Gas Market Study on Logbaba

14 November 2012

Victoria Oil & Gas Plc

('VOG' or 'the Company')

Gas Market Study on Logbaba Gas Field Endorses Business Strategy

Highlights

·; Independent Gas Market Study confirms VOG's competitive advantage in a robust gas market

·; VOG is positioned to benefit from increasing local demand with annual projected sales anticipated to increase rapidly

·; 5 customers taking gas from Logbaba following commissioning of an additional customer

·; Further Gas Sales Agreements signed bringing total to 21

Victoria Oil & Gas Plc (AIM: VOG), the oil and gas exploration and production company with assets in Cameroon and the FSU, is pleased to announce publication of a Gas Market Study ("GMS") compiled by a leading petroleum advisory and consultancy group, Challenge Energy Limited ("Challenge") on the existing and potential market for natural gas relating to the Logbaba gas field in Cameroon, together with an update on customers.

Gas Market Study Highlights

·; Robust local demand for natural gas and on-site power generation supports expectation for rapidly increasing annual sales represented by a compound annualised growth rate ("CAGR") of over 100% over the period 2012 to 2017;

·; Limited potential competing supply and VOG's vertically integrated operation offers it a critical advantage to capitalise on industrial opportunities in the Douala market;

·; Confirmation of clear economic drivers, combined with proven gas supply and successful implementation analogs in sub-Saharan African countries, strongly endorses VOG's business strategy

Overview

The GMS was commissioned by VOG to assess the existing and potential market for natural gas in the industrial city of Douala in Cameroon with a principal emphasis on the market for thermal and power generation from the perspective of supply and demand variables. The GMS was also commissioned in connection with a senior secured credit facility that VOG is currently negotiating with a top tier financial institution.

The GMS concludes that VOG is well positioned to benefit from increasing demand for pipeline gas in preference to alternative energy sources, with limited future potential competing supply and no alternative gas supply currently existing in Douala. Challenge has forecast annual projected sales growing on a CAGR of over 100% over the period 2012 to 2017. Sales of gas are anticipated to increase rapidly as the continuing connection of new thermal customers to the pipeline network is combined with first supply to the on-site industrial power generation sector. The GMS suggests that matters of logistics and interactions with stakeholders are consistent with a nascent industry but successful implementation stories in analogous sub-Saharan African countries strongly endorse the business strategy. Challenge believes that VOG's strategy of displacing refined products consumed by industrial customers for thermal heat generation and substituting unreliable grid power in the major industrial centre of Douala is both robust and reasonable with few material risks.

Supply

With regard to supply, Challenge is of the view that VOG has the distinct advantage that it controls all aspects of the natural gas delivery chain, from well head to customer meter. The GMS also endorsed the fact that there is ample capacity in the gas supply chain for customer requirements in the short/medium term. Furthermore, Challenge believes that the existing capacity of the gas processing and downstream distribution networks could both be expanded within six to twelve months.

A review of potential competing supply was also undertaken by Challenge. They concluded that natural gas activity in Cameroon is either at an early exploration stage or more advanced projects outside of Douala have committed gas reserves to particular downstream projects and as such there is no existing and limited potential for future competing supply in VOG's target market.

Demand

The GMS provides confirmation of clear economic drivers and a robust market which support VOG's business strategy and provides a base case with projected annual sales indicating a CAGR of over 100% over the period 2012 to 2017.

In respect of the thermal market, the Company enters into 20 year Gas Sales Agreements ("GSAs") for the supply of natural gas to a customer's premises at a fixed price of US$16 per million British thermal units for the first five years, which represents a substantial saving for industrial customers when compared to existing heavy fuel oil pricing. The GMS estimates that industrial customers are economically incentivised to take gas over competing liquid fuels when the Brent crude oil price is greater than or equal to US$63 per barrel.

Demand for natural gas from VOG in Douala will be expanded by the addition of new customers to the existing pipeline network as well and the planned pipeline extension. Challenge believes that the base case is reasonable and achievable and that the Douala market will continue to offer significant new sales opportunities to VOG in excess of the base case. Furthermore, VOG is positioned to create a robust and well diversified customer portfolio.

Other Highlights

·; Commissioning of Prometal's facilities was completed on 11 November 2012 and gas consumption with full load capacity estimated at 450,000 standard cubic feet per day has now commenced

·; Two new thermal GSAs signed with a total of 21 GSAs now executed

On 10 November 2012, Prometal's nine burners were commissioned on an empty furnace. The following day, the plant commenced start-up on oil and successfully switched to gas while at full load. Prometal has an estimated peak load gas requirement of 450,000 standard cubic feet per day and an average daily gas requirement of 300,000 standard cubic feet per day and as such, represents one of the more significant customers connected to the pipeline network to date.

Since our last update, an additional two customers have signed thermal GSAs making a total of 21 contracted thermal customers of which 16 await conversion to gas. Of these, ten contracted customers have existing conversion projects underway and are anticipated to commence gas consumption before the end of December 2012. The Group anticipates achieving positive cash flow from operations before the end of the calendar year.

Commenting on the Gas Market Study, Kevin Foo, Chairman of Victoria Oil & Gas, said, "This market study, conducted by a leading advisory and consultancy group, underpins our belief in the tremendous opportunity for natural gas in Douala and we look forward to building out our crucial energy capacity to the region."

The main body of the report can be read or downloaded from the Company's website at www.victoriaoilandgas.com

For further information, please visit www.victoriaoilandgas.comor contact:

About Victoria Oil & Gas

Victoria Oil & Gas Plc is an independent oil and gas exploration and production company with projects in Africa and the FSU. The Company's principal assets are the Logbaba gas and condensate project in Cameroon and the West Medvezhye project in Siberia, Russia. Logbaba is located in Douala, the economic capital of Cameroon. The field was discovered in the 1950s when all four exploration wells drilled at the time encountered gas. The Company drilled two successful development wells in 2009/10 and was awarded an Exploitation Licence in April 2011.

The Company's Logbaba total proved and probable reserves are sufficient to supply an average of 30 mmscf/d for the next 20 years to industrial customers. Under current management projections, the Company forecasts industrial gas demand to rise to 44 mmscf/d by the end of 2014. In the longer term, as further reserves may be proven, gas may also be supplied to large gas fired power stations connected to the grid, with either VOG investing in an independent power producer joint venture or selling the gas to third parties. The Company has signed a multitude of gas sales agreements with industrial customers to serve their energy requirements and anticipates in excess of 40 customers over the medium term.

West Medvezhye is situated in the prolific Yamal-Nenetsk hydrocarbon region in Siberia. An independent audit, carried out by Mineral LLC in 2011, estimated prospective resources for the area of over 1.4 billion barrels of oil equivalent ('boe'). The Company also has a discovery well, 103, with 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.

Development studies are in progress to commercialise the Well-103 discovery and prospective resources and a detailed well design study for the upcoming drilling campaign has commenced.