Interra Resources Limited 1H 2025 Financial Results Analysis

Interra Resources Limited, a Singapore-listed petroleum exploration and production (E&P) company, has released its unaudited interim financial statements for the first half-year ended 30 June 2025. The report covers financial performance, operational highlights, and updates on strategic ventures, including steps into renewable energy and resource development. Below, we provide an investor-focused analysis of the key metrics, performance trends, and company outlook.

Key Financial Metrics and Performance Overview

Operational and Financial Highlights

• Revenue and Production: Revenue dropped 29% YoY and 18% QoQ, driven by a 20% decline in shareable oil sales volume (127,693 barrels in 1H 2025 vs. 160,091 in 1H 2024) and a lower average oil price realized (USD 71.74/bbl vs. USD 82.84/bbl in 1H 2024).
• Profitability: Net profit plummeted to USD 0.34 million (from USD 2.36 million in 1H 2024), mainly due to lower revenue and other income, partly offset by lower production costs and income tax expenses.
• EBITDA: EBITDA was USD 1.46 million, down 59% YoY, reflecting the revenue decline and relatively stable cost base.
• Cash Flow and Balance Sheet: Net cash inflow for 1H 2025 was USD 0.79 million, with cash and cash equivalents rising to USD 18.75 million. The company has no borrowings, maintaining a strong liquidity position.
• Asset Revaluation: A fair value loss of USD 0.40 million was recognized in other comprehensive income due to a decrease in the market price of Morella Corporation Limited shares.
• Dividend: No dividend was declared for 1H 2025, in line with previous periods.
• Share Buybacks: The company acquired 2.88 million treasury shares during 1H 2025, increasing treasury shares to 22.46 million (3.55% of issued shares).

Business Developments and Strategic Initiatives

• Renewables and Diversification: Interra is moving into renewables, participating in floating solar farm projects in Indonesia via convertible bonds, and continues to hold a 13.65% stake in Morella Corporation Limited (lithium and battery minerals).
• Oil & Gas Operations: Myanmar shareable oil production decreased by 14% versus the previous half-year. A new well in the Chauk field yielded limited output so far, with further perforation planned.
• Exploration: In Indonesia, the next exploration well (WKP-1) is in preliminary planning, pending regulatory approval for extension.
• Joint Ventures: The wood pellet plant JV in Sumatra has been terminated with no loss to Interra, as the capital will be recouped upon sale of the stake.
• Convertible Bond Investments: Interra subscribed to convertible bonds issued by PT Berkat Bersatu (Indonesian solar projects) and VibroPower Corporation Limited (for a solar farm in Sabah, Malaysia).

Chairman’s Statement

“The Group’s shareable oil production in Myanmar decreased by 14% from 148,849 barrels in 2H 2024 to 127,693 barrels in 1H 2025. The Company has completed its obligation to drill one new well budgeted for FY 2025. Drilling of the new well located in the Chauk field was completed in 1H 2025 yielding a total cumulative oil production of 896 barrels of oil in 1H 2025. No significant oil contribution is expected from this new well for FY 2025. The situation in Myanmar remains challenging and the Company will continue to monitor developments closely.”

The tone is cautious and realistic, acknowledging operational and geopolitical challenges, limited near-term upside from new wells, and a focus on monitoring risks.

Notable Risks and Developments

• Macroeconomic/Geopolitical Risk: Operations in Myanmar are described as challenging, which may impact production and profitability going forward.
• Asset Value Fluctuations: The fair value loss on Morella shares and pending regulatory approvals for exploration in Indonesia create uncertainty regarding asset recoverability and future growth.
• No Borrowings: The company has no debt, reducing financial risk but also highlighting limited gearing for expansion.
• No Dividends: Investors seeking yield will find no income at present as profits are not sufficient for distribution.

Conclusion and Outlook

The overall financial performance of Interra Resources Limited in 1H 2025 is weak, with sharp declines in revenue, profit, and EPS. Despite a strong liquidity position and no debt, the company faces headwinds from falling oil prices, reduced production, and limited immediate upside from exploration or new wells. Strategic diversification into renewables and battery minerals is promising but remains at an early stage, with tangible contributions yet to materialize.

Investor Recommendations

• If you currently hold Interra Resources shares: Consider reviewing your position. The company is financially stable but facing significant operational challenges and profit declines. Unless you have a long-term bullish view on their renewable energy ventures or expect a recovery in oil prices and Myanmar operations, it may be wise to reduce exposure or hold only a small speculative position.
• If you do not currently hold Interra Resources shares: It is prudent to wait on the sidelines until there is clearer evidence of operational recovery, successful execution of new projects, or a turnaround in core profitability. The company’s diversification strategy may bear fruit in the future, but near-term risks are elevated and returns are currently weak.

Disclaimer: This analysis is based strictly on the company’s published financial statements and does not constitute investment advice. Investors should conduct their own research and consider their individual risk tolerance before making investment decisions.

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