Victoria Oil & Gas Plc has completed the allotment of 145,271,318 new ordinary shares of 0.5 pence each in the Company ("the Shares") as part of the £20 million fundraising that was announced on 21 December 2007 (the "Fundraising").

The Shares rank pari passu in all respects with the existing issued ordinary shares in the Company. Application has been made to the London Stock Exchange for the Shares to be quoted on AIM and it is expected that admission of the Shares will be on 1 February 2008. Following admission, the total issued share capital of the Company will be 269,507,991 ordinary shares with voting rights.

101,666,667 ordinary shares were placed at a price of 15 pence per share with both institutional and private investors raising £15.25 million before expenses (the "Placing"). The principal placee was a special purpose vehicle, Noor Petroleum Limited (the "SPV") backed by a consortium of investors led by Falcon Petroleum Limited and managed by Noor Capital PSC & Associates. Another placee was HJ Resources Ltd, which subscribed for 6,666,667 ordinary shares to be held on behalf of a discretionary trust, of which Kevin Foo is a possible beneficiary. On admission, HJ Resources Ltd’s new total holding in the Company will be 9,915,396 shares representing 3.68% of the issued ordinary share capital

The remaining 43,604,651 ordinary shares were allotted to the holder of the Company’s £18.75 million Secured Guaranteed Convertible Bond due 2009 (the "Bond") on partial conversion of the Bond at a price of 25 pence per share. Following the issue of these shares and the repayment of the remaining £8 million from the proceeds of the Fundraising, the Bond will have been retired in full.

On admission of the Shares, the SPV will subscribe for $2 million convertible loan notes due 2012 (the "Notes") and subject to approval, the Board of Victoria will appoint four new directors: Mr Rashed Al-Suwaidi and Mr Philip Rand, as proposed by the SPV; and Mr George Donne and Mr Mukhtar Tuyakbayev. The SPV will subscribe for a further $8 million of the Notes on ratification of the extension of the Company’s West Medvezhye licence.

The Company also intends to enter into arms-length contracts with Blackwatch Petroleum Services Limited ("Blackwatch") and GeoDynamics Research s.r.l ("GeoDynamics") for their advice on the development of Victoria’s assets in Russia and Kazakhstan. A full review of all data available on both the West Medvezhye and Kemerkol licences will be undertaken with Victoria’s technical team to re-evaluate the existing interpretations and re-define the development strategies for 2008.

The focus at West Medvezhye will be on fully delineating the next target location, Well 105, to ensure the highest possible chance of success. This will include running trials of GeoDynamics’ passive seismic technology, which is as yet untried in this region.

For Kemerkol, the existing 2D and 3D seismic data will reinterpreted and if warranted, a new passive seismic survey performed to improve the subsurface assessment and define better potential drilling targets for 2008. The short-term goal will be to increase production to the point where Victoria could apply for an export licence and so receive export prices for the oil produced.

Blackwatch will also assist the Company in its on-going review of new acquisition opportunities to boost production levels and increase Victoria’s proven reserve base. A presentation with further information on both Blackwatch and GeoDynamics and their proposed plans for the Company’s assets can be found on the Company’s website at www.victoriaoilandgas.com

Managing Director Sam Metcalfe said, "We have entered into this transaction because we believe in the potential of Victoria’s assets and that, in partnership with GeoDynamics, we can assist in the realisation of that potential. Whilst it must always be remembered that there are no certainties in exploration, with the application of enhanced technical management and passive seismic technology we believe that Victoria can significantly reduce exploration risk and thus improve the success rate."

Chairman Kevin Foo said, "These events signal a major turnaround for Victoria Oil & Gas. We have retired the old bond and provided sufficient working capital for 2008. We will have access to first-class technical resources in Blackwatch and secured a valuable partnership with GeoDynamics. Most importantly, we have strengthened our Board considerably with highly-respected and professional people. The re-build has commenced."

Tags: Victoria Oil & Gas Plc