Victoria O&G Updates Ops at West Medvezhye

Victoria O&G provided an update on its appraisal and delineation program in the West Medvezhye, (West Med) oil, gas and condensate license area in Russia.

West Med Regional Background

VOG's wholly owned subsidiary, ZAO SeverGas-Invest (SGI), holds a 20-year Exploitation License for West Med covering 1,224 km2. The block is located in the Yamal Peninsula in the Nenets region of Siberia and was independently assessed in 2006 by DeGolyer and MacNaughton (D&M) to have total prospective resources of approximately 1.1 billion barrels of oil equivalent (boe). West Med is located in one of the most prolific oil and gas producing areas of the world and is adjacent to Gazprom's giant Medvezhye field that has already produced over 70 trillion cubic feet of gas.

In total, D&M identified 25 leads and prospects and the Company's first discovery in West Med, Well 103, was based on a prospect defined by D&M. The discovery has 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.

West Med Appraisal Update

While VOG's principal focus has been the development and commencement of gas and condensate production at Logbaba in Cameroon which is scheduled for 4Q 2011, SGI's technical team and consultants Blackwatch Petroleum Services (Blackwatch) have been utilizing this time to acquire data and to carry out integrated multi-discipline studies in West Med.

This work has involved integration of new data with previous seismic and well data to screen and firm up the prospects and leads identified by D&M.

Passive Seismic and Gas Tomography Surveys

New data acquired in 2010 included 155 passive seismic points recorded by GeoDynamics Research S.r.l. (GDR) and 289 km lines of gas tomography data recorded by Exotrad Limited. The surveys identified direct hydrocarbon indications in six areas covering a total of 79 km2 in the opinion of GDR and VOG.

Preliminary internal volumetric estimates by the Company, based on these passive seismic areas and regional well and seismic data for reservoir properties, indicate hydrocarbons initially in-place estimated at 400 mmboe by SGI and Blackwatch.

The features are all part of previously identified prospects by D&M, based on conventional seismic, and the volumes were incorporated into the overall assessment of 1.1 billion boe Un-risked Prospective Resource potential for the West Med Block.

Conventional Seismic work

Further to these positive results, in February 2011, the Company commissioned a seismic reprocessing and geological modelling study to be carried out by a Russian geoscience consulting institute, Mineral. The first phase of the technical work, which included reprocessing of 845 km of 2D seismic, was completed in June 2011.

Re-interpretation of the reprocessed seismic data has now commenced and will incorporate the passive seismic and gas tomography results. The results of Mineral's work are scheduled to be considered in a workshop in Tyumen, Russia in July 2011.

West Med Appraisal / Development Planning

In addition to the subsurface technical studies, development studies have commenced for commercialization of the large prospective resources and exploitation of the Well 103 discovery. These include but are not limited to the following:

Drilling & Well Engineering

Studies have commenced on well design and engineering for future appraisal and development well drilling planned for 4Q 2012. The company is in discussions with international and Russian service companies and has compiled initial budgetary estimates for the wells and drill pads.

These studies conclude that the wells may be drilled in clusters of 3 to 10 to significantly reduce location preparation and access cost. This will have a marked impact on development economics.

Surface Production Facilities & Infrastructure

Conceptual design work has commenced to establish costs and schedules for oil, gas and condensate production facilities and supporting infrastructure. The gathering and distribution network design and engineering will be phased with facilities design, starting with fast track development of the Well 103 discovery.