VOLTAIC STRATEGIC RESOURCES LTD — Annual Report 2011

Feb 27, 2012

==> picture [253 x 57] intentionally omitted <==

ABN 66 138 145 114 16 Phillimore Street Fremantle, WA Tel: 08 9431 7306

28 February 2012

The Manager Companies Company Announcements Australian Securities Exchange 20 Bridge Street SYDNEY NSW 2000

By: e-lodgement (ASX code: IOG)

Dear Sir/Madam

Preliminary Final Report for the Year Ended 31 December 2011

Please find attached Incremental Oil and Gas Ltd’s Preliminary Final Report for the Year Ended 31 December 2011.

Yours sincerely

==> picture [91 x 45] intentionally omitted <==

Susan Hunter Company Secretary

Incremental Oil and Gas Ltd

A.B.N. 66 138 145 114

Preliminary Final Report for the year ended 31 December 2011

RESULTS FOR ANNOUNCEMENT TO THE MARKET

	Up/down	%	$US	$US
			2011	2010
Revenue	Up	24.8%	7,704,018	6,169,254
Net profit after tax	Up	29.7%	814,672	628,016
Earnings per share	Down	31.2%	0.66 cents	0.96 cents
Diluted earnings per share	Down	43.8%	0.54 cents	0.96 cents
Net tangible assets per share	Up	25.0%	13.0 cents	10.4 cents
Earnings before income tax,
amortisation, interest paid,
depreciation and foreign
exchange adjustments	Up	21.5%	2,981,917	2,497,768

Directors have not proposed a dividend and no dividend has been paid since incorporation This report is based on accounts which have not yet been audited or reviewed.

1

Incremental Oil and Gas Ltd Preliminary Final Report for the year ended 31 December 2011

COMMENTARY ON RESULTS

This consolidated financial report of Incremental Oil and Gas Limited covers the twelve months of operations for the year ended 31 December 2011.

The results include a full year of production in California USA from the Sheep Springs oilfield and the production from the Round Mountain oilfield which commenced in March 2011.

Profit before interest, tax, amortisation, depreciation and foreign exchange differences for the year was $US2,981,917 (2010:$US 2,497,768)

The company made an Initial Public Offer in December 2010 and listed on the Australian Securities Exchange in January 2011. Holders of convertible notes to the value of $A5,000,000 all converted their notes to shares on 2 July 2011.

Development and production at the Sheep Springs and Round Mountain oilfields continues. The company anticipates drilling further wells at these and other projects during 2012 and increasing production.

	2011	2010
Production bbls	71,651	71,021
Average bbls per day	196	195
Realised oil price	$109	$72

Gerry McGann, Incremental’s Managing Director said that he was very happy with the results of the year with the new Round Mountain project being successfully brought onto production progressively during the year and now more than compensating for the natural decline of the Sheep springs Field. The company is now debt free and poised for a new and exciting phase of growth.

Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures. Until 31 December 2010, both the functional and presentation currency of Incremental Oil and Gas Ltd was Australian dollars. At 1 January 2011 all companies in the group adopted the US Dollar as the functional and presentation currency. All amounts included in the financial statements are in US Dollars unless otherwise indicated. To give effect to the change in functional currency and presentation currency all balances of entities with an Australian dollar functional currency at 31Decenber 2011 were converted into US dollars at a fixed exchange rate on 1 January 2011 of US$1:A$1.0184, and comparative financial information has been translated at this rate.

2

Incremental Oil and Gas Ltd Preliminary Final Report for the year ended 31 December 2011

Condensed consolidated statement of comprehensive income

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 Foreign exchange differences 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 income/(loss) for the period attributable to members of the entity Basic earnings per share attributable to ordinary equity holders of the entity (cents) Diluted earnings per share attributable to ordinary equity holders of the entity (cents) Number of shares on issue at year end	Year ended 31 December 2011 $US 7,704,018 46,476 (1,157,910) (68,402) (993,442) (64,081) (1,472,946) (1,343,095) (730,545) - (324,799) (142,074) 1,453,200 (638,528) 814,672 - 814,672 814,672 814,672 0.66 0.54 135,643,680	Period from 7 July 2009 to 31 December 2011 $US
		6,169,254 31,848 (956,929) (67,807) (705,842) (107,496) (799,217) (958,504) (722,191) (158,996) (492,122) (102,852)
		1,129,146 (501,130)
		628,016
		(1,758,472)
		(1,130,456)
		628,016
		(1,130,456)
		0.96 0.96 110,477,010

3

Incremental Oil and Gas Ltd Preliminary Final Report for the year ended 31 December 2011

Condensed consolidated statement of financial position

Note Current assets Cash assets 1 Receivables 2 Inventories 3 Total current assets Non-current assets Cash assets Oil properties 4 Exploration and evaluation Fixed assets 5 Total non-current assets Total assets Current liabilities Trade and other payables 6 Convertible notes 7 Provisions Total current liabilities Non-current liabilities Convertible notes 7 Deferred tax liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital 8 Reserves 10 Accumulated losses Total equity	31 December 2011 $US 1,456,780 704,372 91,046 2,252,198 100,000 15,747,741 739,700 472,588 17,060,029 19,312,227 516,805 - 30,769 547,574 - 1,139,658 1,139,658 1,687,232 17,624,995 17,905,010 35,769 (315,784) 17,624,995	31 December 2010 $US
		5,114,421 538,780 44,521
		5,697,722
		100,000 11,120,893 388,797 510,149
		12,119,839
		17,817,561
		688,826 2,800,600 25,460
		3,514,886
		2,291,400 501,130
		2,792,530
		6,307,416
		11,510,145
		12,604,832 35,769 (1,130,456)
		11,510,145

