VOG.L Regulatory News (VOG)

17 Oct 2005 07:00

Victoria Oil & Gas PLC17 October 2005 17 October 2005 35 Million Barrels of Oil Reserves Secured Following Kemerkol Transaction, Kazakhstan • Kemerkol Oil Project, Kazakhstan - Total proven C1 category reserves of 8.7 million barrels of oil and probable C2 reserves of 26.3 million barrels• Transaction completed for under US$2 per barrel of proven C1 reserves• Licence area increased from 12 to 65 square kilometres - no increase in Minimum Work Programme• First oil production expected early 2006 Victoria Oil & Gas Plc ("Victoria" or "the Company"), the AIM-quoted oil and gasdevelopment company focused on the Former Soviet Union, today announces that ithas secured 35 million barrels of C1 and C2 category oil reserves with the firstcompletion of the transaction for the Kemerkol subsurface rights contract inKazakhstan. Development of the project will now commence and first productionfrom Kemerkol is targeted for the beginning of 2006. Total reserves for Kemerkol are now estimated at 60.1 million barrels of oil,compared to 16.4 million barrels as reported in February for the originallicence area. The 450 per cent enlargement in license area from 12 to 65 squarekilometres has been successfully negotiated after consultation with the KazakhMinistry of Energy and Mineral Resources by Victoria without adjustment to theoriginal Minimum Work Programme. Addition of Reserves The licence area has proven C1 category reserves of 8.7 million barrels of oil,however, C2 reserves have been increased almost 250 per cent to 26.3 millionbarrels. Furthermore, the expanded licence area also holds an additional 25.1million barrels of C3 category reserves. Reserve Category Original Licence Area Enlarged Licence AreaC1 8.7 Mmbbl 8.7 MmbblC2 7.8 Mmbbl 26.3 MmbblC3 - 25.1 MmbblTotal 16.4 Mmbbl 60.1 Mmbbl Development and Production The Kemerkol project in the Atyrau Oblast of north-west Kazakhstan has threeproductive wells at depths of 1,100 to 1,400 metres, which have tested combinedproduction of up to 200 barrels of oil per day, although this production iscurrently shut in. First production is anticipated for the beginning of nextyear and Victoria is aiming to build output to a targeted daily rate of 1,000barrels of oil per day within Q1 2006. Through re-entry of these existing wells and with further drilling, the Companybelieves that it will achieve the project's initial targeted production level of4,400 barrels per day within three years of the start of operations. The Companybelieves this targeted production level may be increased, following a planned 3Dseismic survey of the expanded licence area. Commenting earlier today, Executive Director William Kelleher said, "By securingfurther reserves without any adjustment to the Minimum Work Programme for lessthan US$2 per C1 barrel, Victoria is delivering on its strategy to become aproducing oil company using our operational and regional experience in the FSU. "Our immediate plan is to review the existing subsurface data focusingparticularly on the C2 reserves. Our feeling is that this is an overlyconservative classification for some of those reserves in the expanded area. Thereview will be done by our technical staff in Almaty. It is then our plan toconduct a 3D seismic survey over the entire licence area, whilst simultaneouslyperforming a re-completion programme on the existing wells and carrying out newdrilling. The Company and its shareholders have reached a significant period inVictoria's development as operations at Kemerkol commence and we achieveproduction and near-term cash flow." For further information please contact: Kevin Foo / George Donne Jamie Cumming / Tracy MackenzieVictoria Oil & Gas Plc Bell Lawrie+44 (0)207 921 8820 +44 (0)141 314 8103 +44 (0)141 314 8220Leesa Peters/ Laurence ReadConduit PR+44 (0)207 618 8760+44 (0)7979 955 923 This information is provided by RNS The company news service from the London Stock Exchange