unless redemption is requested or notes are converted earlier all the secured convertible notes will convert to ordinary shares on the maturity date of 2 July 2011. If the holders of $2,250,000 of the secured convertible notes request redemption of the notes before 2 July 2011, the repayment date for these notes will be extended to 2 July 2012. These amounts are treated as non-current liabilities. The interest rate on the secured convertible notes is10% per annum. 7.Issued capital 110,470,004 ordinary shares 8.Options The company has issued 92,766,670 options exercisable at 20 cents per option on or before 1 November 2014 9.Reserves Foreign currency translation reserve Share option reserve	$ 5,117,919
	518,864
	11,473,288 (621,812)
	10,851,476
	634,200 (63,030)
	571,170
	385,415 366,124
	751,539
	2,750,000 2,250,000
	5,000,000
	12,366,911
	1,721,682 (35,123)
	1,686,559

Incremental Oil and Gas Ltd Preliminary Final Report for the period from 7 July 2009 to 31 December 2010

10.Retained earnings Profit for the period 11. Reconciliation of net profit after tax to net cash flows from operations Profit per accounts Adjustments for Amortisation Depreciation Foreign currency translation differences Share based payments (Increase)/decrease in assets: Current receivables Increase/(decrease) in liabilities: Current payables Deferred taxation Cash used in operating activities	$ 588,870
	588,870 688,468 69,787 (371,781) 35,123 (585,758) 782,937 518,633
	1,726,279

12.Segment information

The consolidated entity operates in one business segment being oil production and exploration in USA and one geographic segment being USA.

13.Entities over which control has been gained during the period

Name: Incremental Oil and Gas USA inc Holding :100% Net profit after tax for the period: $856,739

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