Interra

Interra: 2Q14 earnings disappointed, down 95.4% y/y to US$0.2m, bringing 1H14 earnings to US$1.4m. Revenue increased 12.4% y/y to US$14.0m as sales of shareable production increased from 172,388 barrels in 2Q13 to 183,594 barrels in 2Q14. Cost of production skyrocketed 75.1% to US$10.0m as production expenses rose 46.0% to US$5.4m and amortization of producing oil and gas properties doubled from US$2.1m to US$4.7m, as such GPM halved from 54.1% to 28.4%. Administrative expenses doubled to US$2.8m on one-off expense of US$1.0m. Looking ahead, production in Myanmar is expected to increase significantly as 21 new wells ramp up output and production in TMT TAC is expected to return to normal as weather improves. Interra trades at 29.7x annualized 1H14 P/E and 2.0x P/BV. Separately, 60%-owned JV entity has commenced drilling development well of CHK 1193 in Chauk oil field in Myanmar, results is expected in approx 6 weeks