Annual Report & Accounts 2012

Victoria Oil & Gas Plc
Annual Report & Accounts 2012

Growing
Production
Output

Clean and
Reliable Energy
Supply

Measuring
Progress

About Us

Victoria Oil & Gas is an oil and gas exploration and
production company with projects in Africa and the FSU.
The Group’s assets are 95% of the Logbaba gas and
condensate field in Cameroon and 100% of the West
Medvezhye oil and gas project in Siberia. Both projects are
operated by Victoria. The Company’s flagship development
asset is Logbaba, which commenced continuous production
operations in July 2012, located in the eastern suburbs of
Douala, the economic capital of Cameroon.
Since 2009, Victoria has invested over $100 million into the
Logbaba project including two wells, production facilities
and a pipeline reaching the main customer hub in the
economic capital of Douala. Production is set to ramp-up
significantly throughout the remainder of 2012 and during
2013. The Company anticipates cash flow break-even going
forward for the Group by the end of 2012.

Contents
Highlights 1
Objectives & Strategy 2
Logbaba Production Growth 2
Key Points 3
Map of Logbaba Operational Area 4
Cameroon: Process & Customers 4
Map of West Medvezhye 5
Progress 5
Chairman’s Statement 6
Logbaba: Project History & Market Discussion 7
Review of Operations 11
West Medvezhye: History & Market Context 14
Directors’ Biographies 16
Senior Management Biographies 17
Directors & Other Information 18
Directors’ Report 19
Statement of Directors’ Responsibilities 23
Independent Auditor’s Report 24
Consolidated Income Statement 25
Consolidated Statement of Comprehensive Income 25
Consolidated Balance Sheet 26
Company Balance Sheet 27
Consolidated Statement of Changes in Equity 28
Company Statement of Changes in Equity 29
Consolidated Cash Flow Statement 30
Company Cash Flow Statement 31
Notes to the Consolidated Financial Statements 32
Notice of Annual General Meeting 63
Notes to the Notice of Annual General Meeting 64
Glossary

Victoria Oil & Gas Plc Annual Report and Accounts 2012

Highlights

Logbaba Operational Highlights

Review
Continuous production operations commence at Logbaba in July 2012
Current peak production in excess of 1 mmscf/d
Production forecasted to reach 5 mmscf/d by the end of 2012
Commissioning of the process plant and 13.2km of pipeline to and

Governance
around Central Douala
Company increases participation in Logbaba to 95%
VOG becomes the first gas producer ever in Cameroon to supply the
industrial market
19 Gas Sales Agreements signed to raise steam/heat at $16/mmbtu

Accounts
($16/mcf)
13 Power Proposals delivered to customers of which 6 have advanced
to LOIs
The Phase 1 pipeline area (red route on map on page 4) is now complete

Other information
Independent CPR on the Logbaba gas and condensate field confirms a
50% increase in total 1P Reserves and 1C Contingent Resources
Independent Douala gas market study provides positive assessment of
Logbaba demand and supply considerations

Financial & Other Highlights
$16.4 million of equity finance and $5.5 million of debt raised in the year
$22.8 million invested in Logbaba project
Strengthening of senior management team with appointment of a
Director of Projects and additional sales staff
Macquarie Capital (Europe) Limited appointed as joint corporate broker
Senior secured debt facility expected to close in Q4 2012

Recent Milestones
2008 2009 2010 2011 2012
Victoria Oil & Gas enters In September, VOG The two-well drilling The President of the Commencement of
Cameroon in December spuds the first well, programme was Republic of Cameroon, continuous gas and
and becomes operator of La-105, the first onshore completed successfully; S.E. President Biya, signs condensate production
Logbaba. well in Cameroon since well La-105 tested at the Exploitation Licence operations in July.
the 1950s. 55 mmscf/d and La-106 on 29 April.
Year-end expected
tested at rates up to
First delivery of gas in production rate of
22 mmscf/d.
December. 5 mmscf/d.

Victoria Oil & Gas Plc Annual Report and Accounts 2012 1

Objectives & Strategy

Logbaba: 2011-12 Progress Logbaba: 2013-14 Aims

Become a mid-size E&P player by 2015 Flow 1 mmscf/d in July 2012
Flow 20 mmscf/d by end of 2013
Flow 5 mmscf/d at end of 2012
through organic growth and acquisition
Supply 40 customers in Douala
First gas to power in country
Focus on core area of West Africa and surrounding area
Pipeline Phase 2 commences Complete Pipeline Phases 2 & 3
Build on cash flow from Logbaba to fund
Attain positive cash flow from Introduce new technologies such
further exploration and development operations as compressed natural gas
opportunities
West Med: 2011-12 Progress West Med: 2013-14 Aims
Become a leading player in new thermal and Processing of new well data and Aim to secure Farm-in partner in
power projects in Cameroon surveys completed 2013

Acquisition of opportunistic, undervalued Submitted drilling candidate
locations for next drilling Complete winter road and drill pad
assets/distressed sellers programme
Announced 300 million boe
increase in gross prospective Complete drilling design project
resources to 1.4 billion boe
Obtained approval from Russian
Plan for drilling to start in Q4
Ministry for development plan of
2013
an Early Production Scheme

Logbaba Production Growth with Attractive Margins
from Sales to Industry
Independent Assessment of Forecast Peak Production

2 Victoria Oil & Gas Plc Annual Report and Accounts 2012

Key Points

Logbaba

Review
Customer Specific Benefits
(Thermal)
First natural gas supplier in Cameroon Energy demand is met by high-
cost liquid fuels (diesel and fuel
95% interest and operatorship in the Logbaba gas and condensate field oil) priced off international
benchmarks
Located in the heart of a substantial industrial and energy-hungry region
Natural gas supply contracts
Own and operate whole gas supply chain from wellhead to customer create approximately 30% total

Governance
cost savings
Excellent relationships with strong government support Improved boiler efficiencies and
longer life through reduction of
Diverse industrial customer base within 10km of wellhead scaling and soot
Reduced pumping, storage and
19 thermal gas sales agreements (“GSAs”) signed including multi-nationals heating costs of liquid fuels

GSAs have 20-year exclusive gas supply arrangement with price fixed at Reduced maintenance costs and

Accounts
less downtime
US$16/mmbtu ($16/mscf or $96/boe) for first 5 years
6 Letters of Intent signed for power Customer Specific Benefits
(Power)
Field production anticipated to reach 5 mmscf/d by year-end 2012 Cameroon industry challenged
with constant blackouts and
Forecast gross production to increase to 20 mmscf/d by year-end 2013 brownouts hampering expansion
Natural gas-fired power solutions

Other information
Current condensate yield of 18 bbls/mmscf will increase control and reliability
of energy delivery
Gross 2P reserves of 212 bcf of gas + 4 mmbbls condensate
Customers can expect significant
cost savings with a reliability
Outstanding potential in other areas of the Logbaba licence area premium
Additional 1 tcf gross best estimate prospective resources
Benefits for Cameroon
Advance of gas will pave the way
for increased industrial expansion
and foreign direct investment
Environment benefits: gas energy
of choice with fewer emissions

West Medvezhye
Major potential with best estimate prospective resources of 1.4 billion boe
Classical prolific West Siberian geology; targeting structural and
stratigraphic traps
2013 drilling programme catalyst for re-rating of VOG
4 wells drilled, one discovery well (Well-103)
Well-103 has C1+C2 Reserves estimated at 14.4 million boe
Recoverable Resources (C3) estimated at 170.6 million boe
Approval of Early Production Scheme by Russian Ministry of National
Resources
Early production facility to truck oil to Nadym, located 40km away, with
$60/bbl achievable


