Interra Resources Limited: FY 2025 Financial Analysis and Investor Insights

Interra Resources Limited, a Singapore-listed petroleum exploration and production company, released its unaudited results for the full year ended 31 December 2025. This review covers key financial metrics, major business developments, and provides actionable insights for investors based strictly on the disclosed financials.

Key Financial Metrics and Performance

*Inferred from total dividends paid divided by weighted average shares for FY2024.

Historical Performance Trends

Interra’s FY2025 marked a dramatic reversal from prior year profitability to a significant net loss. Revenue fell sharply by 30% YoY, mainly on lower shareable oil sales (down 19% to 250,791 barrels) and weaker average oil prices (down 14% to US\$69.06/barrel). The company swung from a net profit of US\$4.12 million in FY2024 to a net loss of US\$24.32 million in FY2025, driven by major impairment and credit loss charges. Basic EPS turned negative at -3.458 US cents per share, compared to a positive 0.645 US cents last year. Net asset value was almost halved.

Exceptional Earnings and Expenses

• Impairment Losses: The group recorded impairment and allowance losses totaling US\$24.04 million in FY2025. This included:
• US\$10.48 million impairment on exploration and evaluation assets in Indonesia (Kuala Pambuang PSC) after license expiry and extension uncertainty.
• US\$6.88 million impairment on producing oil and gas properties in Myanmar due to lower assessed recoverable value.
• US\$6.65 million full write-off of loans to third parties related to KP PSC.
• Lower Cost of Production: Production expenses fell to US\$9.28 million (from US\$10.15 million), reflecting reduced activity and volumes.
• Lower Revenue and Other Income: Revenue and other income declined on reduced oil output and lower interest income.

Major Corporate Actions and Balance Sheet Movements

• Treasury Shares: The company increased its treasury shares to 22.46 million, representing 3.55% of shares outstanding, via additional buybacks in FY2025.
• Dividend: No dividend was declared for FY2025, compared to a small payout in FY2024. The board cited insufficient profits for the year.
• Asset Write-downs: Non-current assets fell sharply to US\$4.67 million (from US\$29.08 million), largely due to impairments on oil and gas properties and exploration assets.
• Investments: New investments were made in associated companies, floating solar projects in Indonesia, and convertible bonds, reflecting diversification into renewables and minerals.
• Cash Position: Cash and cash equivalents at year-end stood at US\$15.08 million, down from US\$17.97 million, mainly due to investing outflows and dividend payments.

Business Developments and Outlook Risks

• Kuala Pambuang PSC, Indonesia: The main exploration license expired in March 2025. The proposed drilling programme is on hold, pending extension approval from authorities. The company recognized the recoverable amount as nil for these assets.
• Myanmar Operations: Shareable oil production declined 4% in 2H 2025. Only one new well was drilled (as budgeted) with modest output. The political and operating environment remains challenging.
• Renewables and Diversification: Interra is diversifying into floating solar projects and silica sand, but these are at early stages and are not yet contributing significantly to earnings.

Chairman’s Statement

“Revenue for FY 2025 was US\$11.95 million, 30% lower than the previous financial year. The decrease was mainly due to lower sales of shareable oil… and lower weighted average transacted oil price… Net loss for FY 2025 was US\$24.32 million… mainly attributable to the recognition of impairment losses and loss allowance for expected credit loss in FY2025. In respect of the Kuala Pambuang (KP) PSC, an impairment loss of US\$10.48 million was recognised following the expiry of the exploration licence rights and the absence of the extension approval letter from the relevant authority. In addition, loans extended to third parties to finance KP PSC were fully impaired, resulting in a loss allowance for expected credit loss of US\$6.65 million. Separately, in respect of the Myanmar IPRCs, an impairment loss of US\$6.88 million was recognised on producing oil and gas properties in FY 2025 after the recoverable amount was assessed to be lower than the carrying amount.”

The tone is cautious and defensive, focusing on impairment-driven losses and regulatory uncertainty, but notes efforts towards renewable ventures.

Divestments, Asset Sales, and Corporate Restructuring

• Disposal of non-core wood pellet plant assets in Indonesia, with proceeds re-invested in silica projects.
• Internal restructuring involving the transfer of Goldwater Indonesia Inc. and Goldpetrol Joint Operating Company Inc. equity interests to align with future operating strategies.
• Subscription for additional shares in Morella Corporation Limited, increasing the group’s stake in this ASX-listed resource company.

Share Buybacks, Dilution, and Placements

• Share buybacks continued (treasury shares rose to 22.46 million), but no new shares were issued during 2H 2025.
• Share options for certain key executives lapsed following their departure.

Related-Party Transactions and Remuneration

• No material related-party transactions were disclosed beyond those in the normal course of business.
• Director and executive remuneration details were not provided in the summary report.

Outlook and Forward-Looking Risks

• Kuala Pambuang PSC: The lack of regulatory extension approval presents ongoing risk and uncertainty; further impairments are possible if the license is not renewed.
• Myanmar: Political and operational challenges persist, and only routine maintenance and incremental drilling are planned. No major production increases are expected in the near term.
• Renewables: Investments in solar and silica are at an early stage and are not expected to contribute materially in the immediate future.
• No Dividend: The absence of a dividend underscores the company’s focus on capital preservation amid losses.

Conclusion: Financial Health and Investment Recommendations

Overall Assessment: Interra Resources delivered a weak financial performance in FY 2025, moving from profitability to significant losses due to impairment charges, declining oil production, and regulatory uncertainty. The company remains cash-rich, but asset values have been sharply reduced, and its core upstream business faces both operational and regulatory headwinds. Diversification into renewables and minerals is underway but has yet to provide meaningful returns or reduce risk.

Investor Recommendations

• If Currently Holding the Stock:
  Caution is warranted. The company is facing significant uncertainties regarding its key upstream assets, and near-term turnaround prospects appear limited. Investors should monitor for regulatory developments (especially on the KP PSC), progress in renewable projects, and any signs of stabilization or recovery in oil production. Consider reducing exposure if risk tolerance is low, or holding only if there is confidence in management’s ability to execute on diversification.
• If Not Currently Holding the Stock:
  Avoid initiating new positions until clearer signs emerge of operational recovery, license extension in Indonesia, or tangible earnings contributions from new business segments. Interra remains a high-risk, turnaround situation best suited to speculative investors with a long-term horizon and high risk appetite.

Disclaimer: This analysis is based solely on the company’s FY 2025 unaudited financial statements and disclosures. It does not constitute financial advice. Investors should conduct their own due diligence and consider their risk tolerance before making any investment decisions.

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