VOG.L Regulatory News (VOG)

VICTORIA OIL AND GAS PLC ('VOG' or the 'Company')

INTERIM FINANCIAL REPORT FOR THE SIX MONTHS TO 30 NOVEMBER 2010

CHAIRMAN'S STATEMENT

Dear Shareholder,

It is my pleasure to provide an update of your Company since the release of the 2010 Annual Results. Following the AGM on the 30 November, VOG completed the fundraising of £10.8m in new equity to reinforce our capital base. This capital underpins our transformation to a producing and cash generating company at our flagship Logbaba Gas field in Cameroon.

Award of the Exploitation Decree for the Logbaba Gas Field, to be signed by the President of Cameroon, His Excellency Paul Biya, is imminent. We must remember that this is a very high profile project in Cameroon and the first Exploitation Decree of its type to be issued. Once the decree has been issued, we expect to deliver first gas sales within five months.

Logbaba has aroused much interest in Cameroon. Over the last three months, Rodeo Development Limited, our subsidiary company in Cameroon has participated in many fact-finding meetings and discussions with Government, the Office of the President and industrial customers. In addition, we have had many community meetings and consultations with local chiefs and civic leaders. We are respecting these procedures and the response has been universally positive.

While these discussions have been underway, we have advanced the project on every front:

·; All design and engineering is complete.

·; All equipment has been procured and transported to site.

·; Expro Worldwide B.V, who has been awarded the contract for the leased process gas separation and cleaning facilities, has shipped their equipment into Cameroon and this is ready to be constructed and commissioned.

·; Contracts for civil works at the Logbaba site and trenching and installation of the pipeline have been tendered and evaluated and we are ready to award these contracts upon receipt of the Decree.

·; As for other permits, the Company has obtained a Certificate of Environmental Conformance from the Ministry of Environment and Natural Affairs. We have secured a Letter of Approval for the right to work in public roads from the Douala City Council, Public Works Department. In addition, the Company has negotiated Transit Agreements with two state companies, Magzi Industrial Estate and Camrail, (the state railway company,) upon whose land part of the pipeline will be installed and we expect these to be signed shortly. Finally, the Demolition and Construction Permits for civils works at the Logbaba Site have been reviewed and are ready to be granted from the Douala City Council, Department of Construction and Urban Environment.

We remain on course to have a very successful year at Logbaba. The delay in getting the Exploitation Decree is minor in the overall context of this project and the future remains very exciting for us all.

Meanwhile, operations at West Medvezhye, Russia are gathering momentum. Our gas tomography and passive seismic surveys concluded last year confirmed direct hydrocarbon indication in six accumulations. VOG's technical team has carried our preliminary integration of the new data with existing datasets including seismic and well data. Work is progressing and the studies are highlighting several interesting leads for more detailed analysis and future drilling.

This month, we met with Russian geosciences consulting institutes with established experience in the region including OGFC Siberian Scientific & Analytical Centre, "SibNats" and Mineral LLC, "Mineral" to discuss technical collaboration. As a result, we have commissioned a seismic reprocessing and geological modelling study with Mineral to re-interpret certain targeted areas taking into account the newly integrated survey information.

Also in February, our technical team presented the results of our 2010 work programme and outlined forward plans for this year and 2012 to the Ministry of Natural Resources and other official bodies in Russia. I am delighted to report that the plans have been approved. We plan to drill two exploration/appraisal wells by the end of 2012. Drilling locations will be decided once we receive the results of the study by Mineral, which is expected to take 4 months and an additional 185 km of 2D seismic which will also be acquired this year.

In addition, we are assessing ways of exploiting the well 103 discovery to generate cash. This work will incorporate the 2011 subsurface studies and data acquisition and conceptual development studies to evaluate various surface production facilities and downstream options for commercialising these reserves.

Finally, we have extended the option to acquire Falcon Petroleum Limited which has assets in Mali and Ethiopia. In the meantime, the Company has also commissioned a third party evaluation to determine the prospectivity of the assets and a valuation range. This work is now complete and VOG is currently negotiating with the Directors of Falcon. We expect to provide a further update to the market shortly.

Kevin Foo

Chairman

UNAUDITED CONSOLIDATED INCOME STATEMENTFOR THE HALF YEAR ENDED 30 NOVEMBER 2010

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 NOVEMBER 2010

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETAS AT 30 NOVEMBER 2010

UNAUDITED CONSOLIDATED STATEMENT OF CHANGESIN EQUITY FOR THE HALF YEAR ENDED 30 NOVEMBER 2010

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UNAUDITED CONSOLIDATED CASH FLOW STATEMENTFOR THE HALF YEAR ENDED 30 NOVEMBER 2010

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2010

1. PRINCIPAL ACCOUNTING POLICIES

The annual financial statements of Victoria Oil & Gas Plc are prepared in accordance with International Financial Reporting Standards (IFRS) and in accordance with International Accounting Standard 34 'Interim Financial Reporting'.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 May 2010.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual consolidated financial statements as at 31 May 2010.