Map of Logbaba Operational Area

Total Existing and Potential Identified Customer Base

Cameroon: Process & Customers
Signed Thermal Customers and
Power LOIs
Gas for customers heat and power
requirements represents a market
anticipated to be in excess of 50 mmscf/d
over the medium term

Thermal GSAs
Food Processors Metallurgical
Imperial Foods 7 Coulée Continue 1
BSF 8 Laminoir n/a*
Camlait I 10 Prometal 3
Camlait II 23 Metafrique 6
Parlite Foods 27
Other
Chemical Industry SOLICAM 2
The gas processing facility drops
the pressure of the gas from the Plasticam 15 CICAM 12
well conditions to the sales gas HACC 18 Pack Industry 28
specification by separating and Unalor 19
stabilising the condensate and
water produced. VOG has LGCCA 21 Power LOIs
developed a local market for gas CCC* 51 Camlait 10
for heat/steam generation and CICAM 12
gas-fired power.
Breweries Plasticam 15
SABC I 9 Biopharma I 30
Guinness 13 Biopharma II 30
CCC 51

* New customer – spur line to be constructed


Map of West Medvezhye

Review
Governance
Accounts
Other information
Progress
Reserves Reserves
Survey Drilling 1 estimate 1 Drilling 2 estimate 2 Construction Production Supply
Logbaba

West Medvezhye

Net Proved and Probable Reserves Net Prospective Resources
Oil & Condensate Gas Total Oil & Condensate Gas Total
(mmbbls) (bcf) (mmboe) (mmbbls) (bcf) (mmboe)

Reserves Prospective Resources
Logbaba Field 4.0 201.4 37.6 Logbaba Area(2) 19.0 950.0 177.3
(1) (3)
West Med 103 Discovery 11.8 15.6 14.4 West Med Block 721.5 3,902.3 1,416.6
Total Reserves 15.8 217.0 52.0 Total Prospective Resources 740.5 4,852.3 1,593.9
(1) (2)
Victoria’s West Med Reserves, as approved by the Russian Ministry of Blackwatch estimate (2012).
(3)
Natural Resources, are classified as C1 and C2 reserves according to Mineral estimate (2011).
Russian convention and are broadly comparable to the Society of
Petroleum Engineers proved, probable and possible reserves Western
classification.

Note:
In addition, in September 2012, the Company announced an independent
CPR on the Company’s proved reserves only where ERC Equipoise Limited
assessed 1P reserves of 39.1 bcf plus 32.7 bcf of 1C contingent proved
resources.


Chairman’s Statement

Turning on the Taps

There have been a number of very positive developments on our
projects in 2012, most notably the commencement of continuous
production at the Logbaba Field, Cameroon (“Logbaba”) in July
2012. We are very proud of what we have achieved over the course
of three years. We landed the first onshore rig for over fifty years in
country and successfully completed two wells. Today we have a A boiler house at SABC. VOG is substituting
cornerstone project with robust and increasing domestic demand for heavy fuel oil and waste oil used in raising heat
with natural gas.
our gas and the supply capability to meet it. These key elements have
been independently verified as part of due diligence requirements for
a debt financing package that is close to being finalised. Our key
priority remains to ramp up gas off-take volumes through
conversions of existing contracted customers, in order to strengthen
the financial position of the Company and attain positive cash flow
for the Group.

Review of the Markets to move from an exploration and and around central Douala. We have
Throughout 2012, the global economy development company into one with installed nine pressure reduction and
has continued to slow with a mixture of continuous production and cash flow. metering stations (“PRMS”) at our
an austerity constrained Euro-zone and We have now achieved this and, in customers’ premises. The PRMS units
lower growth in emerging economies doing so, have distinguished ourselves reduce the gas pressure in accordance
and China in particular. The US has from the majority of our peers which with the customer’s acceptance
shown some green shoots of recovery are solely reliant on the equity capital requirements and measure the volume
having performed better than other markets for funding. of gas transmitted. This data is then fed
major developed economies, but further back to our control room at the
Production and cash flow from our
rounds of quantitative easing, high production plant. We have since ordered
flagship Logbaba project are set to
levels of unemployment and an additional 20 PRMS units which are
ramp-up significantly over the coming
forthcoming cuts to the federal budget expected to arrive in country before the
months as contracted customers
indicate that confidence will be fragile end of November 2012. These units
continue to come on line. This will
in the global economy in 2013. have been produced to individual
provide a solid platform for growth and
customer requirements and reflect our
Despite this, Africa has become a “hot the foundations upon which I believe we
platform for continued production
address” for investors this year with a can progress this Company into a
growth over the coming months.
considerable amount of corporate mid-market integrated E&P company.
activity in both East and West Africa. On a broad scale, one of Africa’s most Completion of the downstream works
However, many junior exploration critical problems is provision of reliable culminated in our announcement of
companies continue to see depressed energy. We believe that we have continuous production operations in July
share prices as investors’ price in established a strategically important 2012, by which time our first three
funding difficulties in the absence of solution for the provision of locally customers had completed their own
cash flow from production. I believe sourced energy. Furthermore, we believe conversion requirements downstream of
that during these challenging economic that this model, and our expertise, can be their PRMS unit and were able to accept
times, the now-producing Logbaba exported to many other countries within gas. We currently have four customers
Project is an exceptional project, as it is Africa, potentially forming a significant connected, with an aggregate peak off-
local conditions rather than global part of our future business strategy. take of in excess of 1 million standard
factors that will ensure its success and, in cubic feet per day (“mmscf/d”) and
Operational progress at Logbaba was
turn, the performance of this Company. average daily volumes (7 day week) of
maintained at a steady rate throughout
0.7 mmscf/d.
the financial year, with completion of all
Logbaba, Cameroon
of the key downstream elements of the Since July 2012, customer conversions
RDL 95% operated interest
project. This included the re-opening have not advanced at a rate I would
I am very satisfied with the progress
and commissioning of wells La-105 and have hoped for or expected, but I would
achieved by the Group throughout the
La-106, installation of the production like to reassure you that this does not
financial period and to date. In this
facilities and the completion and unduly concern me or impact on the
financial climate, it was essential for us
commissioning of 13.2km of pipeline to long-term fundamentals of this project.


Logbaba: Project History & Market Discussion

Logbaba is located in the city of Douala, onshore Cameroon. highlighted that industry in Douala is beset with chronic power

Review
The field was discovered in the 1950s by Elf SEREPCA with shortages and suggested that firms faced 128 outages in 2009
four wells that encountered gas and condensate in multiple which represented a total of at least 16 days. It is the
reservoir layers. No gas-water contacts were detected in any of unplanned nature of the outages when the grid overloads from
the sands encountered. The gas bearing reservoir sands are of excessive demand that causes the greatest disruption and
Campanian and Santonian age of the Logbaba Formation. cost to many industries as raw materials in process at the time
Exhibit 1 is a time structure map on top upper Logbaba. get thrown to waste. Therefore, customer benefits will be both
contracted monetary savings versus the local power supply
VOG owns and operates, through its subsidiary RDL, a 95%

Governance
charges, as well as savings resulting from less disruption costs
interest in the Logbaba gas and condensate project. Since
and the lost productivity that they regularly experience.
the beginning of September 2009, VOG has drilled two
appraisal wells which were completed as producers, installed The Company’s power contract prices will be individually
2 x 20 mmscf/d gas processing trains and installed 13.2km of tailored to each individual customer given that they will require
pipeline to deliver gas to industrial centres in and around different technical solutions and have different operating
central Douala. The Logbaba field is located onshore, on the regimes i.e. days worked per week and hours worked per day.
doorstep of the industrial city of Douala (approximately 4km Factors that will influence contract pricing include the quality of

