Interest in Matanda Block in Cameroon

18 February 2016

Victoria Oil & Gas Plc

("VOG" or "the Company")

Victoria Oil & Gas secures 75% interest in Matanda Block in Cameroon

Highlights

· VOG secures 75% of 1,235 square kilometre Matanda Block PSC adjacent to current Logbaba gas production operations

· North Matanda Field estimated to hold an estimated P50 'gas-in-place' volume of 1.8 Tcf and 'condensate-in-place' of 136 Mmbbl

· Matanda block is over 60 times area of Logbaba concession

· Assignment subject to Government approvals including Work Programme

· Further seismic development work scheduled for Q4 2016

· Matanda forms part of VOG's expansion strategy to meet Cameroon's growing energy demand

Victoria Oil & Gas Plc, the integrated natural gas producing utility, is pleased to announce that it has reached an agreement with Glencore Exploration Cameroon Limited ("Glencore Cameroon") and Afex Global Limited ("AFEX") on the Matanda Block ("Matanda") a large hydrocarbon licence in Cameroon. The terms of this agreement include the assignment by Glencore Cameroon of its 75% participating interest in the Matanda Production Sharing Contract ("PSC") to VOG, and VOG becoming Matanda's operator through its 100% owned subsidiary, Gaz Du Cameroun Matanda S.A. ("GDC Matanda").

As consideration for the assignment, VOG or its subsidiaries will assume responsibility for carrying out a Work Programme to be agreed by the Government of Cameroon. The assignment is conditional on this being agreed and other customary approvals from the Government of Cameroon.

Matanda covers an area of approximately 1,235 square kilometres and is highly prospective for significant natural gas and gas condensate resources.

Glencore Cameroon is currently the operator of the PSC, with a 75% participating interest and AFEX, a Bermuda based exploration and production company specialising in West Africa, holds a 25% participating interest. Under the assignment GDC Matanda will hold a 75% participating interest in the PSC and AFEX will have a 25% participating interest in the PSC. GDC Matanda and AFEX will initially focus on prospects in the onshore licence area located within a few kilometres of the adjacent Logbaba area and its existing pipeline network that is currently operated by GDC.

GDC Matanda and AFEX will submit a new work programme to the Government of Cameroon for approval and expects to commence its first phase of seismic data acquisition in Q4 2016. The assignment of the PSC complements the Group's current development activity at Logbaba, including the previously announced new drilling programme of one twin and one-step out well scheduled for 2016, by securing a significant additional resource base. The existing Logbaba gas network infrastructure will also allow for fast-track development of any new discoveries made on Matanda to deliver additional natural gas to local industrial users in Cameroon.

Kevin Foo, Chairman, said: "This is a very exciting and fulfilling acquisition for VOG and its expansion plans. The North Matanda Field has considerable potential and we believe is an extension of the Logbaba structure and at 1,235 square kilometres, the block is over 60 times larger than our existing concession. VOG has worked closely with AFEX, Glencore Cameroon and SNH, the Cameroon national oil company, to bring this opportunity to a successful conclusion. We believe the assignment and operatorship of the Matanda block  is a major step towards allowing the Group to meet the growing energy needs of the Cameroonian economy.

Development of Matanda will be built on the excellent foundation established by Glencore Cameroon and AFEX. We believe that the three wells drilled in the North Matanda Field and the extensive 2D and 3D seismic data shows a strong geological continuation between the Logbaba and North Matanda Fields. Tests from the NM-1x, 2x and 3x wells proved a rich condensate yield varying from 30 bbl/mmscf to more than 70bbl/mmscf. The assignment and development of Matanda is consistent with our strategy to provide clean and reliable energy to industrial users in Cameroon."

Background on Matanda

The link below shows the Matanda Block location 

http://www.rns-pdf.londonstockexchange.com/rns/3964P_-2016-2-17.pdf 

The Matanda Block is situated in the northern part of the Douala Basin, in the transitional zone between the Wouri estuary and the neighbouring onshore area to the south-west of the city of Douala. The block borders GDC's Logbaba concession at the southern boundary. Approximately 30% of the block is in shallow water, whilst the remainder is onshore. 

The North Matanda Field was originally discovered by Gulf Oil Corporation in 1980, and to date three offshore wells on the block have tested gas and condensate from the Logbaba Formation of the North Matanda Field. One onshore well has also encountered gas reservoirs in the Logbaba Formation. During 2008 to 2010, Glencore Cameroon and AFEX acquired 200 square kilometres of 3D seismic survey over the North Matanda Field and 150 kilometres of 2D seismic survey over the northern, onshore portion of the block.  

In May 2013, Glencore Cameroon spudded well NM-3x, an appraisal well into the North Matanda Field to further define and delineate the Cretaceous reservoirs. The NM-3x well was completed in October 2013 and studies based on its results have concluded that the North Matanda Field extends to the onshore area of the block and continues towards the boundary of Logbaba, and that significant potential exists for large-scale gas reserves in this field.

