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Proactive Investor Forum
12 February 2009
Corporate Snapshot
Listed on AIM in July 2004Completed the acquisition of Logbaba gas field in Cameroon in December 2008Two assets located in the FSU with combined reserves of 40 Mmboeand resources of over 1.1BnboeExperienced Board and management with technical assistance from Blackwatch Petroleum Services
Share Structure
Free Float (46%)
NoorPetroleum (18%)
Hydrocarbons Tech. (10%)
Compass (6%)
Management(14%)
Background
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RSM (6%)
Corporate ProfileShare price £0.04Shares in issue 447.6 millionMarket Cap £17.9 million
Advisers:Nomad Strand PartnersBrokers Fox-Davies Capital
As at close 10 February 2009
The Turnaround Story
Strong exploration base; Billion BOE resources in FSU
New focus on Africa (acquisitions and options)
Cameroon Logbaba project will be the significant driver of the turnaround:
Capacity to turn VOG into a profitable company with first commercial deliveries expected by 1H 2010
Net 2P of 65Bcf attributed to only a tiny portion of the licence, with significant upside
All wells drilled penetrated multiple gas reservoirs with high flow rates, some over 60Mmcf/d
Focus on production (revenue) in Africa complements FSU long-term exploration/appraisal potential
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A Global Footprint
VOG is building a presence in highly prospective hydrocarbon regions
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Russian OperationsKazakh OperationsAfrican Operations
Operational Structure
Board of Directors
Executive Management TeamLondon / Houston
Development of Logbaba field to be run from existing office in Douala
Technical office in Almaty, the commercial centre of Kazakhstan
Main office to be moved to Orenburgto facilitate pursuit of opportunities in the region
Blackwatch Petroleum Services
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Logbaba, Cameroon
Bramlin’s key asset is a farm-in for 60% of the Logbaba natural gas and condensate project in Cameroon
Logbaba is located in the northern Douala Basin within the eastern suburbs of Douala, the economic capital of Cameroon
Four wells were drilled in the 1950s, all encountering gas – three were tested at between 12Mmcf/d and 62Mmcf/d
LogbabaLicence area
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Logbaba Reserves and Valuation
RPS Energy undertook an evaluation of limited section of the Logbaba field in July 2008
Using the data provided, they determined 14Mmboe of 2P reserves with an NPV10 valuation of $169Mm
RSP Energy Competent Person’s ReportNet Attributable Reserves and Resources
1P 2P 3PTotal Liquids Mmbbl 0.28 2.35 4.51Natural Gas Bcf 7.92 64.53 123.91Total Mmboe 1.71 13.97 26.81NPV valuation at 10% $Mm 18.17 168.65 412.16
RPS review area (~6km2)
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Logbaba Development Plan
PHASE 1: Gas production to serve existing contractsDrill and test a twin to Well 104 down to 10,000 ft
Production expected to be min. 12Mmcf/d against current local industrial demand of 8Mmcf/d
Install surface facilities 12Mmcf/d capacity gas processing facility15 km, 10” pipeline to the industrial users
Sell gas to industrial market in DoualaLetters of intent already signed with potential customers for a total of 8Mmcf/d at an indicative price of $15/mcf
PHASE 2: Gas to additional clients and swing productionDrill second well to increase production to meet expected industrial demand of >25Mmcf/dProvide swing production for users and new consumers
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Cameroon Gas Market
Most fuels currently imported
VOG has signed gas off-take agreements and letters of intent for 8Mmcf/d
The indicative price is set at $16/MmBTU ($15/mcf)
A study by Tradex estimates demand to increase to 25Mmcf/d within 5 years
A gas-fired power station could initially increase demand by up to 25Mmcf/d
10-Yr Gas Demand Forecast
Source: Tradex, Company estimates
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Power Load
Industrial Load
Exploration Potential
The Logbaba project is complemented by VOG’s portfolio of exploration assets in Africa and the FSU offering significant upside potential
West Medvezhye in Siberia has independently assessed prospective resources of over 1.1Bnboe of gas, condensate and light oil for the 1,220km2 licence area
First discovery well was completed in late 2007Field located in the largest gas producing region on Earth
In September 2008, VOG acquired an option to acquire Falcon Petroleum, an E&P company with PSAs over 45,000km2 in Ethiopia and Mali
Virgin exploration territory, but with good geological leads and oil seeps
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West Medvezhye, Russia
West Med lies adjacent to the super-giant Medvezhye field and about 120km from Urengoy, the world’s largest gas and gas condensate field
VOG has successfully completed a passive seismic survey over an area surrounding discovery Well 103
The results of the survey will be correlated to the existing subsurface interpretation to confirm the location of the next well to be drilled in 2010/11
11Source: Merrill Lynch
West Med
Kemerkol, Kazakhstan
The Kemerkol project has State-classified oil reserves and resources of:
C1 8.7 MmbblC2 26.3 MmbblC3 25.1 Mmbbl
Production from the field is temporarily suspendedVOG is fighting an illegitimate claim against its ownership
Appeal with the Supreme Court and General Prosecutor
Judgement won against the former owner in High Court
VOG preparing $30Mm damages claim
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Falcon Petroleum, Mali and EthiopiaVOG has signed a 12 month option to acquire the assets of Falcon Petroleum
Falcon has a 50% interest in the PSA for Block 17 in Mali and 90% of PSA over Blocks Ab1, Ab4 and Ab7 in the Blue Nile Basin in Ethiopia
Total acreage covers over 45,000km2
Logbaba
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In Summary
Logbaba represents proven reserves and fast-track cash flow generation from a captive market with significant expansion potential