Accounts
from the city centre) and has gross proved and probable the generator required, monthly load factor and daily variable
reserves of 212 bcf which is sufficient to supply an average of load of the customer, operating regime and the desirable
30 mmscf/d (approximately 5,000 boe per day) to the market contract term. In addition, VOG is requiring some level of ‘take
for the next 20 years. The proximity of the reserves to our or pay’ commitment in the contract in order to justify the
market, the industrial customers in Douala, represents a investment in the gas-fired generators which the Company will
distinct competitive advantage enabling infrastructure build out pay for unless the buyer wishes to own and operate their own
to deliver the gas to customers at significantly reduced cost. mini-plant/generator. Each contract where VOG is contracted
The initial target markets for Logbaba's natural gas are to sell power will have three pricing elements:

Other information
industrial customers in Douala for: > A monthly fixed charge to cover the cost of the generator
> Substitution of heavy fuel oil and waste oil used to generate over the contracted term;
heat with natural gas (thermal); and > A monthly O&M charge to cover the cost of maintaining the
> Power generation at customer sites using natural gas generator based on kwh consumed; and
displacing grid power (on-site power). > A monthly volume charge to cover the cost of the gas
utilised in generating electrical power.
Douala, the economic capital of Cameroon, is an energy
intensive city with a great variety of light and heavy industry. It The total contracted price to the customer will vary but is
also serves as the principal deep water port for all of the six estimated to be similar to thermal contract pricing. The volume
member states of Central Africa. Examples of charge to the customer will once again vary depending on the
Cameroon/Central African industry that reside here include efficiency of the electrical conversion process but is estimated
breweries, metallurgical foundries, food processing plants, to be in the range of $10-$16/mmbtu ($10-$16/mcf) on a gas
chemical plants, textile and packaging industries. equivalent basis. In the short term, to expedite the sale of
power and meet with clients wishes to replace grid power
VOG has secured a large local market to replace liquid fuels
provision as soon as possible, VOG will supply power to some
consumption to generate heat, including heavy fuel oil and
customers with the employment of rental power generators.
waste oil. These ‘competing’ fuels are priced according to
When the permanent power units become available, VOG will
international indices and are currently estimated to cost the
swap out the rental equipment with the permanent fixtures
customer on average in excess of 30% more than VOG’s
under the same contract. The standard contract terms being
contracted gas price. The Company has entered into ‘pay-as-
discussed with the customers are for ten years.
you-go’ gas sales agreements with customers to sell gas at
$16/mmbtu (ca. $16/mcf) with prices fixed for five years and the VOG has publicly declared production targets of 5 mmscf/d
contract term lasting 20 years. After conclusion of the first five day for year-end 2012 and 20 mmscf/d for year-end 2013.
year period, prices are fully re-negotiable between the seller
and the buyer. The buyer has no minimum contractual volumes
stipulated in his contract but is economically incentivised to
take our gas over more expensive liquid fuel alternatives. Exhibit 1: Well location map, Logbaba Field, on Top Upper Logbaba time
structure (TWT).
A recent independent study on pricing in Cameroon,
commissioned by VOG, estimated that the dated Brent
benchmark for crude would need to fall to a price below
$63/bbl to make competing liquid fuels more attractive.
In addition to gas for thermal heat requirements, VOG is
signing power contracts with industrial customers. The
Company has secured LOIs to replace power sourced from the
local grid, the primary power source of electrical energy, with
the employment of gas-fired power generators on the
customer premises. These generators will deliver a more
reliable power supply than the existing grid network where
power demand from the network far outstrips supply causing
significant problems for the customer. The pricing of VOG’s
power contracts will represent a significant saving for the
customer but a reduced saving compared to thermal contracts.
The principal attraction and focus of the customer is the
significantly increased reliability of this energy solution. For
example, a World Bank report on Cameroon in 2011


Chairman’s Statement continued

We also have a highly prospective market
for the direct supply of power. The lack
of a reliable power supply in Douala is a
major concern cited by industries in the
region, as it limits expansion plans and
causes major operational and production
issues including wastage, equipment
damage and cost overruns. The Company
has an established independent
distribution network (with Phase 1 of
the pipeline completed) that will allow
us to deliver a ‘total energy solution’ to
VOG has two wells, 2 x 20 mmscf/d
industrial customers to fulfil all their heat
production trains to condition and
and power requirements.
separate the gas and condensate, its
own pipeline distribution network and is While the gas to power market represents
rapidly developing a market with over 60 a larger and more lucrative opportunity
identified customers for gas and/or over the medium term, the Company has
power. 25 have already signed only recently engaged in contractual
contracts/LOIs and we expect a very discussions with customers regarding the
high conversion rate for the remainder. provision of power, as the capital cost to
the customer is higher, relative to thermal
conversion costs. Each solution must also
Under the terms of our gas sales > Contracting burner commissioning be individually tailored to a customer’s
agreements, the customer’s agents from one of three principal needs and generic solutions cannot be
responsibility is to complete all works manufacturers in a timely fashion has pre-ordered. This is explained more fully
required downstream of the PRMS proved challenging. These companies in the Logbaba History and Market
unit. This involves a cost to them on had a limited presence in Cameroon Discussion on page 7. With the Company
average of $50,000-$100,000 including and we are working hard to rectify this. having had continuous production
project management costs, engineering operations for approximately four
Throughout this process, however, we
design and installation of a dual fuel gas months, our customers are now able to
have gained valuable experience with
burner and a gas spur line from the witness a reliable gas distribution network
respect to customer conversion
boiler to the PRMS unit. The payback in place, which we anticipate will help
requirements and in-country contractor
for all signed customers is estimated to facilitate their investment decision on
competencies, and we are now taking a
be less than six months. The challenges committing to a gas generator through
greater role in assisting clients to
that we have encountered include the our proposed payment structure.
connect to our gas network. There have
following factors:
been two instances where we have We have recently sent 13 power offers to
> Not all customers have the skills
completed the prerequisite works for customers, of which six have been
required to undertake pipe work,
our customers and now that we have converted to Letters of Intent (“LOI”s),
burner and boiler specification,
continuous production operations and and we expect the first contract to be
construction work and project
satisfied customers, there is a backlog of signed in November 2012. With this
management.
additional customers waiting to be first power coming on line, together
> Some customers employed local
connected to the grid. I am confident with the thermal gas demand outlined
contractors who were not sufficiently
that we will have a minimum of 15 above, the Company anticipates year-end
qualified to undertake the works and
customers taking in excess of 3 mmscf/d production of 5 mmscf/d.
as a result failed the inspection and
of thermal gas by the end of 2012.
integrity tests set by Bureau Veritas, I am very optimistic about the
our pipe work inspectors. As a Our gas sales and marketing team have remainder of 2012 and our Company’s
company, we have a commercial identified over 60 suitable thermal prospects into 2013. Logbaba is a
interest, and a duty of care, to ensure and/or power customers in the region, fantastic project to be involved with. We
all works are performed in a safe and as represented in the map on page 4 of are in a privileged position to have a
robust manner and we have therefore this report. To date, we have signed 19 project which is neither demand nor
become much more involved in gas sales agreements (“GSAs”) for the supply constrained for the foreseeable
contractor qualification and selection. provision of thermal gas and the team is future. Both of these statements have
> While customer awareness for the very much focussed on finalising contracts recently been independently verified
project is high, there has been a in the Phase 1 pipeline area to maximise through third-party competent person’s
degree of hesitation in converting to revenue opportunities until we are in a reports produced by Challenge Energy
a new energy source and paying for financial position to embark on Phases 2 Limited (“Challenge”) and ERC
the alteration work. and 3 of the pipeline construction. Equipoise Limited (“ERCE”).



