INFA.L Share News (INFA)

(ShareCast News) - Gas storage company InfraStrata swung to a slight profit as it secured funding from the European Union for its Islandmagee project, while it seeks to gain a further £3m.The company made a profit for the year ended 31 July 2016 of £66,955, compared to a loss of £6.1m last the previous year. This comprised an initial loss of £177,614 due to the operations of the Islandmagee gas storage project, and a profit of £244,569 due to the discontinued operations of oil and gas exploration.The next step in the project is the Front End Engineering and Design (FEED) and commercialisation, which is to cost about £6m.The company secured further funding from the EU's connecting Europe facility for up to €4.02m to meet up to 50% of the costs of FEED and with the downhole testing, while selected FEED contractors have agreed to contribute a further £1.1m by way of secured loans.Both the EU grant and contractors loans are conditional on the company securing the balance of £3m.Since the end of the financial year, the company's stake in the project increased to 90% from 65%, while Mutual Energy owns the remaining 10%.Project management and company administration costs decreased 18% to £932,635, which £677,735 was also due to the gas storage project.Capital costs of Islandmagee during the year declined 83% to £608,760, principally related to the completion of the salt core well programme in late 2015.A £1.3m loan from Baron Oil plc was repaid in August 2016, following receipt of the balance of European Union grant relating to the salt core well programme.Some €1.6m was received as an advance on the EU grant for the FEED programme, which is held as a creditor, pending securing the balance of £3m of additional funding required to complete the FEED and commercialisation programme.New £300,000 secured loan facility from Baron Oil, to meet the company's minimum short-term working capital requirements while the additional funding to pursue the FEED is sought.The company has £2.45m in cash at bank at the end of July, including £1.4m from the grant received from the EU.InfraStrata also sold its exploration assets in order to focus on the Islandmagee, as the project head towards construction. The company received £552,481 from the sale of the Woodburn Forest well.Anita Gardiner, joint managing director, said the Islandmagee gas storage project holds "significant value" for the company and is also likely to be of material importance to the future UK gas market once operational.Stewart McGarrity, the other joint managing director, said: "We have made further progress post period with procuring the engineering, technical and commercial support necessary for the FEED and commercialisation programme. We have already secured approximately half of the total costs of £6m from continued grant support from the European Union and secured loan arrangements with leading FEED contractors."Furthermore, we have made changes to our board to reflect our new focus and to allow us to work towards achieving our goals to maximum effect in 2017 and beyond. Completion of the overall funding arrangements by securing the £3m of funding required is our immediate imperative."Shares in InfraStrata were up 80% to 0.810p at 1049 GMT.