19 May 2022

Victoria Oil & Gas Plc

("VOG" or the "Company")

Q1 2022 Operational & Corporate Update

Victoria Oil & Gas Plc, whose wholly owned subsidiary, Gaz du Cameroun S.A. ("GDC"), is the onshore gas producer and distributor with operations located in the port city of Douala, Cameroon, provides shareholders with a brief operations update for the first quarter of 2022 and an update on corporate matters.

OPERATIONS SUMMARY

·    Sales: Average daily gross gas sales rate for the quarter was 5.5 MMscf/d (up 4% on Q4 2021: 5.3 MMscf/d), and a gross volume of 4,691 bbls (Q4 2021: 5,584 bbls) condensate was shipped to customers.

·    Logbaba Performance: The field has been meeting the demand using two of the three wells at any one time, with Well La-108 alternating with Well La-107.

·    Matanda: Following the rig tendering exercise, a suitable rig has been identified in nearby Chad, and this rig would be capable of drilling deeper Cretaceous targets as well as the shallower Tertiary targets. As the rig is currently idle, the rig owner will mobilise the rig to Cameroon whilst contract negotiations continue.

CORPORATE SUMMARY

Post-Period: RSM Litigation & Suspension of Trading. As announced on 4 April 2022, the Arbitral Tribunal made its Partial Final Award under ICC Rules (the "Award") on 1 April 2022. The net award to RSM was US$12.1 million, with interest and costs to be agreed by the parties separately.

Neither GDC, nor the VOG Group, has the ability to pay the Award and accordingly the trading of VOG shares on the London Stock Exchange was temporarily suspended as of 7.30am on 4 April 2022 pending resolution of this fundamental uncertainty to continue as a going concern.

As stated in the 4 April 2022 RNS, the parties continue to work towards a post-award settlement, albeit such settlement cannot be assured. However, the settlements reached in September 2021 and January 2022 show that these sorts of agreements are possible.

Hadron Loan Notes: Referring to the £1.25 million unsecured Loan Note entered into in 2021 (the "2021 Note"), which was due to be repaid by 21 April 2022, Hadron has agreed to not declare an event of default and stay any enforcement action on the non-repayment of this Note. Hadron has reserved its position to take any action in the event that at any time it reasonably believes that the financial position of the Company is unlikely to be stabilised. This stay also applies to the £1.15 million unsecured Loan Notes entered into with Hadron on 1 March 2022. 

Roy Kelly, Chief Executive of Victoria Oil & Gas, commented:

"GDC turned in another robust quarter of gas sales, partially buoyed by the AFCON football competition hosted by Cameroon, and that performance has continued into the start of the second quarter.

Despite the post-period Arbitral award, and the suspension of trading in VOG shares whilst the Company is in a position of financial uncertainty, it remains very much business as usual at the operational level whilst we continue to earnestly seek a post-award settlement.

Our Russian asset is of course not immune from global events and the international sanctions on the country, though we continue to receive encouraging interest in the sale process."

LOGBABA UPDATE

Quarterly Production

GDC continues to safely produce and sell natural gas to a variety of customers in the Douala area. Quarterly gross and net gas sales and condensate shipments at Logbaba are as follows (amounts shown in bold represent net gas and condensate sales attributable to GDC (57%)):

Post-period: production was up further in April, with average daily gross gas sales of 5.9 MMscf/d in the month, and one day at 6.7 MMscf/d, based largely on organic growth.

Logbaba Field Performance

The Logbaba field has now produced a cumulative of over 21 Bcf of natural gas, having passed the 20 Bcf milestone in July 2021. Well La-108 reached a cumulative of 1 Bcf gas production in the period, worth approximately US$12 million in gas sales.

Customers

GDC's online customer count remained around 30 for the period, though the count finished April at 33.

During January 2022, demand was high, reaching a mid-week peak of 6.8 MMscf/d gas sales on one occasion, the highest daily rate for three years.

Look-ahead: GDC is forecasting a growth in demand of 10-20% in 2022 (compared to demand in 2021), from both organic and inorganic growth. GDC will continue to exercise capital discipline and look to reduce costs where possible.

MATANDA UPDATE

Site access planning continued during the period. GDC's community liaison team made several site visits as part of the permitting process during the period and engaged with the local chiefs to implement local resident grievance processes along the planned access route.

The Company has selected an "over-spec" rig, in terms of horsepower and general capability. Such a rig could drill deeper, in fact down to 5,100m, meaning Cretaceous targets would be easily within reach, as well as the primary Tertiary targets (of which Marula is the first to be drilled). The rig owner, who has a large, global fleet of over 40 rigs, will mobilise the skid-mounted rig to Douala.

The Company continues to market the Matanda Farm-Out opportunity.

WEST MED UPDATE

As a result of the conflict in Ukraine, restrictive international sanctions have been imposed upon Russia and these have affected our Russian subsidiary SGI which holds the West Med asset. In particular, fund transfers have been affected, and our banks are currently restricting us from transferring funds into Russia.  In addition, a large number of entities and persons have been designated under international sanctions regimes, meaning such entities and persons cannot be dealt with. Whilst this will almost certainly hinder our proposed sale of the asset, we continue to receive interest in the process.

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

Victoria Oil & Gas Plc

Roy Kelly/Rob Collins                                                                      Tel: +44 (0) 20 7921 8820

Strand Hanson Limited (NOMAD)

Rory Murphy/James Dance                                                            Tel: +44 (0) 20 7409 3494

Shore Capital Stockbrokers Limited (Broker)

Mark Percy/Toby Gibbs                                                                   Tel: +44 (0) 207 408 4090