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Operational Update and Listing of Shares

21 Dec 2012

 

Highlights:

  • * 11 customers taking gas from Logbaba following the commissioning of an additional five customers
  • * Average daily production of 2.4million standard cubic feet per day ("mmscf/d") with peak daily production of 3.2mmscf/d
  • * Cameroon operating Company cash flow positive going forward
  • * Credit Application Outcome on the Senior Secured Debt Facility expected in early January 2013

Victoria Oil and Gas Plc, ("VOG," or "the Company"), the AIM quoted oil and gas exploration and production company with assets in Cameroon and the FSU, is pleased to provide an operational update. Since the Company's last update on 30 November, a further five customers have been commissioned and have commenced gas consumption and a further three customers are scheduled to accept gas by year end.

Of the 11 customers taking gas, the Company calculates a combined peak demand of 3.2mmscf/d and an average daily consumption of 2.4mmscf/d during a standard operating week. By this year end, the Company expects combined peak demand to be 3.6mmscf/d and average daily consumption of 2.6mmscf/d.

Additionally, a large brewery with an average daily consumption of 0.4mmscf/d has committed to commence commissioning of facilities and gas consumption in January, immediately following their peak seasonal Christmas period. Besides these four customers with existing conversion projects underway, there are a further 10 contracted customers that await conversion of their facilities to take gas.

The Company is very pleased to announce that, at current consumption levels, revenue received from sales can support the operating costs going forward of Rodeo Development Limited, VOG's operating company in Cameroon. 

The financial institution that has been mandated by the Company to structure a $30 million reserve based debt financing, in relation to the monetisation of the Logbaba gas field onshore Cameroon, and where it is mandated to act as Technical Bank and Facility Agent, has recently informed the Company that the outcome of the lodged Credit Application is expected in early January 2013.

The Company has allotted 21,832,533 Ordinary Shares in lieu of a cash payment due to a major Cameroon supplier, for work completed during the year, at a price of 2.25 pence per Ordinary Share.

Application has been made to the London Stock Exchange for the 21,832,533 new Ordinary Shares to be admitted to trading on AIM ('Admission'). It is expected that Admission will become effective and that dealings will commence at 8.00 a.m. on Friday, 28 December 2012.

Following the issue of the abovementioned new Ordinary Shares, the Company's issued share capital will consist of 2,883,223,309 Ordinary Shares with voting rights. The Company does not hold any Ordinary Shares in treasury. The new Ordinary Shares will rank pari passu in all respects with the existing Ordinary Shares.

The aforementioned figure of 2,883,223,309 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, VOG under the Financial Services Authority's Disclosure and Transparency Rules.

VOG Chairman Kevin Foo said, "Having just returned from a visit to Cameroon, I am extremely proud of what the company has achieved since we first spudded well La-105 in September 2009. Three years later, we have 11 customers accepting our gas and have visibility around a number of additional customers in the coming months. This simply would not have been achieved without the total dedication and incredibly hard work of our Cameroon Operations and Projects teams led by Jonathan Scott Barrett and Neil Kendrick. We have achieved a truly outstanding result and see 2013 as a particularly exciting year for the company."

About Victoria Oil & Gas

Victoria Oil & Gas Plc 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 project in Siberia, Russia. Logbaba is located in Douala, the economic capital of Cameroon. The field was discovered in the 1950s when all four exploration wells drilled at the time encountered gas. The Company drilled two successful development wells in 2009/10 and was awarded an Exploitation Licence in April 2011.

The Company's Logbaba total proved and probable reserves are sufficient to supply an average of 30 mmscf/d for the next 20 years to industrial customers. Under current management projections, the Company forecasts industrial gas demand to rise to 44 mmscf/d by the end of 2014. In the longer term, as further reserves may be proven, gas may also be supplied to large gas fired power stations connected to the grid, with either VOG investing in an independent power producer joint venture or selling the gas to third parties. The Company has signed a multitude of gas sales agreements with industrial customers to serve their energy requirements and anticipates in excess of 40 customers over the medium term.

West Medvezhye is situated in the prolific Yamal-Nenetsk hydrocarbon region in Siberia. An independent audit, carried out by Mineral LLC in 2011, estimated prospective resources for the area of over 1.4 billion barrels of oil equivalent ('boe'). The Company also has a discovery well, 103, with C1 and C2 reserves, independently assessed under the Russian classification convention of 14.4 million boe as approved by the Russian Ministry of Natural Resources.

Development studies are in progress to commercialise the Well-103 discovery and prospective resources and a detailed well design study for the upcoming drilling campaign has commenced.