In 2011 and 2014 ERCL, an independent specialist in upstream oil and gas consultancy, reviewed the Operator's estimates of resources for the North Matanda Field based on the new data from the NM-3x well and concluded that the P50 'gas-in-place' volume of 1,864 Bcf with 'condensate-in-place' of 136 Mmbbl were valid estimates for the area inside the Matanda 3D seismic survey.  

NM-3x drilled deeper than the previous North Matanda wells and discovered new, deep gas reservoirs, which are not included in the above volume resource numbers. Following assessment of extensive drill logs and geophysical data by Afex, both Afex and VOG believe that significant potential exists for large-scale gas reserves in this field.  

Additionally, it is thought that the North Matanda Field extends to the onshore area of the block.  

The Matanda block also contains additional Cretaceous prospects and Tertiary prospects that offset the Moambe and Zingana discoveries drilled in 2015 by Bowleven Plc. in the adjacent Bomono concession. Matanda is located between the onshore blocks of Logbaba and Bomono concession and the offshore block of the Etinde concession. Gas has been discovered at all six wells drilled at Logbaba and in two new exploration wells currently under test by Bowleven Plc. at Bomono. The Etinde concession, operated by New Age (African Global Energy) Limited, has 2C gas and condensate resources of 345 Mmboe.

 For further information, please visit www.victoriaoilandgas.com or contact: 

Victoria Oil & Gas Plc

Kevin Foo / Laurence Read Tel: +44 (0) 20 7921 8820

Numis Securities

John Prior / Ben Stoop Tel: +44 (0) 207 260 1000 

Strand Hanson Limited

Angela Hallett / Stuart Faulkner Tel: +44 (0) 20 7409 3494

Bell Pottinger

Daniel Thöle / Charles Stewart / Zara de Belder Tel: +44 (0) 20 3 772 2499

Notes to Editors

About Victoria Oil & Gas Plc

Victoria Oil & Gas (VOG.L) is a gas utility company with operations in the industrial port city of Douala in Cameroon, which is the business hub to Central Africa.

The Company's subsidiary, Gaz du Cameroun S.A. ("GDC"), supplies cost effective, clean and reliable natural gas to industries in the Douala region from its onshore Logbaba Gas Project. Industrial customers are supplied with gas through a 33km pipeline network built by GDC in Douala.

GDC's gas supply to the thermal, grid power and retail power markets in Douala, is helping to ensure that the Cameroon economy is underpinned with stable energy. By developing a fully integrated gas supply network, connected to wells located within the city itself, GDC has established a new energy supply within Douala that is cost effective, reliable, safe and cleaner than liquid fuel alternatives.

The Company generates cash flow from the Logbaba Project which is 60% owned and managed by GDC, with RSM Production Corporation, an affiliate of Grynberg Petroleum Company of Denver, Colorado holding a 40% participating interest.

VOG also holds 100% of the West Medvezhye oil and gas exploration project near Nadym, Russia. The field has C1 plus C2 reserves of 14.4MMboe (under the Russian resource classification system, analogous to proven and probable reserves under Western conventions) in addition to best estimate prospective resources of 1.4Bnboe. Given the challenging economic environment in Russia, The Group has fully impaired the West Medvezhye assets.

About AFEX

AFEX is an independent oil and gas E&P company incorporated in Bermuda and focused exclusively on opportunities in West Africa. Since its founding in 2006 the Company has successfully executed its strategy of acquiring oil and gas exploration and production acreage in the Republic of Cameroon, the Republic of Angola, the Republic of Mali and the Republic of Equatorial Guinea. AFEX's key asset is the Matanda Block in Cameroon, which it entered via a PSC signed in April 2008. AFEX's shareholders include both Gulf Cooperation Council institutions and high net worth individuals. AFEX is advised in corporate and financial matters by Gulf One Investment Bank BSC (c).

Cameroon Energy Market

Cameroon continues to evolve as a key African economy with the industrial port of Douala a key import and export gateway for goods to most of Central and West Africa. Power deficits remain a major hindrance to Cameroon's economic expansion, with demand increasing 7% annually. Power remains high on the political agenda and gas is seen as a key element of the national energy strategy. Grid power is heavily reliant on seasonal hydroelectric dams to supply 75% of demand and the shortfall is made up from gas and heavy fuel oil. The Logbaba gas and condensate project is a rare example of successful onshore gas monetisation in Sub-Saharan Africa, with energy provision aligned with the national interests. GDC, with the full support of the Government of Cameroon has successfully unlocked natural gas for industrial use. GDC estimates demand for gas in the Douala and Yaoundé area for thermal and power generation to be in excess of 150mmscf/d. GDC is focused on growing production to help meet this demand and to displace heavy fuel oil by providing a cleaner and more reliable energy source.