Victoria Oil & Gas Issues Bonds

Victoria Oil & Gas Plc has closed a private placement of up to £20 million of Secured Guaranteed Convertible Bonds to fund the exploration and development programs of its assets in Russia and Kazakhstan. Victoria today has issued £11.5 million Bonds, with an option to issue an additional £8.5 million of Bonds in the next 90 days subject to Shareholder approval. The placement of the Bonds was managed by Jefferies International Limited ("Jefferies") acting as Sole Placement Agent.

Proceeds of the Bonds will be used to finance the Company's exploration and production programs at its assets in Russia and Kazakhstan. Victoria has announced that an interpretation of open-hole logs from Well 103 at its West Medvezhye gas and condensate project had confirmed the presence of hydrocarbons in three potentially productive intervals. Following this discovery, the Company will begin immediate mobilisation for testing of the intervals and further analysis of its next exploration targets.

The Bonds were privately placed at 100 percent of the principal amount and are denominated in Sterling. The Bonds bear a coupon of 2.5 percent per annum until April 17, 2007 and 6.25 percent per annum thereafter, mature in 2009 and are convertible in to ordinary shares of the Company. The initial conversion price was set at a 4 per cent premium to a price determined in a pricing period leading up to closing.

The Bonds also contain other terms, including a price readjustment provision, restrictions on issuances of certain future debt and anti-dilution protection in the event of certain future issuances of ordinary shares.

The Company has also secured a floating rate exchangeable note facility with ING Bank N.V., (the "ING Facility"), which provides for finance up to a maximum of £25 million on a draw down basis. The Company's ability to draw down on the ING Facility is restricted until early 2007 by the terms of the Bonds.

Commenting today, Chairman Kevin Foo said, "We are approaching a critical period in Victoria's development with testing of our new discovery at Well 103, the drilling of up to three further exploration wells at West Medvezhye in Russia and development of Kemerkol in Kazakhstan. This financing has secured our ability to complete our current development programs and puts us in a strong position as we head towards 2007."