At the date of these interim financial statements the following Standards and Interpretation were in issue but not yet effective:

Name of new Standards/amendments Effective from

IFRS 9 Financial Instruments 1 January 2013

IAS (revised Nov. 2009) Related Party Disclosures 1 January 2011

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010

The Directors anticipate that all of the above Standards and Interpretation will be adopted in the Group's financial statements in future periods and that they will have no material impact on the financial statements of the Group in the period of initial application.

2. SHARE OPTION EXPENSE

The fair value of warrants issued by the Company in respect of fees for share placings has been offset against Share Premium. The amount for the 6 months to 30 November 2010 was $580,000 (6 months to 30 November 2009 and 12 months to 31 May 2010: $938,000).

The warrants have been fair valued using a Black-Scholes option pricing model. The inputs into the Black-Scholes model were as follows:

The expected volatility was determined based on the historical movement in the Company's share price over a period equivalent to the option period.

3. LOSS PER SHARE

Basic earnings or loss per share is computed by dividing the profit or loss after tax for the year available to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the year, excluding those held by the ESOP Trust. Diluted earnings or loss per share is computed by dividing the profit or loss after taxation for the financial year by the weighted average number of ordinary shares in issue, each adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.

The following table sets forth the computation for basic and diluted loss per share.

Basic and diluted loss per share are the same, as the effect of the outstanding warrants is anti-dilutive and is therefore excluded.

4. SEGMENTAL ANALYSIS

The Group operates in one class of business being the exploration for, development and production of oil and gas and in three geographical segments, namely the Russian Federation, Republic of Cameroon and the Republic of Kazakhstan.

The analysis by geographical segment is shown below:

Six months to 30 November 2010

Six months to 30 November 2009

Segmental Analysis (continued):

Twelve months to 31 May 2010

EXPLORATION AND EVALUATION ASSETS

The movement on exploration and evaluation assets, which relate to oil and gas interests, during the period was:

Six months to 30 November 2010

Six months to 30 November 2009

Twelve months to 31 May 2010

Oil and gas interests at 30 November 2010 represent exploration and related expenditure on the Group's licences & permits in the geographical areas noted above. The realisation of these intangible assets by the Group is dependent on the discovery and successful development of economic reserves and the ability of the Group to raise sufficient funds to develop these interests. Should the development of economic reserves prove unsuccessful, the carrying value in the statement of financial position will be written-off.

The Directors have considered whether facts or circumstances exist that indicate that exploration and evaluation assets are impaired and considered that no impairment loss is required to be recognised as at 30 November 2010. Exploration and evaluation assets have been assessed for impairment having regard to the likelihood of further expenditures and ongoing appraisal for each geographical area.

5. OTHER GAINS AND (LOSSES)

6. FINANCE REVENUE

7. FINANCE COSTS

Interest payable relating to the convertible loans includes both the stated and effective interest charge.

8. INCOME TAX EXPENSE

At the balance sheet date, the Group has unused tax losses of $38.0m (30 November 2009: $35.0m; 31 May 2010:$37.7m) available for offset against future profit. No deferred tax asset has been recognised in either year due to the unpredictability of future profit streams. Accordingly, at the year end, deferred tax assets amounting to $10.7m (30 November 2009: $9.3m; 31 May 2010: $10.6m) have not been recognised.

9. RECEIVABLES

Other receivables at 30 November 2010 includes $14,706,000 due from subscribers for new ordinary shares in the Company issued in a placing on 15 November 2010 and $3,000,000 relating to RSM Production Corporation's 40% carried interest in the Logbaba gas development. The amount recoverable from RSM Production Corporation will be recovered from their share of initial net cash flows and is therefore dependent of the successful construction and commissioning of facilities and sales to customers.

Other receivables due in more than one year relates to RSM Production Corporation's 40% carried interest in the Logbaba gas development as described above.

10. TRADE AND OTHER PAYABLES

11. SHARE CAPITAL

Share capital as at 30 November 2010 amounted to $16.9 million. During the six months to 30 November 2010, the Group issued 676,263,527 shares for cash or in settlement of amounts due to creditors, increasing the number of shares in issue from 1,427,794,447 to 2,104,057,974. 

12. RELATED PARTY TRANSACTIONS

Payments to Directors and other key management personnel are set out below.

The following table provides the total amount of transactions entered into by the Group with other related parties:

There was no intragroup trading or transactions between Group subsidiaries.

Radwan Hadi is Chief Operating Officer of the Company and a manager of Blackwatch Petroleum Services Limited, a firm of upstream oil and gas consultants. These accounts include $483,000 for the 6 months to 30 November 2010, (6 months to 30 November 2009: $705,000; 12 months to 31 May 2010: $1,285,000;) in relation to oil and gas technical services provided by Blackwatch Petroleum Services Limited to the Company.

In December 2008, HJ Resources Limited, a company owned by a discretionary trust of which Kevin Foo and certain members of his family are potential beneficiaries, provided unsecured loans to Victoria Oil & Gas International Limited totalling $1,188,000. Interest accrues at 0.5% per month. On 6 October 2010 the Company repaid $388,000 and on 20 October 2010 $400,000.

13. POST BALANCE SHEET EVENTS

There were no post balance sheet events.

14. APPROVAL OF INTERIM FINANCIAL STATEMENTS

The financial statements were approved by the Board of Directors on 25 February 2011.