VOG.L Regulatory News (VOG)

 6 February 2013

Victoria Oil & Gas Plc

("VOG" or "the Company")

Oversubscribed £23 million Equity Placing and Convening of General Meeting

Summary

·; VOG raises £ 23 million of equity, including a number of leading UK institutional investors

·; VOG is now fully funded to meet its long-term corporate objectives, to monetise the Logbaba Gas discovery and to meet its production target for 2013

·; A revised production target of 12 mmscf/d by the end of December 2013 has been set, comprising 6.5 mmscf/d of thermal and 5.5 mmscf/d of power production

·; Plans to strengthen the Board are in progress including the appointment of a Chief Executive Officer to implement the production and revenue phase of the Company's growth

·; The Board plans further appointments with independent Non-Executive Directors as well as in-house technical and financial expertise to assist in delivering revenue and shareholder value

·; VOG is seeking to divest or spin out its Russian Assets to become a pure Africa focused Production Company and Natural Gas Utility

VOG, the AIM quoted oil and gas exploration and production company with assets in Cameroon and the FSU, announces that it has successfully raised £ 23.4 million before expenses through Fox-Davies Capital Limited (the "Placing"), conditional on admission, which will be managed through a two stage equity placing of 1,465,329,020 new ordinary shares ("Placing Shares") at a price of 1.6 pence per share ("Placing Price") to fund the execution of its downstream strategy at the Logbaba Gas and Condensate Project in Cameroon. This Placing was oversubscribed and supported by a number of leading financial institutions who now have a disclosable interest in the Company's share capital.

Initial Equity Financing

The Company has placed 510,000,000 ordinary shares (the "Initial Placing Shares") at a price of 1.6 pence each ("Initial Placing") for gross proceeds of £8.2 million. The Initial Placing Shares have been allotted and issued utilising the Company's existing share allotment authorities subject only to the admission of the shares to trading on AIM.

Secondary Placing and Shareholder Approval

To enable the issue of the remaining new ordinary shares pursuant to the Placing, the Company will be required to refresh its authorities to issue new ordinary shares. Shareholder approval for the placing of a further 955,329,020 ordinary shares ("Secondary Placing Shares"), at the Placing Price ("Secondary Placing"), to raise an additional £15.3 million before expenses, shall therefore be sought at a General Meeting to be held at VOG's offices at Hatfield House, 52-54 Stamford Street, Blackfriars, London SE1 9LX at 11 a.m. on Friday, 1 March 2013. Shareholder approval to update the existing Directors' authorities to allot shares will also be sought at this General Meeting. Completion of the Secondary Placing will therefore be conditional on, inter alia, the passing of the resolutions to be proposed at the General Meeting.

Formal notice of the General Meeting will be posted to shareholders as soon as practicable and will be is available from the Company's website at www.victoriaoilandgas.com. A further announcement will be made on posting.

Gas Production at Logbaba

The Company through its 100 per cent. owned subsidiary Rodeo Development Limited ("RDL") holds a 95 per cent. interest in, and is operator of, the Logbaba Field which owns and controls its own pipeline and distribution infrastructure from the well-head to the customer.

On 30 January 2013, the Company reported that a further four customers have been commissioned and are consuming gas. In total, RDL now has 15 contracted customers taking gas at rates of 2.8 million standard cubic feet per day ("mmscf/d") during a standard operating week and there remain a further 10 contracted customers that await conversion of their facilities to take gas. All existing contracted customers are utilising gas for their thermal requirements. They have contracted gas at US$16 per million British thermal units for a five year non-negotiable term, exclusive for 20 years. 2.8 mmscf/d equates to US$18 million of revenue per annum under current contracts. RDL has a set a production target of 12 mmscf/d by December 2013, comprising 6.5 mmscf/d of thermal and 5.5 mmscf/d of power production.

RDL has identified over 60 prospects for gas and/or on-site gas fired power demand along the existing and planned pipeline routes. The gas to power market represents two thirds of the Company's total thermal and power market estimated by Challenge Energy Limited to total approximately 20 mmscf/d by July 2014 assuming adequate capital availability. To date, RDL has signed seven letters of intent for on-site gas fired power and anticipates a total of 30-40MW of gas-fired power generation equipment in operation by December 2013. RDL estimates total gas demand in excess of 40 mmscf/d over the medium term.

