VOLTAIC STRATEGIC RESOURCES LTD — Interim / Quarterly Report 2011

Jul 26, 2011

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ABN 66 138 145 114 2/16 Phillimore Street Fremantle, WA 6160 Tel: 08 9431 7306 (note new #)

27th July 2011 Australian Stock Exchange By ASX online

QUARTERLY ACTIVITIES REPORT For the quarter ended 30 June 2011

HIGHLIGHTS

• Three more successful wells at Round Mountain

• First Two Round Mountain wells paid out

• First horizontal well successfully completed

• Average oil production up 15% for quarter

• 21% increase in sales revenues to $1.828m for quarter

• Field Mapping at Raven Pass

• Additional land leased during the quarter

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Incremental Oil and Gas project locations

Incremental Oil and Gas Limited (ASX: IOG)

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DRILLING ROUND MOUNTAIN OILFIELD

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Round Mountain well locations

SMOOT 2 was a conservative offset about 170 feet SW of Smoot 1. It was spudded on June 5[th ] and reached total depth of 1700’ on 6[th] June. The well intersected the primary target low to Smoot 1 as predicted. Log analysis indicated 61 feet of net pay. A 24’ interval was perforated and the well was placed on production on 16[th] June. Smoot 2 provided valuable information on oil/water contact, reservoir distribution and Smoot #1 reservoir drainage and area.

SMOOT 3 was a horizontal well, spudded on 8[th] June. The well was drilled without incident to 1514’ where the drill string became stuck. Nine days were spent retrieving the fish. After 7 5/8” casing was set at 1800’, a 810’ long horizontal hole was drilled to a total depth of 2610’. Excellent shows were seen throughout, with oil over the shakers. A 4 1/2” slotted liner was run to 2610’ and the rig moved off on 26[th] June.

SMOOT 4 was drilled as an inclined well to better site the surface location. It was drilled without incident to a total depth of 2700’ with shows down to 2185’. The drill string became stuck at 1900’ whilst pulling out of the hole to log. The fish was successfully recovered after 4 days. The well intersected 70 feet of hydrocarbon pay. The well will be brought onto production as soon as possible.

Incremental Oil and Gas Limited (ASX: IOG)

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PRODUCTION SHEEP SPRINGS:

There were some external power interruptions that resulted in the field being shut down for as long as 36 hours. We are looking at install an emergency generator to alleviate this problem in the future. Sheep Springs production over the quarter was also negatively impacted by the workover of C-5 (down three days, then successfully returned to production) and C-4.

During the quarter, well C-7 was shut in to preserve gas supplies for a future steam injection project.

ROUND MOUNTAIN:

Two wells, Smoot 1 and 2 were successfully brought on production in the quarter. Smoot 3 is being prepared for production at the end of the reporting period.

At SMOOT 1 , there were initial problems during May in replicating the excellent flow rates achieved during testing, but after the initial 40’ perforated interval was reperforated on 6[th] May the well produced dry oil at rates averaging 102 bopd, as announced to the ASX on 24[th] May.

SMOOT 2 came on production on 16[th] June. Production stabilized at about 30 bopd at the end of the reporting period.

SMOOT 3 is being brought into production at the end the reporting period. Results will be announced as soon as they are available.

The four well programme at Round Mountain this year cost US$2.6 million and over US$800k of gross oil revenue has already been generated from Smoot 1 and 2, significantly exceeding the total cost of those two initial wells.

The IOG Round Mountain production is shown below:

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Round Mountain IOG Lease Total Daily Production Chart
200
100
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BOPD
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Incremental’s plan is to observe production trends in our new Round Mountain wells for several months before initiating additional activity.

Incremental Oil and Gas Limited (ASX: IOG)

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WORKOVERS SHEEP SPRINGS:

T he long awaited C-4 FracPac was performed by Halliburton on June 21[st] in an attempt to increase production and limit sand ingress. Production increased from 6 bopd to 12 bopd after the job.

H & P #2 was perforated in the Carneros over a 30’ interval. The well flowed dry gas at 275 thousand cubic feet per day. The well then loaded up with fluids and has died. We are evaluating re-completion options in the well.

Three wells underwent an inexpensive chemical treatment during the quarter. Production increased by about 6 bopd as a result of this work, resulting in payout of the treatment in just a matter of months.

Details of production for the quarter and reference quarters are:

	Q2 2011	Q1 2011	Q2 2010
Production (Av barrels oil per day)	188	164	192
Gas production (Av 000’s cubic ft/day)	117	222	414
Average daily production (barrels oil equivalent)	208	203	261
Average price of oil sold (US$/barrel)	109.60	98.50	83.66
Average price of gas sold (US$/mcf)	2.45	3.14	3.21
Quarterly revenue (US$)	1,828,190	1,512,760	1,548,094

IOG Average Daily Production

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300
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200
150
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Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011
BOPD GAS BOEPD
BOEPD
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Average daily production graph by quarters

The 2011 second quarter oil production was 15% above the preceeding quarter. This is mainly due to the contribution from the Round Mountain Field. Revenues increased by

Incremental Oil and Gas Limited (ASX: IOG)

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21% from the previous quarter. Realized oil prices increased over the quarter from an average of US$89.50 in Q1 to $109.60 in Q2.

OTHER PROJECTS

In The Guijarral Hills and Raven Pass projects geological studies continued and an additional 152 net acres of prospective leasehold was added during the quarter. In the prospective Raven Pass project, an extensive field mapping project was undertaken, and available seismic purchased.

CORPORATE

$5million in convertible notes were all converted to shares on July 2[nd] . Incremental now has no debt.

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Gerry McGann Managing Director

Incremental Oil and Gas Limited (ASX: IOG)

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