To date the Company has road in preparation for construction of

Review
exported five tankers of
condensate to the Limbe
a drilling pad planned for Q1 2013. We
refinery, located 60km will then look to qualify and finalise a
from the city of Douala.
selection of contractors for the next
drilling programme over the coming
months as well as contractors to
perform the logging and well-test

Governance
operations. The Company will then
commence drilling during the winter of
2013/2014 in targeted locations which
have been defined by the Mineral study
in the Well-103 area.

VOG owns and operates the entire supply Based on our recent geotechnical work,

Accounts
the Company believes that Well-103
chain from the wellhead to the final was drilled on the edge of a significant

consumer. We feel this is a considerable structure. Our next drilling campaign, if
in line with management expectations,
achievement and offers us a strategic could lead to a very significant reserve

advantage. upgrade for the Company in the Upper

Other information
Jurassic as well as the Lower Cretaceous
Achimov layers.

In light of the enhanced prospectivity of
A Gas Market Study, undertaken by extremely hard to meet our publicly
the asset, we would have liked to finance
Challenge, a leading advisory stated targets and are confident that
this drilling programme ourselves.
consultancy group to the oil and gas these targets will be achieved.
However, the Company is planning to
industry, highlights a very positive
farm-out a portion of its interest in West
assessment of the Logbaba project, West Medvezhye
Med to preserve capital and forge ahead
concluding: “VOG’s strategy to 100% operated interest
on the infrastructure roll-out and
displace refined products consumed by Progress at West Medvezhye (“West
customer expansion at Logbaba. We
industrial customers for thermal heat Med”) during the financial period and
have begun this process with some
generation and substituting grid power to date has been very pleasing and we
selected screening of potential candidates
in the major industrial centre of Douala have made two very notable
and anticipate concluding a farm-out
is robust and reasonable with few advancements on the project.
process by Q4 2013. We do not intend
material risks.” Challenge’s assessment
I have always maintained that West Med to use cash flow from Logbaba to fund
of gas and gas-to-power market
has the potential to become a company- exploration in West Med.
performance and growth split by phase
maker. Whilst we have a fairly modest
is highlighted on page 2. I often feel that West Med is overlooked
discovery to date of 14.4 mmbbls of oil,
to some degree by investors in our overall
In October 2012, we announced an there is very exciting geological potential
asset portfolio but its significance should
independent reserves estimate completed on the block and this was confirmed by
not be forgotten. Our first production
by ERCE on the Company’s proved an independent geological modelling
from West Med is currently estimated to
reserves. This was commissioned by the study and resource audit carried out by
begin in 2016 and should provide a
Company in relation to a debt funding Mineral LLC (“Mineral”). Following
strong platform for production growth
proposal that we are advancing. ERCE completion of their report in August
and cash flow over the medium term.
concluded a 50% increase in total 1P 2011, the Company announced an
Reserves and 1C Contingent Resource increase in best estimate unrisked
Management Changes
gas volumes with 1P (“Proven”) Reserves prospective resources in excess of
VOG has strengthened its senior
of 39.1 billion cubic feet (“bcf”), plus 300 million barrels of oil equivalent
management this year with the addition
32.7 bcf of 1C Contingent Resources (“boe”) to over 1.4 billion boe.
of a new Director of Projects, Neil
leading to a total potential 71.8 bcf of
The second notable achievement was the Kendrick, a professionally qualified
producible gas (gross), plus 1.14 million
approval of the development plan for an Mechanical Engineer and Project
barrels (“mmbbls”) of condensate. This
early production scheme by the Ministry Manager who has held a number of
endorses our supply capability for the
of Natural Resources in August 2012 for senior management and executive level
foreseeable future.
Well-103 and the surrounding area. We positions over the past 25 years with
I look forward to the coming months are making good progress at West Med both publicly and privately held
and years with genuine optimism. We with a well defined project and scope of companies in the oil and gas sector. As
have made great progress on the works for the next three years. Director of Projects, Neil is responsible
Logbaba project during the financial for all aspects of project delivery and is
We have commenced building a winter
period and beyond. We are working currently concentrating on leading the



VOG turned on the taps for the first time
in December 2011 when it commissioned
the process plant and the first 4.5km
section of pipeline. This was the first
ever commercial application of natural
gas in Cameroon.

customer conversion effort in Logbaba which may require additional funding in As anticipated in last year’s accounts,
and growing the business in Cameroon. the future. During the financial period RSM Production Corporation (“RSM”)
the Company successfully raised has initiated arbitration proceedings in
Under the leadership of Jonathan Scott
£10.1 million in equity to continue to relation to the forfeiture of their
Barrett, Managing Director of RDL, the
fund the development of its projects in interest in Logbaba. Since the initial
Company has expanded its sales and
Cameroon and Russia and for the Request for Arbitration was made by
marketing team in Douala with the
Group’s working capital requirements. RSM there have been significant delays
addition of dedicated professionals to
In addition, the Company drew down in the selection of the arbitrators and
help lead the effort in country. The team
$5.2 million under a short-term finalisation of the terms of reference,
has done an excellent job having signed
unsecured $8 million loan note facility. which were only agreed in final form
up 25 customers to date, including power
By the end of the period VOG has between the parties on 19 October
LOIs, and has identified a total of over
invested a total of $103.7 million in 2012 and are expected to be signed
60 existing customers and prospects.
Logbaba and $41.6 million in West Med. shortly. We will vigorously defend the
Philip Rand stepped down as Non- claims and our UK and US lawyers view
Subsequent to the financial year-end,
Executive Director this year to pursue is that the forfeiture should be upheld.
the Company raised a further
another opportunity that requires a The arbitration is currently expected to
£3.15 million in equity. These
greater degree of international travel take place in June of next year.
additional funds were drawn as a bridge
and a full-time commitment. We are
to positive cash flow from operations at I would like to thank all VOG employees,
grateful for Philip’s service to the
Logbaba. The Company expects to my fellow Directors and contractors who
Company over a number of years and
reach positive cash flow for the Group have participated in our progress this year.
wish him well in his future endeavour.
going forward before the end of the year. We have had some really notable
Going forward, we are also looking to achievements and I look forward to
In addition, the Company is currently
strengthen the Board with the expected carrying on our work together to
negotiating a large senior secured
addition of one or two directors in the continue to optimise our asset base going
revolving credit facility with a top-tier
near future, including an active search forward. I would also like to thank all our
financial institution to fund its ongoing
for a CEO to lead the Company into its shareholders for your continued support
capital requirements at Logbaba and to
next growth phase. of the Company. I believe the next 12
support the Group’s working capital.
months will bring some very exciting
VOG’s strategy for the next 12-18
Corporate news flow and developments and I
months is to complete Phases 2 and 3 of
The Board seeks to maximise sincerely hope you will continue to
the pipeline for Logbaba and achieve
shareholder returns when considering support us as we make this happen.
sales volumes of 20 mmscf/d. The
financial solutions for its ongoing capital
Company also hopes to announce within
requirements. The Company constantly
this time frame a farm-out of West Med
reviews asset and corporate investment Kevin Foo
to cover the next drilling programme
opportunities that will increase our Chairman
anticipated in the winter of 2013/2014.
exploration and production portfolio


Review of Operations

Ground-breaking Gas and Power in

Review
Cameroon
VOG has pioneered the first ever onshore gas delivery network to
industry in Cameroon. Having completed production drilling,

Governance
conceptual design and FEED, VOG set about implementing the
downstream elements of the Logbaba project in financial year 2012.
The Logbaba project involves taking high pressure gas from the The pipeline route of way has been selected to
wells, processing it to clean it, removing condensate and then minimise disruption to the population with the
majority of the pipeline running parallel to the
distributing it through a low pressure pipeline network to our state railway line or along public highways.