Reasons for the Placing and Use of Proceeds

The funds from the Initial Placing and the Secondary Placing, together with a US$15 million reserve based lending facility previously announced in January 2013, will be used to fund the build-out phase of the Logbaba Project in Cameroon as the Company increases production and sales. The Company is focused on delivering gas to already contracted customers, installing initial power generation units, generating more customers and expanding the pipeline network in Douala.

The Company believes that having found substantial gas, established a market and completed an initial pipeline to that market, the optimal use of capital is to complete Phase 2 of the pipeline, purchase the first 40 MW of power generation units and pay off existing financial and trade debts.

Following completion of the Placing and the reserve based lending facility, the Company will be fully funded to meet its current development and production plan. The Company does not envisage any further equity funding and future development drilling, increases in power generation and potential pipeline expansion can be financed from cash flow and debt financing.

Strengthening the Board for Increased Production

As the Company evolves from an exploration company to an integrated gas utility and revenue focused company, the skill set needed at both management and board levels will be different. The Company remains committed to strengthening the Board of VOG and is in contractual discussions with a new Chief Executive Officer. The Company also plans to appoint two Non-Executive Directors in 2013 and strengthen its in-house technical expertise, particularly to build gas to power operations in Cameroon.

West Medvezhye

Concerning the Company's wholly-owned Russian asset, West Medvezhye ("West Med"), the Board is actively exploring various divestiture alternatives. These include a farm-out, trade sale or spin-off to a stand-alone company. It is anticipated that a preferred solution will be implemented within 12 months. The Company will not be investing further capital into the asset beyond licence maintenance expenditure. While the Company continues to feel strongly that there is considerable value in West Med, this move will allow management to focus fully on implementing the utility led growth strategy in Cameroon.

Details of the Placing

Application will be made to the London Stock Exchange for the Initial Placing Shares to be admitted to trading on AIM. It is expected that admission of the Initial Placing Shares will become effective and that trading will commence on 11 February 2013.

An application will also be made to the London Stock Exchange for the Secondary Placing shares to be admitted to trading on AIM, subject to the necessary resolutions being passed at the General Meeting. It is expected that admission for the Secondary Placing Shares will become effective and that trading will commence on 4 March 2013.

Following the admission of the Initial Placing Shares to trading on AIM, the Company will have 4,348,552,329 ordinary shares in issue. The Initial Placing Shares and the Secondary Placing Shares (together "New Ordinary Shares") will rank pari passu in all respects with the existing ordinary shares. The New Ordinary Shares will represent 33.7 per cent of the enlarged issued share capital of the Company.

Kevin Foo, Chairman of VOG commented, "The last three years have been extremely challenging but we have become the first onshore gas producing company in Cameroon. We have made a significant gas discovery and in this period we have delivered gas to a hungry market. Our gas and condensate field lies in the heart of a city of three million people that is the industrial hub of Central Africa, with a rapidly increasing demand for energy and power.

This work has been achieved during a major financial crisis and in very difficult equity markets. We have gone from a standing start of zero customers on gas production seven months ago, to 15 industrial customers purchasing a total of 2.8 mmscf/d, with another 10 clients waiting to be connected. We are the only gas alternative to the incumbent energy providers and we can provide both heat generation and reliable power on a more cost efficient basis.

With this capital injection, combined with the reserve based bank facility, the company can cover the last yards in our progression to substantial cash flow. While the thermal customer business is growing solidly, the bulk of the forecast sales growth will be derived from power clients. These require considerable capital expenditure upfront. As a shareholder, I am acutely aware that dilution of existing shareholders is a major concern. However, I feel that ensuring we are fully funded to meet our production and cash flow targets is the best way to deliver shareholder value. There is still great uncertainty ahead in equity markets but I am greatly encouraged by the support shown from the institutional investors. I now look forward to updating shareholders on a quarterly basis on our operational and corporate progress."

For further information, please visit www.victoriaoilandgas.com or contact:

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 over the medium term. 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.