Victoria Oil & Gas: West Medvezhye Project on Track

Victoria Oil & Gas

Victoria Oil & Gas says that drilling at Well 103 at its West Medvezhye gas and condensate project has reached 3,627 meters and remains on track to reach target depth by the end of September 2006.

The Company is targeting up to six potentially hydrocarbon-bearing intervals between depths of 3,200 – 3,880 meters.

Last week, a well drilled by Russian independent explorer Nadymneftegaz to a depth below 3,000 meters less than 10 kilometers from Well 103 intersected potentially commercial quantities of gas and condensate.

An updated resource statement for the Project prepared by independent reserve auditors DeGolyer & MacNaughton ("D&M") as at 30 June 2006 prior to this discovery gives an analysis of prospective intervals by well. D&M have also revised their best estimate gross prospective resource volume statement for the Project to 1.1 billion barrels of oil equivalent (an increase of 12%).

Commenting today, Managing Director William Kelleher said, "We continue to see gas shows and have had to increase the density of the drilling fluid in order to maintain stable wellbore conditions. This should not delay us in reaching total depth by the end of this month.

"The discovery made by Nadymneftegaz at our neighboring field last week could be an extremely important indicator for our West Medvezhye license as we believe that the well may be producing from intervals including those which Well 103 is targeting. Given the proximity of the discovery, it is a very encouraging sign. D&M's upgrading of their best estimate resource volume by 12% is also very good news"