Interra Resources

Interra Resources: Key feature in The Edge, where Co note that on June 5, DBSV put out a non-rated report that gives a potential target price of 57c. The company now has two producing fields in Myanmar, where it holds a 60% stake for both fields. It is also pumping in two other wholly-owned fields in Indonesia. It has a total of so-called “proven plus probable” reserves of 24.6m barrels. Last year, Interra Resource’s share of production from the fields was 369,908 barrels, +23% compared to the previous year. Earnings for FY12 was US$3m -- up from just US$1m y/y. DBSV expect the co’s earnings this year and next year to hit US$4m and US$5m respectively, on a corresponding revenue of US$30m and US$31m. The higher forecasts are backed by the co’s on-going expansion. From 33% last year, Interra Resources today has increased its share of onshore oil exploration in Myanmar to 40%, making it the market leader in the country in this segment. The co is carrying various expansionary activities like drilling. From seven wells drilled in 2011, Interra Resources has been stepping up the pace, to nine wells last year and this year, it will further increase the number to 21 wells. The coy, which has been doing business in Myanmar since 1996, is also seeking out more fields put out for bidding by the govt. DBSV expect 18 fields to be put up for bidding around August this year, with the awarding of the licences by end of the year. DBSV note that a “wild card” might manifest in the form of growing gas production. Gas, however, how strong this gas will flow has yet to be fully determined. Gas is generally cheaper to produce but its selling price is also lower. The upfront investments for gas exploration are higher but once the flow of gas has been established, the incremental cost is less than for oil production. If gas production is to happen, Interra can tap on existing lines to pipe gas from Myanmar to China.