Update on Flour Bluff Drilling Program in South Texas

Texas Crude Energy Inc ("TCEI"), the Operator of the Flour Bluff Gas Project, Gulf Coast, Corpus Christi, Texas, has provided Victoria Petroleum N.L with the following summary report of the following progress on gas well completions in the East Flour Bluff Gas Field.

Completion of the East Flour Bluff (EFB) D-24 Well
Final testing of the Frio J99 sand, a 3.96 metre (13 feet) interval from 3,329 metres (10,921 measured depth, in the EFB D-24 well is now underway and should be completed by the end of the week. After testing the Frio J99 will either be isolated below a plug in the packer temporarily or permanently, depending on test results. The Frio J90 sand, a 7.3 metre (24 feet) interval from 3,300 metres (10,828 feet) will then be perforated and tested. The two intervals will then be commingled together and tested. If the combined flow performance is not acceptable then consideration will be given to testing additional sands up hole (Frio J77) and dual completing. The J77 has a reasonably strong water drive and will not be commingled with the J90 and J99 flows. This operation is expected to take another weeks, after which the rig will be moved to the EFB E-10 well for completion operations.

Completion of the East Flour Bluff (EFB) E-10 Well
As advised above the rig will move across the pad onto EFB E-10 to carry out completion operations. The completion will begin by testing the Frio Duncan sand first, a 7 feet (2.1) metre interval from 2,176 metres (7,141 feet) measured depth, and subject to flow performance may include adding the Massives O-1 L and U sands. After the final completion is made the perforated interval will be gravel packed to reduce the potential for the flow of formation sand.

Re-completion of the EFB D-13, D-17 and D-19 Wells
To complete phase 1 of the redevelopment program by end of September, re-completions/workovers planned to follow on from EFB E-10 on the EFB D-13, D-17 and D-19 wells. The Operator is currently reviewing the program on EFB D-13 and D-17 in light of new information gained from EFB D-24.

Summary East Flour Bluff Gas Field
The East Flour Bluff Gas Field is a down faulted, four way dipping closure, lying eastern adjacent to the West Flour Bluff Gas Field under a shallow sea lagoon (Laguna Madre). It has a present 3P reserve of 23 billion cubic feet of recoverable gas ("BCF") with further upside potential of 44 BCF of recoverable gas, in all 67 BCF of recoverable gas in Frio Massive, J and K sands.

Phase 1 of the redevelopment program for the East Flour Bluff Gas Field has consisted of two new development wells (EFB E-10 and D-24) and a three well work over program yet to be carried out. Both the EFB E-10 and D-24 wells have met and exceeded reserve expectations with expected reclassification of reserves into higher categories once testing has been completed.

EFB D-24 well targeted 3P reserves of 17 BCF of recoverable gas and additional potential of 14 BCF of recoverable gas in the lower Frio J and K sands, i.e. a total 31 BCF of recoverable gas, in the deeper part of the four way dipping closure. The EFBD-24 well successfully evaluated multiple sand targets principally Frio J (55, 64, 77, 90 & 99) and K 9 series sands between 10,400 feet (3,170 metres) and 11,000 feet (3,353 metres) measured depth. Three of the Frio J sands (77, 90 & 99) are currently being brought into immediate production. The EFB D-24 well has also indicated untapped potential in the upper Frio 2,450' 8,000', 8,100', 8,375', 8,400' and 8,500' series sands that require follow up in another phase of drilling.

EFB E-10, a 7,325 feet (2,205 metres) deep well in measured depth terms, 6,706 feet (2,044 metres) in true vertical depth terms, was a test of the remaining potential of 36 BCF of recoverable gas in the shallow Frio Massives sands in the structure. The primary sands targeted were the Frio Massive O-1U, O-1L and Duncan below 7,000 feet (2,134 metres) measured depth. The gas sands in this well will be brought on production to replace the nearby EFB E-9 well that was junked and abandoned before coming onto full production.