Positioning in Cameroon power generation market can transform VOG into the premier energy supplier in the region
Exposure to huge hydrocarbon potential of the FSU still of primary importance
Technical management greatly enhanced through new appointments and assumption of existing Bramlin team
Continuing financial and strategic support of Noor Petroleum adds significant advantage during economic instability
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APPENDICES
Directors and Management
Kevin Foo, Chairman36 year career in the resources sector including 16 years in the FSU; former MD of Celtic Resources Holdings
Grant Manheim, Deputy Chairman37 years at N M Rothschild and Sons Limited, with 25 years as a board director
Robert Palmer, Finance DirectorChartered accountant with extensive experience in corporate finance
George Donne, Executive DirectorFormer investment banker and General Manager of VOG
Rashed Al Suwaidi, Non-Exec DirectorPetroleum engineer and former E&P Director of ADNOC. Director of some of the largest investment companies in UAE
Philip Rand, Non-Exec Director+30 years financial experience and currently the CEO of Equator Exploration
Mukhtar Tuyakbayev, Non-Exec DirectorPreviously an executive director of Celtic
Board of Directors
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Senior ManagementRadwan Hadi
COO of VOG; Senior petroleum engineer with Blackwatch with over 25 yrs experience in oil and gas including in Nigeria, Ghana and Equatorial Guinea
Sam MetcalfeManaging Director and Principal Reservoir Engineer with Blackwatch, over 25 years oil industry experience, worldwide
Jim Ford30 years experience in the energy sector and previously president of Daytona Energy
Ernie Miller 16 years of energy experience in both public and private companies, including BPZ Energy, Calpine Corporation and Pan Canadian
Eckhard Mueller27 years experience in exploration and production, including 4 years as chief geologist for KazGerMunay;
Cameroon
Cameroon's GDP of $39.5bn in 2007 one of the top ten in sub-Saharan Africa
Majority of electricity from hydroelectric power stations, susceptible to droughts
In 2004, electricity generating capacity of 900MW: 95% hydroelectric
Other operators in region:Addax PetroleumAmerada HessBowlevenPerencoNoble CorporationSanta Oil & Gas
Source: EIA
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West Med Progress during 2008Confirmation of commercial discovery by Russian Ministry of Natural Resources (MNR)
Confirmation of proven recoverable reserves
Geochemical analysis of target location by Exotrad Limited
Reassessment of subsurface data by local institute, SibNats
C1 Oil 1.49 Mmbbl
Gas 1.71 Bcf
C2 Oil 10.41 Mmbbl
Gas 12.10 Bcf
C1+C2 Oil 11.90 Mmbbl
Gas 13.81 Bcf
Total 14.39 Mmboe
Recoverable Reserves confirmed by MNR
Well 103
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West Med Programme for 2009
During winter 2008/9, GeoDynamics (GDR) conducted a passive seismic survey focused on new target location
Drilling of next exploration well, Well 105, expected in 2010 with a further two wells to be drilled by the end of 2012
New target area identified by both
Exotrad and SibNats
Well 103
Well 103
SibNats Prognosis Exotrad Prognosis
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Kemerkol Programme for 2009
Production from the field is temporarily suspended following a claim against VOG’s ownership during 2008
The short-term development programme remains:
Shoot a passive seismic survey to determine next drilling locations and analyse subsalt and salt overhang potential
Initial drilling plan of two exploration wells to target best locations and confirm correlation of passive seismic
Full development drilling on confirmation of further discoveries
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Falcon Petroleum Assets
Block 17 is located in the Nara Trough, the most western of Mali's four sedimentary basins
According to aeromagnetic data, sediment thickness may amount to over 14,000m –similar to the PrecaspianBasin in Kazakhstan
The Cretaceous reservoir is thought to be similar to that of Chad, but the Paleozoic is more comparable with Algeria
Block 17’s location in the narrow and relatively elevated part of the Nara Trough
Falcon has been involved in a study of the most prospective sedimentary basin in Ethiopia – Block 1 – covering 150,000km2 including the Blue Nile (Abay) Basin
Within this Block, Falcon has signed a PSA for sub-Blocks Ab1, Ab4 and Ab7
The Basin contains possible structural and stratigraphictraps and oil seeps are present in the northern section
The oil seeps occur in Were Ilu, inside Block Ab1
Mali Ethiopia
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AbbreviationsBnboe Billion barrels of oil equivalent
Mmboe Million barrels of oil equivalent
Mmbbl Million barrels of oil
bbl/d Barrels per day
mcf Thousand cubic feet of natural gas
mcf/d Thousand cubic feet per day
Mmcf/d Million standard cubic feet of gas per day
Bcf Billion cubic feet of natural gas
Tcf Trillion cubic feet of natural gas
Bcm Billion cubic metres of natural gas
$Mm Million US$
km2 Square kilometres
m Metres
Mt Million tonnes
Mtpa Million tonnes per annum
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Resource Categorisations
Category Explanation Approx Western Category
A Geologically and geophysically examinedDelineated by exploration and productionData shows recoverabilityRepresents reserves in current production
Proven
B Geologically and geophysically examinedEvaluated by adequate drilling Data shows recoverabilityRepresents unused producing capacity
C1 Reserves adjacent to A and B categoriesGeologically and geophysically evaluatedVerified by minimal drillingData shows partial recoverability
C2 Presumed to exist based on favourable geological and geophysical data analogous to that of verified reserves Probable
C3/D1 Speculative resources presumed to exist based on favourable geological analogy to reference areas Possible
Source: IEA and Russian Ministry of Natural Resources
VICTORIA OIL & GAS PLCHATFIELD HOUSE
52-54 STAMFORD STREETLONDONSE1 9LX
Tel: + 44 (0)207 921 8820Fax: +44 (0)207 921 8821
