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Equity placing of £9.2 million successfully completed

1 Sep 2010
Highlights:
  • £9.2 million equity placing successfully completed
  • Placing  ensures completion of gas plant facilities and pipeline to enable first gas production at Logbaba
  • VOG remains on target for first gas delivery at Logbaba in December
  • Reserves upgrade and exploitation license anticipated before year end

 Victoria Oil & Gas Plc, the AIM quoted oil and gas Exploration Company with assets in Cameroon and the FSU is pleased to announce that the Company has successfully completed a share placing of £9.2 million. This will enable the Company to complete all necessary gas plant facilities and the pipeline to deliver first gas production.

The fund raising consists of an equity placing of 368,000,000 new ordinary shares ("Placing Shares") at a price of 2.5 pence per share (the "Placing") raising £9.2 million, before expenses and conditional on admission, through Fox-Davies Capital Limited. 

VOG has now completed two successful onshore wells in Cameroon, making the company the only onshore gas producer in the country. The first well flowed at up to 56 million cubic feet of gas plus 1,000 barrels of condensate per day (equivalent to 10,000 barrels of oil per day) the second well flowed at up to 22 million cubic feet of gas plus unmeasured amounts of condensate per day (equivalent to approximately 3,600 barrels of oil per day).  There remain a number of additional horizons in both wells that have yet to be tested.

The Company has entered into several gas supply contracts with leading industrial end users in Douala, including some multinational firms.  Due to the shortage of domestic gas supply and the high costs of alternative energy, the Company has achieved favourable prices of US$16 per mmbtu fixed for the next 5 years on initial contracts, compared to a spot price in the United States  of approximately US$4 per mmbtu.  All initial end users are located within 15km of the well heads, resulting in minimal capital expenditure required now to monetise the gas.  The pipeline route has been planned to have minimum impact on dwellings and citizens and is being permitted.  The pipeline is scheduled for completion by year end.

The prospective gas and condensate resources and reserves numbers attributed to the Company were established in 2008, before the Company had drilled either well.  The original reserve report which gave 108 billion cubic feet of 2P reserves evaluated less than 10% of the license area. The successful completion of wells La-105 and La-106 should allow for a material increase in the Company's reserves and resources both on the immediate areas around the well and within the overall license area.

The Company expects to be selling approximately 10 million cubic feet of gas per day by mid 2011.  This is anticipated to generate gross gas sales revenue of more than US$1 million per week, with the Company confident that it can build sales to over 100 million cubic feet a day within 5 years.

The Placing will be executed over two tranches.  Application will be made to the London Stock Exchange for admission of the first tranche of 284,430,000 Placing shares ("First Admission") and a further application has been made for admission of the second tranche of 83,570,000 Placing shares ("Second Admission") to trading on AIM. It is expected that First Admission will become effective and that trading will commence on 7 September 2010 and it is expected that Second Admission will become effective and that trading will commence on 14 September 2010.   HJ Resources Ltd ('HJR'), a company owned by a discretionary trust of which Kevin Foo and his wife are possible beneficiaries, is participating in the placing by subscribing for 10,000,000 ordinary shares.

Other share issues

The Company has also issued a further 60,260,086 ordinary shares as set out below.

A total of 1,920,963 shares have been allotted to Directors and employees in lieu of cash salary for the six month period ended 31 July 2010 in accordance with their standard employment contracts at a weighted average month-end market price of 3.5 pence per share. In addition, 10,237,533 new ordinary shares have been allotted to advisers in lieu of cash payments and 48,101,590 ordinary shares to the Trustee of the Company's Employee Share Ownership Plan.

These shares will be admitted simultaneously with First Admission as mentioned above.

Directors Share Interests

The effect of the above allotments on the holdings of the Directors is as follows:-

 

 

Shares subscribed

Total Shareholding in VOG following allotments

Kevin Foo*

             10,713,012

      47,264,229

2.55%

Robert Palmer

                   178,701

 

           832,940

 

0.04%

*The shares are held by HJR on behalf of a discretionary trust, of which Kevin Foo and his wife are possible beneficiaries.

Following these admissions, the Company will have 1,856,054,533 ordinary shares in issue. The new ordinary shares will rank pari passu in all respects with the existing ordinary shares.

Kevin Foo, Chairman of Victoria Oil & Gas, said, "I am delighted to close this financing in what continues to be a difficult global environment. I welcome the tremendous support and patience that our shareholders have given the Company.   This fundraising finally enables us to turn the corner into being a producing, revenue-generating Company. It allows us to complete all gas handling facilities and the pipeline for delivering gas to clients without the need for debt or project finance. We shall control all subsurface and surface facilities and a pipeline distribution system totally unencumbered.  There is a substantial demand for gas in Cameroon and VOG possesses a wonderful asset with significant further upside.  We look forward to being able to demonstrate this in the coming months and delivering real value for our shareholders."

 

For further information, please contact:

Victoria Oil & Gas Plc - Tel: +44 (0) 20 7921 8820

Kevin Foo

 

Strand Hanson Limited - Tel: +44 (0) 20 7409 3494

Simon Raggett / Angela Peace

 

Fox-Davies Capital - Tel: +44 (0) 20 7936 5220

Daniel Fox-Davies

Phil Davies/David Porter

 

Conduit PR - Tel: +44 (0) 20 7429 6611

Jonathan Charles / Ed Portman

 

 

Background Information on Victoria Oil & Gas Plc:

Victoria Oil & Gas is an independent oil and gas exploration and production company with projects in Africa and the FSU. The Company's principal assets are the Logbaba gas and condensate project in Cameroon and the West Medvezhye field in Siberia, Russia. Logbaba is located in Douala, the economic capital of Cameroon. The field was discovered in the 1950s and all four exploration wells encountered gas. West Medvezhye is situated in the prolific Yamal-Nenetsk hydrocarbon region in Siberia. An independent reserve audit estimated prospective resources for the field of over 1.1 billion barrels of oil equivalent.