Accounts
customers. Meanwhile, appraisal of VOG’s West Med discovery took
a big step forward with the completion of its Early Production
Scheme project plan and its approval by the relevant authorities.
This scheme will pave the way to realising the full potential of the
1.4 billion barrels of oil equivalent prospective resources in VOG’s

Other information
West Med licence area.

Logbaba, Cameroon July and 900mm of rain in August. By VOG required a minimum daily average
95% interest September 2011, the production tree throughput of 0.5 mmscf/d. While total
assembly work for the wells had been gas thermal and power demand at the
Downstream Operational
completed and we had installed the first Magzi estate is anticipated to be in
Achievements
1.2km section of pipeline. At the site, excess of 5 mmscf/d over the next two
The financial year ended 31 May 2012
36 of the foundation piles were years, sufficient customers were neither
marked a period of tremendous
completed to a depth of 10 metres. converted nor ready at this time to take
operational progress on the ground.
Meanwhile, our gas plant contractor, gas so the Company put the process
You will recall that the Company was
Expro, had completed testing of the plant into standby mode after
awarded its Exploitation Authorisation
majority of the equipment at their base commissioning.
for Logbaba via Presidential Decree in
including process plant vessels, flow
April 2011, just before the last financial VOG continued the pipeline expansion
lines and ancillary equipment.
year end. This enabled the Company to northward to the city of Douala and
Specifications and sizing of PRMS units
embark on the downstream elements of completed the Phase 1 pipeline area of
for the first 20 customers had also been
the project which consisted of: 13.2km in May 2012 which is shown as
completed and the first nine units were
> Re-opening wells La-105 and the red line on the map on page 4.
being shipped into country.
La-106; In July 2012, the Company announced
> Trenching, jointing, installation and After the end of the rainy reason, work that the first three customers had
commissioning of the gas pipeline continued at a more rapid pace and by completed their gas conversion
network; December 2011, VOG had fully requirements and were taking gas
> Installation and commissioning of installed and commissioned the process with an average daily demand of
the process plant; and plant, commissioned the wells and 0.7 mmscf/d.
> Installation of pressure reduction, completed the first 4.5km of pipeline.
Recently, the Company received the
metering stations and boiler This enabled the Company to deliver
results of an independent gas market
conversions on customer premises. first gas to a customer on the Magzi
study carried out by Challenge. This was
estate by the end of December 2011
In June 2011, pipeline and civil commissioned at the request of a
during the commissioning process. This
contractors were mobilised, excavation financial institution as part of a financing
was a very creditable achievement for a
works commenced on our site for the package that is currently under
Company of our size and the result of
processing facilities and work began on negotiation. This report was a
hundreds of thousands of VOG
the production trees and baseline tremendous endorsement of
employee and contractor man hours.
caliper logs to prepare the wells for management’s projections and strategy
commissioning. To satisfy the minimum throughput and outlined a very robust demand curve
conditions of the processing plant, sized for gas and gas-fired power. Challenge
The works progressed satisfactorily over
at 20 mmscf/d for each of two also referred to successful analogues in
the next few months despite very tough
production trains, and to operate safely Tanzania and Ivory Coast and concluded
and almost unprecedented weather
and commercially on a continuous basis, that the Company is competitively well
conditions with 1,600mm of rain in


Review of Operations continued

Logbaba Gas Reserves, 100% Basis (bcf)

Category Oct 10
Health and safety is a key driver of the Logbaba Field
Group’s operational performance. In Logbaba Proved Reserves (1P) 49
2012, the Company has recorded over Proved + Probable Reserves (2P) 212
500,000 man hours from VOG employees Proved + Probable + Possible
Reserves (3P) 350
and contractors with just two lost-time
Entire Logbaba Block
incidents. Prospective Resources >1,000

placed vis-a-vis other gas exploration and did not test the fourth well when it had calculated 1P reserve volumes of
appraisal activity in Cameroon. encountered further gas as it was 39.2 bcf of gas and 0.62 mmbbls of
targeting oil). condensate and 1C resources of
As of today’s date, we have four
32.7 bcf of gas and 0.52 mmbbls of
customers taking gas with a combined There is considerable resource potential
condensate. ERCE employed standard
demand in excess of 1 mmscf/d and by in the remaining areas of the Logbaba
petroleum evaluation techniques,
December 2012, we are forecasting a Block which are thought to share the
following the guidelines outlined in the
year-end production rate of 5 mmscf/d. same geology. This potential has been
2007 Petroleum Resources Management
This will include the first gas to power in part confirmed by results of our
System. The Logbaba Formation is
units in country. passive seismic survey which provided
divided into Upper and Lower sections,
the first new geophysical information to
We have also completed installation of and ERCE has assigned most of the
be acquired over Logbaba since the
the tanker loading facility which was proved reserves to the Upper Logbaba
discovery was made in the 1950s. These
installed at the Logbaba production formation. ERCE has assigned the
survey findings are in line with our
plant for export of condensate. Tankers additional recoverable volumes it has
geological understanding of the
with a 36,000 litre capacity export calculated for the Lower Logbaba as 1C
Logbaba reservoir sands and correlate
condensate to the Limbe refinery Contingent Resources pending the
well with data from the four old wells
located 60km away. To date, we have outcome of a satisfactory remediation and
and the newly drilled wells, La-105 and
exported five tanker loads to the refinery. testing programme which demonstrates
La-106. Of particular interest, the
that improved flow rates can be
results highlight a major potential
Subsurface and Geology achieved from the Lower Logbaba.
hydrocarbon accumulation around 2km
The Company holds a 95% working
from the new wells surface location. Despite a reduction in the currently
interest and is operator in the Logbaba
This exploration prospect, which lies bookable 1P Reserves, ERCE’s
Block. The Company’s internal reserves
entirely within the Company’s licence independent assessment represents a
and resources estimates at Logbaba
block, could be substantially larger than 50% increase in aggregated 1P Reserves
were reconfirmed in 2012 by
the existing discovery and has not been and 1C Contingent Resource gas
Blackwatch Petroleum Services Limited,
seen in any previous subsurface studies, volumes compared to the Company’s
(“Blackwatch”), the Company’s
due to the lack of geophysical data. internal estimate, which comprises
retained consultants. The Proved and
Technical 1P Reserves of 46.7 bcf in the
Probable (2P) gas reserves in the Separately, as part of ongoing
Upper and Lower Logbaba, but carries
Logbaba field are contained in discussions with a financial institution
no 1C Contingent Resources.
Campanian and Santonian age sands of regarding a senior secured debt facility,
the Logbaba Formation. All six of the VOG was requested to carry out an A summary of the estimated reserves
wells drilled to date in the Logbaba independent CPR of the Company’s and resources under different
block have encountered significant gas proved reserves. The Company classifications that the Company is
intervals and all of the five wells that contracted ERCE and in October 2012, carrying for Logbaba is highlighted in
were tested flowed gas to surface (Elf the Company announced that ERCE the table above.



