VOG.L Regulatory News (VOG)

15 May 2006 07:02

Victoria Oil & Gas PLC15 May 2006 Victoria Oil & Gas Plc 15 May 2006 Completion of Well 106 and Resource Update at West Medvezhye Project, Russia Victoria Oil & Gas Plc ("Victoria" or "the Company") the AIM-quoted oil and gasdeveloper focused on the Former Soviet Union, today announces an updatedresource statement prepared by DeGolyer and MacNaughton ("D&M") for its 100%owned West Medvezhye gas and condensate project (the "Project") in Russiafollowing completion of drilling of appraisal Well 106 . Highlights • Confirmation of best estimate recoverable contingent and prospective hydrocarbon resource volumes of 1.1 billion barrels of oil equivalent by independent reserve auditors D&M and a five times increase in contingent gas resource volume to 322 billion cubic feet • Drilling and logging of Well 106 completed with confirmation of hydrocarbon-bearing sands at intervals of 488 - 559 metres (Upper Cenonian) and 1,034 - 1,139 metres (Lower Cenonian) at Well 106 • Preliminary well testing results for Well 106 expected in May 2006 • Testing of Well 104-Bis to commence in late May 2006 with results expected in June 2006 Updated Resource Statement from D&M Based on the data obtained from Well 106 and correlated with that from Well 104,D&M have issued an updated resource statement of the contingent and prospectiveresource volumes for the Project as of 30 April, 2006 (please see Appendix). The statement confirms total best estimate contingent and prospectivehydrocarbon resource volumes of approximately 1.1 billion barrels of oilequivalent with increased gas volume and a minor decrease in condensate volume. Importantly, the best estimate contingent resource volume has increased by overfive times from 63 billion cubic feet to 322 billion cubic feet for theDanniella Accumulation. Contingent resources are resources which are known toexist, but need further evaluation to be reclassified as reserves. For a copy of this report, please visit the Company's website atwww.victoriaoilandgas.com Completion of Well 106 Appraisal Well 106, was drilled and successfully logged to a depth of 1,350metres. Petrophysical log interpretations were generated by D&M, Baker Atlas andmembers of Victoria's technical team. All of the data was then reviewed by D&M. The log data obtained from the well bore and subsequent petrophysical interpretation has yielded the following results: • Interval 488 - 559 metres: Upper Cenonian horizon consisting of multiple gas-bearing sands, interpreted to be shingled • Interval 1,034 - 1,139 metres: Lower Cenonian horizon consisting of single gas sand Testing of the Upper Cenonian horizon is expected to commence in mid-May withpreliminary well test results later in the month. Development Update Following the completion of Well 106, the drilling rig has been moved back tothe site of Well 104 and drilling of twin well, Well 104-Bis, has commenced.Well testing is expected to begin on the 594 - 650 metre interval of this wellin late May with preliminary results anticipated in June. Fracturing operationsat Well 104 have been delayed following problems in delivery of necessaryequipment to the site. The Company is expecting the equipment before the end ofthe May and fracturing is now anticipated in June. Drilling is underway at Well 103 and has reached 1,080 metres. The first targethorizon at around 3,200 metres is anticipated to be reached in June. Ageological prognosis has identified up to six potential target horizons betweendepths of 3,200 metres and the planned target depth of 3,880 metres in the upperJurassic horizon. Extensive coring will be carried out as part of the drillingprogramme and target depth is expected to be reached in August 2006. Speaking today, Managing Director William Kelleher said, "Well 106 met ourprimary objectives of confirming and indeed increasing initial resourceestimates for the Project, as documented in the D&M report. What is exciting isthe reclassification of over a quarter of a TCF of prospective gas resourcevolume into contingent resources. With successful testing results, we expectthat these contingent resource gas volumes can be reclassified into provenreserves." For further information please contact: Kevin Foo / George Donne Leesa Peters/ Laurence ReadVictoria Oil & Gas Plc Conduit PR+44 (0)207 921 8820 +44 (0)207 429 6605 +44 (0)7979 955 923 The information in this release has been reviewed by William Kelleher, SPE, whois a qualified person for the purposes of the AIM Guidance Note for Mining, Oiland Gas Companies. Mr. Kelleher is Managing Director of Victoria Oil & Gas Plc,is qualified as a petroleum engineer and has over 26 years experience in oil andgas exploration and production. Appendix Below is a summary of total attributable contingent and prospective gas resourcevolumes for the Danniella Accumulation confirmed by D&M in their latest reportprepared using definitions promulgated by the Society of Petroleum Engineers("SPE") and the World Petroleum Congresses ("WPC"): (Bcf) Low Estimate Best Estimate High Estimate Pg Factor OperatorContingent Resource 174 322 501 100% ZAO SeverGas-InvestProspective Resource 86 196 344 23%Total Gas Resource 260 518 845Source: DeGolyer & MacNaughtonPg Factor: Probability of geologic successBcf: Billion cubic feet Below is a summary of total attributable contingent and prospective gas resourcevolumes for the entire Project confirmed by D&M using definitions promulgated bythe SPE and the WPC: (Bcf) Low Estimate Best Estimate High Estimate Pg Factor OperatorContingent Resource 174 322 501 100% ZAO SeverGas-InvestProspective Resource 4,175 5,300 6,526 19%Total Gas Resource 4,349 5,622 7,027Source: DeGolyer & MacNaughtonPg Factor: Probability of geologic successBcf: Billion cubic feet Below is a summary of total attributable contingent and prospective hydrocarbonresource volumes for the entire Project confirmed by D&M using definitionspromulgated by the SPE and the WPC: Low Estimate Best Estimate High Estimate Pg FactorContingent Gas Resource (Bcf) 174 322 501 100%Prospective Gas Resource (Bcf) 4,175 5,300 6,526 19%Condensate Resource (Mbbl) 56 139 248 21%Oil Resource (Mbbl) 14 25 37 10%Total Resources (Mboe)* 795 1,101 1,457Source: DeGolyer & MacNaughtonPg Factor: Probability of geologic successBcf: Billion cubic feetMbbl: Million barrels of oilMboe: Million barrels of oil equivalent* Gas converted to oil at the rate of six thousand cubic feet of gas to one barrel of oil Accumulation - An individual body of moveable petroleum. A known accumulation(one determined to contain reserves or contingent resources) must have beenpenetrated by a well. The well must have clearly demonstrated the existence ofmoveable petroleum by flow to the surface or at least some recovery of a sampleof petroleum though the well. However, log and/or core data from the well mayestablish an accumulation, provided there is a good analogy to a nearby andgeologically comparable known accumulation. Contingent Resources - Those quantities of petroleum that are estimated, on agiven date, to be potentially recoverable from known (drilled) or discoveredaccumulations, but which are not currently considered to be commerciallyrecoverable or for which the degree of commitment is not such that theaccumulation is expected to be developed and placed on production within areasonable time frame. Contingent resources include accumulations for whichthere is currently no viable market, or where commercial recovery is dependenton the development of new technology, or where evaluation of the accumulation isstill at an early stage. Prospective Resources - Those quantities of petroleum that are estimated, on agiven date, to be potentially recoverable from undiscovered (undrilled)accumulations. Probability of Geologic Success (Pg) - The probability of geologic success isdefined as the probability of discovering reservoirs that flow petroleum at ameasurable rate. Pg is estimated by quantifying with a probability each of thefollowing individual geologic chance factors: trap, source, reservoir, andmigration. The product of the probabilities of these four chance factors is Pg This information is provided by RNS The company news service from the London Stock Exchange