4

Incremental Oil and Gas Ltd Preliminary Final Report for the year ended 31 December 2011

Condensed consolidated statement of cash flows

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Net cash provided by operating activities 11 Cash flows from investing activities Interest received Interest paid Payments for development of oil properties Payments for property, plant and equipment Payments for exploration Net cash used in investing activities Cash flows from financing activities Proceeds from issues of equity securities Cost of share issue Proceeds of borrowings Repayment of borrowings Net cash provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the start of the year/period Cash and cash equivalents at the end of the year/period 1	2011 $US 7,474,345 (4,860,891) 2,613,454 46,476 (324,799) (5,620,290) (30,841) (350,902) (6,280,356) 32,927 (23,666) - - 9,261 (3,657,641) 5,114,421 1,456,780	2010 $US
		5,630,475 (3,675,203)
		1,955,272
		31,848 (171,225) (13,185,447) (645,714) (430,475)
		(14,401,013)
		12,882,928 (414,766) 5,438,256 (346,256)
		17,560,162
		5,114,421
		-
		5,114,421

5

Incremental Oil and Gas Ltd

Preliminary Final Report for the year ended 31 December 2011

Condensed consolidated statement of changes in equity

At 31 December 2010 Profit attributable to members of the entity Other comprehensive income Total income/expense for the period Exercise of options Cost of issue of share capital Conversion of convertible notes At 31 December 2011 At date of incorporation Profit attributable to members of the entity Other comprehensive income Total income/expense for the period Share option reserve Issue of share capital Cost of issue of share capital Effect of change of functional currency At 31 December 2010	Issued capital Accumulated losses $US $US	Other reserves Total equity $US $US
	12,604,832 (1,130,456) - 814,672	35,769 11,510,145 - 814,672
	814,672 32,927 - (31,373) - 5,298,624 -	814,672 - 32,927 - (31,373) - 5,298,624
	17,905,010 (315,784)	35,769 17,624,995
	Issued capital Accumulated losses $US $US	Other reserves Total equity $US $US
	- - - 628,016 - -	- - - 628,016 (1,758,472) (1,758,472)
	- 628,016 - - 13,019,598 - (414,766) - - (1,758,472)	(1,758,472) (1,130,456) 35,769 35,769 - 13,019,598 - (414,766) 1,758,472 -
	12,604,832 (1,130,456)	35,769 11,510,145

6

Incremental Oil and Gas Ltd Preliminary Final Report for the year ended 31 December 2011

Notes to the financial statements

1.Cash and cash equivalents Cash at bank and on hand 2.Trade and other receivables Oil and gas sales debtors 3.Inventories Oil and gas inventory at cost of production 4.Oil properties Cost of acquisition and enhancements Accumulated amortisation 5.Fixed assets Cost Depreciation 6.Trade and other payables Trade payables and accruals 7.Convertible notes Current Non-current All the convertible loan notes were converted to equity on 2 July 2011 8.Issued capital At 1 January 2011 Exercise of options Conversion of convertible loan notes At 31 December 2011 9.Options The company has issued 92,600,000 options exercisable at 20 cents per option on or before 1 November 2014 10.Reserves Share option reserve	2011 $US 1,456,780 704,372 91,046	2010 $US 5,114,421
		538,780
		44,521
	17,378,686 (1,630,945) 15,747,741 594,072 (121,484) 516,805 516,805 - - - Number of shares 110,477,010 166,670 25,000,000 135,643,680 35,769	11,758,396 (637,503)
		11,120,893
		571,868 (61,719)
		510,149
		688,826
		2,800,600 2,291,400
		5,092,000
		US$ 12,604,832 32,927 5,267,251
		17,905,010
		35,769

7

Incremental Oil and Gas Ltd Preliminary Final Report for the year ended 31 December 2011

11. Reconciliation of net profit after tax to net cash flows from operations Profit per accounts Adjustments for Interest received Interest paid Tax expense Amortisation Depreciation Consultancy fees (non-cash) Forex Share based payments (Increase)/decrease in assets: Inventories Current receivables Increase/(decrease) in liabilities: Current payables Cash used in operating activities	2011 $US 814,672 (46,476) 324,799 638,528 993,442 68,402 - 142,074 - (46,525) (165,592) (109,870) 2,613,454	2010 $US 628,016 (31,848) 171,225 501,130 705,842 67,807 13,442 (390,323) 158,996 (44,521) (538,780) 714,286
		1,955,272

12. Segment information Year ended 31 December 2011

Revenue Income Total segment revenue Segment Profit/(Loss) Income tax expense Segment loss after income tax expense Assets Segment assets Liabilities Segment liabilities Other Depreciation and amortisation	Australia $US 1,626,744 1,626,744 (143,120) - (143,120) 1,288,801 91,742 5,856	United States $US 7,700,209 7,700,209 1,596,320 (638,528) 957,792 18,023,426 1,595,490 1,055,988	Adjustments $US (1,576,459) (1,576,459) - - - - -	Consolidated $US 7,750,494
				7,750,494
				1,453,200 (638,528)
				814,672
				19,312,227 1,687,232 1,061,844

8