Incremental Oil & Gas has posted a major and very unexpected loss for 2014 due to an accounting difference between the company's expectations and valuations of $US9 million.

The difference relates to a major writedown of its US oil and gas interests, from $US14 million to $US5.43 million, after the board received the independent valuation of its assets, one that differed widely from the company's own internal estimates of its undeveloped oil reserves, which had been prepared using market sales data and adjusted for the fallen oil price.

Managing director John Whistler said the board had decided to use the certified 1P numbers now that they were available from MHA Petroleum Consultants.

The values of the Sheep Springs, Round Mountain and Florence fields have been reduced by about half.

Chairman Mark Stowell said despite the loss the company's cash reserves have been increased by $US820,000 and debt was decreased by $US510,000 during the year.

He said the company had attempted to secure additional projects last year, but was trumped at every turn because the market was running too hot, and Incremental only bid at levels where it could see returns.

The company continues to seek to increase daily average production through the acquisition of multiple small-medium sized oil fields, given the limited low risk drilling targets in its existing fields.

Although he said that vendors are still in many cases pricing sales on the basis of a quick rebound in oil prices, so the market for new projects continued to be tight, and Incremental may not find the right assets until distressed sellers hit the market.

Incremental's shares closed at $0.024 and were steady in early trading this morning, leaving the company valued at $3.85 million.