Victoria O&G Contracts Austin Maritime for Logbaba Field

Victoria O&G announced that, following the award of an Exploitation Authorisation by Presidential Decree on the April 29, 2011, the Company has executed a contract with a Cameroon civil engineering contractor, Austin Maritime, for the site civil works and the pipeline trenching, jointing and installation.

The contractor mobilized on May 31 and its offices, containers and equipment have been moved to site where excavation commenced on June 11.

The Company has also mobilized horizontal drilling and high density polyethylene pipe, ('HDPE') jointing experts and a pipeline engineer from the UK. These personnel will supervise and train staff from Austin Maritime in HDPE pipeline jointing, installation, testing and commissioning procedures.

Pipeline installation is scheduled to commence before the end of June and involves three construction teams and a horizontal drilling team to complete fourteen horizontal sections. The project schedule envisages completion of 100 meters of pipeline per day although rates of up to 200 meters per day are achievable in certain circumstances. All the equipment required to deliver first gas to customers is now in Douala, either at the EXPRO site, (operators of the processing plant,) at the Douala Port or at VOG's site at Logbaba.

The pipeline installation coincides with the rainy season in West Africa. Our construction plan includes shoring of all trenches deeper than 1.2 meters and the use of temporary drainage and pumps to keep the pipeline route clear of water. Jointing will be conducted under cover to ensure that pipeline ends are kept dry and clean. Austin Maritime has recent experience of installing 400 km of pipeline in similar conditions for gas export from oil fields in Chad.

The Company has also commenced work on the production trees and baseline caliper logs of the wells to prepare the wells for commissioning. This work will be complete at the end of June.

The Company currently has 11 gas sales agreements ('GSAs') signed and executed together with a further 10 GSAs which have been contractually agreed subject to legal due diligence and final approval. Gas supplies in all contacts are priced at $16 per million British thermal units ('btu') or $96 per barrel of oil equivalent.

Logbaba has proven and probable reserves of 212 billion cubic feet of gas (35.3 million barrels of oil equivalent) and the Company expects gas sales of 8 million standard cubic feet per day ('mmscf/d') in the first year of operations rising to 44 mmscf/d (7,300 barrels of oil a day equivalent) by the end of 2014. The pipeline has a capacity of 60 mmscf/d, which is of sufficient size for the Douala industrial market over the medium term. Condensate separated from the gas at the process plant will be stabilized and stored for transport to the Sonara refinery at Limbe in Cameroon. Condensate production is forecast at the rate of 20 barrels per million cubic feet of gas.

Logbaba's current proved and probable reserves of 212 Bcf are sufficient to supply an average consumption of 30 mmscf/d for the next 20 years. In the longer term, as further reserves are proven, gas may 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 gas to third parties.

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