The total purchase price of $11 million was satisfied by the payment of $8 million in cash and $3 million in new Victoria ordinary shares of 0.5 pence each ("Ordinary Shares").
Victoria aims to review current Russian estimates of 135bn cubic meters of gas and 201 million barrels of recoverable gas condensate through a comprehensive technical review starting in early 2005.
The project forms part of the Western Siberian Basin located in the Yamalo-Nenetsk Autonomous District, adjacent to the producing Medvezhye field and to the world's largest gas field, Urengoy. According to OAO Gazprom, the Medvezhye, Urengoy, Yamburg and Zapolyarnoye fields in Yamal produced over 15% of the world's total gas production in 2003 (based on estimates from BP's 2004 Statistical Review of World Energy).
A total of 4,759,314 Ordinary Shares were issued at a price of 34 pence per Ordinary Share representing the weighted average (by market volumes) of Victoria's share price for the 30 trading days prior to Oct. 1, 2004, pursuant to the purchase and sale contract.
The Contract provides for a claw back of some or all of the consideration shares in certain circumstances. The Ordinary Shares issued are subject to a 12 month lock-in agreement and are held in escrow for an initial period of 6 months pending finalisation of any claw-back. The consideration shares represent 6.8% of the enlarged Ordinary Share Capital of 70,454,314.
Victoria has obtained a Dec. 31, 2001 feasibility study completed by DeGolyer and MacNaughton on the West Medvezhye license area.
Based on this study and other acquired data, the Company has made an initial resources estimate under Russian standards of 135bn cubic meters of gas and 201 million barrels of recoverable gas condensate.
An internal technical review in early 2005 is expected to refine these estimates as part of the 2005 SGI development plan.
The Victoria technical team has recommended that drilling be restarted at the site of the existing well (SGI GBP104) begun in May, 2004 prior to SGI's acquisition by Victoria.
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