Review
Governance
At West Med, further to approval of the Consultants at Mineral leading the VOG technical
team through their seismic reprocessing and
Early Production Scheme by the Russian geological modelling study findings.

Ministry of Natural Resources in August

Accounts
2012, we have a well-defined project and
scope of works for the next three years and
the Company is gearing up for an exciting
period ahead.

Other information
West Medvezhye, Russia 2012 and a work programme including well design as well as studies of the
100% interest a two-well drilling campaign was terrain, soil mechanics, access and
The West Med block is located near the approved by the authorities. The wells ecological issues.
Yamal Peninsula, North West Siberia, in are set to target the Jurassic discovery
During the period, work continued on
one of the most prolific gas producing horizons successfully encountered by
conceptual screening and development
areas in the world and is adjacent to the Well-103 and also new hydrocarbon
studies to monetise West Med’s large
giant Medvezhye and Urengoy fields. potential horizons in the Lower
prospective resources and to exploit the
The Company holds a licence for West Cretaceous Achimov layers (Exhibit 2)
Well-103 discovery to generate cash
Med covering 1,224km2, and has a identified by Mineral as highly
flow. In January 2012, VOG contracted
discovery well, Well-103, with ‘C1 plus prospective.
LLC Nefteproject, based in Tyumen,
C2’ reserves of 14.4 million boe under
The drilling design contract for these Russia to develop a project plan for an
the Russian classification system.
planned wells was awarded to CJSC early production scheme for the
Operational progress during the “TjumenNIPIneft” in March 2012. discovery area around Well-103. This
financial year was excellent. Following a The scope of work includes detailed project was completed and agreed by
seismic reprocessing and geological
modelling study commissioned in
February 2011, the Company reported Exhibit 2: A Schematic of Formation of the Achimov Strata Deposits.
in September 2011, that independent
reserve auditors, Mineral had confirmed
a 300 million boe increase in gross
prospective resources to 1.4 billion boe,
comprising 670 mmbbls of oil and
730 million boe of gas and condensate.

Mineral is a leading consultant in Russia
for this specialised geological work and
has an excellent proven track record in
Siberia where our West Med block is
located. We believe its updated
assessment of over 1.4 billion boe is of
major significance and demonstrates the
very high exploration potential of our
West Med block.

This programme was presented to the
Yamal District regional petroleum
authorities in Salekhard in February


West Medvezhye: History & Market Context

VOG completed its acquisition of ZAO SeverGas-Invest (“SGI”) While the 103 discovery well proved hydrocarbons in the
which owns a 100% interest in West Medvezhye in 2005. In Jurassic formation in a small area of the licence, there remains
2006, independent reserve auditors DeGolyer and large hydrocarbon potential in other parts of the licence area
MacNaughton attributed best estimates for the total yet to be explored. In 2008, VOG’s new technical team
prospective recoverable resource volumes for the 1,224km2 launched a studies and data acquisition programme integrating
licence of approximately 1.1 billion boe. the Company’s existing seismic and well data with additional
data from conventional and new advanced technologies.
Following an unsuccessful three-well drilling programme in
2005/2006 where VOG, under previous stewardship, targeted This programme comprised direct Hydrocarbon Indication
the shallow gas horizons on the north east flank of the licence technologies including passive seismic Infrasonic Passive
where large discoveries had been proved in the neighbouring Differential Spectroscopy (IPDS), usually referred to as Passive
Medvezhye licence area (SGI found hydrocarbon presence but Seismic, and Gas Tomography which is primarily based on
in non-commercial quantities), discovery Well-103 was drilled surface geochemistry. This technology programme was
in 2006/2007 in a more central location of the licence area, to a implemented in two stages over two years. This new data was
total depth of around 3,900 metres and intersecting two correlated with the data from the existing wells and seismic in
hydrocarbon-bearing intervals in the Jurassic (J2) and order to re-map structures and re-model the subsurface geology.
Bazhenov at depths of between 3,718 and 3,794 metres. Both stages were completed successfully and the results showed
strong correlation with the 2D seismic and Well-103 data.
This was a major step forward for the Company as the
presence of an operating petroleum system enabled VOG to Further to these positive results, in February 2011, the
successfully apply for exploitation status of the licence. Company commissioned a seismic reprocessing and
However, the discovery Well-103 intersecting the very edge of geological modelling study to be carried out by a Russian
the reservoir was relatively modest enabling us to book C1 and geoscience consulting institute, Mineral.
C2 reserves in 2008 of 14.4 million boe. This was approved by
the Russian Ministry of Natural Resources under the Russian
Classification system (C1 and C2 being broadly analogous to Exhibit 3: 103 discovery area and previous drill targets in north east flank
Proved Probable and Possible Reserves under Western of the licence area.
conventions).

There exists several routes for the commercialisation of the
West Med hydrocarbons. The neighbouring town of Nadym
is located 44km away with access by all-weather road
where there exists a domestic market for crude and
condensate. The Chircha railroad station is located within
the south west boundary of the licence and the river port
and loading terminal of Old Nadym are located 22km away.
From the river port, crude can be barged to the Obskaya
Bay and shipped in the summer season via tanker to
Rotterdam. For gas, one of Gazprom’s principal gas
transmission pipelines in the area runs along the eastern
border of the licence and the nearest Central Gas
Processing Unit is located 18.5km from West Med.



Review
West Med is located near the Yamal
Peninsula, in North West Siberia, in
one of the most prolific gas producing
areas in the world

Governance
Accounts
Other information
the Company in April 2012. Further to > Screening, qualification and final
submission of the report to the Russian selection of contractors including
Ministry of Natural Resources, the drilling companies, well logging and
project plan was approved in August facilities companies; and
2012. The scheme established costs and > Acquisition of all necessary consents
schedules for oil, gas and condensate and permits for drilling.
production facilities and supporting
Based on this preliminary assessment
infrastructure. The gathering and
work on the Well-103 discovery, the
distribution network design and
Company is currently planning for first
engineering will be phased with facilities
oil sales via an early production scheme
design, starting with fast track
in 2016. Following the Company’s
development of the Well-103 discovery.
decision to farm-out a portion of its
Work has continued on the drilling interest in West Medvezhye, a data
design project but the current estimate room has been prepared and initial
for completion of this project, which potential candidates have been screened
includes public consultations and in anticipation of concluding a farm-out
permitting approvals, is not anticipated by Q4 2013.
until February 2013. This will not give
the Company sufficient time to mobilise
drilling operations in the coming winter Radwan Hadi
period. As a result, the Company now Chief Operating Officer
anticipates postponing its two-well (Radwan Hadi is also a Director of
drilling programme until the winter of Blackwatch)
2013/2014.
Neil Kendrick
Notwithstanding this, the Company
Director of Projects
will continue to advance the West Med
early production project over the
coming 6-12 months. Works
outstanding prior to the next drilling
campaign include:
> Completion of the drilling design
project estimated in Q1 2013;
> Completion of a winter road and a
drill pad in Q1 2013;


Directors’ Biographies

Kevin Foo MSc, DIC, Dip Met, MIMMM Grant Manheim Austen Titford ACA
Chairman Deputy Chairman Executive Director
Kevin Foo has had a 40-year career in Grant Manheim has extensive financial Austen Titford is a Chartered
all aspects of mining, including experience in the City of London, Accountant with more than 20 years’
technical, operational and project gained over 38 years at a top-tier financial and commercial experience
management and has run several public investment bank. In addition to his working for FTSE 100 and AIM-
companies. He has worked on five financial experience, he also has quoted natural resource companies,
continents including 20 years in knowledge of the oil and gas sector including: Lonrho plc, LASMO plc,
Kazakhstan and Russia and is a specialist having been the Chairman of the BHP Billiton plc and Celtic Resources
in the development of mines in the executive committee of a company Holdings plc. He has worked on
FSU. He was formerly the Chairman of whose business was investment in, and projects in Africa, Iran, Russia and
Bramlin Limited, Eureka Mining plc development of, oil and gas properties Central Asia and brings a broad mix of
and Managing Director of Celtic in the United States. financial experience, covering both the
Resources Holdings plc, all AIM- project development and operational
quoted resource companies. He helped Robert Palmer FCA phases.
build Celtic from a sub-£1 million Finance Director
market capital company in 1999 to the Robert Palmer is a Chartered
point where it was taken over by a Accountant. He combines his role as
Russian group in 2007 for £170 million Finance Director with his position as a
cash. senior partner in a consultancy-based
accountancy practice where he
specialises in providing financial advice
to small- and medium-sized enterprises.
He holds a number of directorships in
private companies.


