The Perth-based company today said production for the fourth quarter was 130,834 barrels of oil despite the suspension of daily production of between 70bbl and 100bbl of oil to allow drilling of the USR wells.

Incremental said firm oil prices and the steady production again gave rise to an operating cashflow surplus in the quarter.

Net cash on hand at September 30 was $10.3 million, it said.

Chairman Chris Cronin said good progress was also reported in the USR drilling program at its 100%-owned Selmo field.

The company’s six-well USR program involves the re-entry of existing vertical wells, targeting horizontal completions with the aim of boosting production.

“We are pleased with the progress on Selmo 43, where the horizontal drilling has been successful and we appear to have intersected several possible fracture zones with oil shows, although the significance of these is unknown until the well is placed back on production,” Cronin said.

“At present, drilling has been suspended for the Bayram holiday in Turkey and is planned to resume on October 31.

“Selmo-40 will be drilled after completion of Selmo-43 to complete the program.”

In early September, the company said a number of drill pipe failures had occurred at Selmo-36 after two USR drill holes placed “substantial stresses on the pipe”.

Incremental suspended the first hole because of the ongoing risk of drill pipe failure, but continued to drill the second with a larger diameter radius to reduce drill pipe stress.

The company said it was able to achieve “encouraging” flow rates despite problems.

Incremental said it believes the Selmo MSD reservoir is undrained by field production and still contains substantial reserves.

Project costs to date have reached about $2.4 million, which were “well within” original cost estimates, the company said in early September.

The total 2006 USR program in Selmo is budgeted around $4 million for six USR wells.

The current program is expected to continue until the end of the month.

Incremental listed on the Australian Stock Exchange last October, after raising $61 million in an initial public offering.

It used the funds to finalise its purchase of a 100% working and revenue interest in the production and exploration licenses for Selmo, along with other exploration areas in Turkey.