Senior Management Biographies

Review
Radwan Hadi Martin Devine Eckhard Müller
Chief Operating Officer Commercial Manager, London General Manager, Russia
Radwan Hadi is a petroleum/reservoir Martin Devine has over 12 years’ oil Eckhard Müller has 35 years’ experience
engineer with over 30 years’ experience and gas experience, including four in exploration and production,
in the upstream oil and gas industry. He years’ investment banking as a Senior including four years as Chief Geologist
has worked on a broad range of Associate with JP Morgan Chase. He for KazGerMunay and six years as a
integrated projects including reserves has substantial Mergers and senior geologist with Gaz de France.

Governance
estimation, development planning and Acquisitions transactional experience, as He has been responsible for
asset valuation. Hadi has worked on well as debt advisory and oil and gas development projects in Germany,
numerous projects in the Middle East, client coverage exposure. Devine has Mongolia, Kazakhstan and Russia and
Europe, South East Asia, and Africa. also held senior positions with Dana has held the position of General
Specifically in Africa, he has worked on Petroleum plc and El Paso Energy Inc. Manager, Russia with Victoria for over
projects in the Cameroon, Equatorial five years.

Accounts
Guinea, Ghana, Mauritania, Mali and Honoré Mbouombouo Daïrou
Ethiopia. Deputy Managing Director, Cameroon Vladimir Andreyev
Honoré Mbouombouo Daïrou has over Chief Engineer, Russia
Jonathan Scott-Barrett 13 years’ oil and gas industry Vladimir Andreyev has over 30 years’
Managing Director, Cameroon experience as a petroleum engineer. oil and gas industry experience.
Jonathan Scott-Barrett is a Chartered Daïrou has graduated with a Master of Andreyev graduated from Kuybishev

Other information
Surveyor with substantial natural Science degree in Petroleum Polytechnic (Oil Faculty) as a Mining
resources expertise. He is a former Geosciences from the University of Engineer. He began his career as a
Executive Director of Celtic Resources Aberdeen; a Master of Science degree in drilling operator in a large Russian
Holdings plc and a former Chief Mining and Petroleum Geology from drilling organisation where he worked
Executive Officer of the London AIM- the University of Yaoundé 1, his way to the position of Chief
listed mining company Eureka Mining Cameroon; and a Master of Philosophy Engineer. Andreyev also spent over 20
plc. Scott-Barrett was formerly a in Environmental Management from years as Production Manager for
non-executive director of the the University of Stellenbosch, South Rosneft (formerly YuKos), before
$13 billion conglomerate Hanson plc. Africa. Daïrou has worked on numerous joining the Company as Chief Engineer
Having previously held the position of international exploration, production in 2007.
Commercial Director in Victoria’s and environmental operations as a
London office, Scott-Barrett, a fluent consultant prior to joining the
French speaker, has taken on the Company in 2009.
Country Manager position in
Cameroon since the beginning of 2011. Divine Mofa
Operations Manager, Cameroon
Neil Kendrick Divine Mofa has more than 17 years of
Director of Projects, London oil and gas industry experience. A
Neil Kendrick is a professionally graduate from Prairie View A&M
qualified Mechanical Engineer and University in the USA, he has led
Project Manager. Kendrick has held various engineering projects
several senior management and accountable as project manager and
executive level positions over the past engineer for the technical, financial and
25 years with both public and private commercial aspects of offshore and
companies in the oil and gas sector. His onshore field exploration and
most recent role was as project manager development operations. Mofa has held
for Expro where he was responsible for senior positions with J Ray McDermott,
the on-time supply, installation and Oceaneering and Alseas.
commissioning of Victoria’s Logbaba
gas plant in 2011.


Directors & Other Information

Current Directors Auditors Nominated Adviser
Kevin Foo, Chairman Deloitte & Touche Strand Hanson Limited
Grant Manheim, Deputy Chairman Deloitte & Touche House 26 Mount Row
Robert Palmer, Finance Director Earlsfort Terrace London
Austen Titford, Executive Director Dublin 2 W1K 3SQ
Ireland
Company Secretary Brokers
Leena Nagrecha Bankers Fox-Davies Capital Limited
HSBC plc 1 Tudor Street
Company Number 60 Queen Victoria Street London
5139892 London EC4Y 0AH
EC4N 4TR
Registered Office Macquarie Capital (Europe) Limited
Victoria Oil & Gas Plc Solicitors Ropemaker Place
1st Floor Kerman & Co LLP 28 Ropemaker Street
Hatfield House 200 Strand London
52/54 Stamford Street London EC2Y 9HD
London WC2R 1DJ
SE1 9LX Registrars
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY


Directors’ Report

Review
The Directors present their Annual Report and the audited Directors’ remuneration
financial statements for the year ended 31 May 2012. An analysis of Directors’ remuneration is given in Note 11 of
the financial statements.
Principal Activities, Business Review and Future
The Company has a discretionary share incentive scheme
Developments
whereby fully paid shares can be awarded by the Trustees of
The principal activities of the Group are oil and gas
the Employee Share Ownership Plan (“ESOP”) as a long-
exploration and development in West Africa and the Former

Governance
term incentive for the Directors, senior managers and staff.
Soviet Union. The focus of activities in the year has been
Under this scheme, the ESOP subscribes for shares up to a
mainly the development of the Logbaba gas and condensate
limit agreed annually by the shareholders. The Trustees of the
field in Cameroon.
ESOP subscribed for 63,500,000 shares during the year
The Group has an exploration project in Russia and a (2011: 48,101,590 shares). Discretionary awards of
development project in Cameroon. During the year, the 23,300,000 shares were made during the year (2011: Nil).

Accounts
exploration and evaluation assets associated with the Logbaba
A copy of the Service Agreement for each Director is available
gas and condensate project in Cameroon were transferred to
for inspection at the Company’s Registered Office.
property, plant and equipment as, in the opinion of the
Directors, the project has now achieved technical feasibility
Corporate Governance
and commercial viability following commencement of
The Directors support high standards of corporate
commissioning of the production facilities and the gas
governance and are committed to managing the Company in

Other information
pipeline network. Refer to Notes 14 and 15 to the Annual
an honest and ethical manner. The Company is not subject to
Report for further details.
the UK Corporate Governance Code May 2011, but where
The Group operates through overseas branches and subsidiary practical and appropriate for a company of this size and
undertakings as appropriate to the fiscal environment. nature, the Company takes account of the UK Corporate
Significant subsidiary undertakings of the Group are set out Governance Code May 2011 and the recommendations on
in Note 17. Operations are funded on a monthly basis from corporate governance of the Quoted Companies Alliance.
funds held centrally in the Group and against monthly cash
The Board seeks to ensure that the Company is managed in
calls by each operation.
an efficient, effective and entrepreneurial manner for the
A detailed review of the significant developments and benefit of all shareholders over the longer term.
operating activities of the Group, as well as the business
environment, future prospects and the main trends and Board
factors that are likely to affect the future development, During the year, the Board of Directors was comprised of the
performance and position of the Group’s business are Chairman, three Executive Directors (including the Finance
contained in the Chairman’s Statement and the Review of Director) and one Non-Executive Director. The Chairman,
Operations. Kevin Foo, is responsible for leadership of the Board as well as
running the Company’s business, where he is assisted by
Results and Dividends other Board members in formulating strategy and delivery
The results for the year, and the Group’s financial position at once agreed by the Board. The structure of the Board ensures
the end of the year, are shown in the attached financial that no one individual dominates the decision making
statements. The Directors do not propose that a dividend be process. The Directors have significant and relevant resource
paid (2011: Nil). exploration and production experience together with finance
and corporate development skills. Summary biographies for
Directors each Director are set out on page 16. Following the
The following Directors held office at the year end: resignation of Philip Rand on 28 August 2012, after his
appointment as Managing Director of Allied Energy plc, the
Executive Directors Company is taking active steps to find a replacement
Kevin Foo non-executive director as soon as possible. It is expected that
Grant Manheim the Board will be strengthened with further appointments in
Robert Palmer the future as the Company continues to grow.
Austen Titford
The Board meets at least six times each year, providing effective
leadership and overall management of the Group’s affairs. The
Non-Executive Director
Board approves the Group’s strategy and investment plans and
Philip Rand (resigned 28 August 2012)
regularly reviews operational and financial performance and risk
management matters. A schedule of matters reserved for Board
decision is maintained. This includes the approval of the
budget and business plan, major capital expenditure,
acquisitions and disposals, risk management policies and the
approval of the financial statements.


Directors’ Report continued

Formal agendas, papers and reports are sent to the Directors in Relations with shareholders
a timely manner prior to Board meetings. The Board delegates The Directors attach great importance to maintaining good
certain of its responsibilities to the Board committees, listed relationships with the shareholders. Extensive information
below, which have clearly defined terms of reference. about the Company’s activities is included in the Annual
Report and Accounts and the Interim Report. The Chairman
All Directors have access to the advice and services of the
also issues an update letter to shareholders from time to time.
Company’s solicitors and the Company Secretary, who is
Market sensitive information is regularly released to all
responsible for ensuring that all Board procedures are followed.
shareholders in accordance with Stock Exchange rules for
Any Director may take independent professional advice at the
AIM-listed companies. The Group is active in communicating
Company’s expense in the furtherance of his duties.
with both its institutional and private shareholders and
One-third of the Directors retire at each Annual General welcomes queries on matters relating to shareholders and the
Meeting of the Company and each may be re-elected. activities of the Group. The Annual General Meeting provides
Furthermore, every Director must stand for re-election once an opportunity for all shareholders to communicate with and
every three years. A Director appointed by the Board must to question the Board on any aspect of the Group’s activities.
also stand for election at the next shareholders’ meeting. The Company maintains a corporate website where
information on the Company is regularly updated, including
At present, the Board does not consider a nominations
Annual and Interim Reports and all announcements.
committee necessary. When appropriate, any decision will be
taken on a clearly defined basis by the Board as a whole.
Corporate social responsibility
The Group is subject to best practice standards and extensive
Audit committee
regulations, which govern environmental protection. The
The audit committee was chaired by Philip Rand, the
Group is committed to uphold these standards and
Non-Executive Director, during the year and meets at least
regulations as a minimum and to keep these important
twice a year. It is responsible for ensuring that the financial
matters under continuous review. When appropriate, adequate
activities of the Group are properly monitored, controlled and
action and provision is immediately taken to ensure full
reported on. It meets the external auditors and reviews
compliance with the standards expected of an international oil
reports from the external auditors. Its full terms of reference
and gas exploration and production company.
are available on request and include: the review of the annual
and interim financial statements and of accounting policies; The Group undertakes Environmental Impact Assessments
the review with management of the effectiveness of internal before each development and uses external consultants to
controls; and the review with the Group’s external auditors of advise on appropriate actions and procedures.
the scope and results of their audit. Grant Manheim has
The Group aims to minimise the use of natural resources,
replaced Philip Rand as Chairman of the audit committee
such as energy and water, and is committed to full
with effect from 28 August 2012. Kevin Foo is the second
reinstatement as part of its environmental obligations.
member and Robert Palmer attends the committee meetings
by invitation. The Group works towards positive and constructive
relationships with government, neighbours and the public,
Remuneration committee ensuring fair treatment of those affected by the Group’s
During the year, the remuneration committee consisted of operations.
Grant Manheim, the Deputy Chairman, Philip Rand, the
In particular, the Group aims to provide employees with a
Non-Executive Director and Robert Palmer, the Finance
healthy and safe working environment whilst receiving
Director. The committee sets the scale and structure of the
payment that enables them to maintain a reasonable lifestyle
Executive Directors’ remuneration and that of senior
for themselves and their families.
management and the basis of their service agreements with due
regard to the interests of shareholders. In determining the As part of our work programme, the Group is keen to
remuneration of the Executive Directors and senior establish Community Development Projects, including
management, the committee seeks to ensure that the Company provision of local employment and skills training
will be able to attract and retain executives of the highest opportunities.
calibre. It will make recommendations to the full Board
concerning the representations to be made to the ESOP for the Risks and Uncertainties
allocation of incentive shares to employees. No Director The Group is subject to a number of potential risks and
participates in discussions or decisions concerning his own uncertainties, which could have a material impact on the
remuneration. The Deputy Chairman replaced Philip Rand as long-term performance of the Group and could cause actual
Chairman of the remuneration committee with effect from results to differ materially from expectation. The following
28 August 2012. The Finance Director is the second member. risk factors, which are not exhaustive, are particularly relevant
to the Group’s activities:
The Chairman of the committee will attend the Annual
General Meeting and respond to any shareholder questions
on the committee’s activities.



Review
Title to assets operations in US Dollars and therefore it is exposed to
Title to oil and gas assets in Russia, Kazakhstan and fluctuations in the relative values of the US Dollar, Russian
Cameroon can be complex and may be disputed. Rouble, the Central African Franc, Euro and Sterling.

Licence obligations Political risk
Operations must be carried out in accordance with the terms The Group’s principal assets are currently located in Russia
of each licence, field development plan, annual work and Cameroon and therefore the Group is exposed to

Governance
programme and budgets agreed with the relevant ministry for country specific risks such as the political, social and economic
natural resources in the host country. Typically, the law stability of these countries.
provides that fines may be imposed and operations suspended,
amended or terminated if a contractor fails to comply with its Financial risk management
obligations under such agreements or fails to make timely Details of the Group’s financial risk management policies are
payments of levies and taxes for the sub-soil use, or provide set out in Note 29.

Accounts
the required geological information or meet other reporting
requirements. Key Performance Indicators (“KPI”)
The Group is in the exploration phase of the West Medvezhye
Requirement for further funding gas project and the development phase of the Logbaba gas
The Group may require additional funding to implement its and condensate project, so the relevant KPIs relate to the
exploration and development plans as well as finance its discovery and development of economic oil and gas deposits

Other information
operational and administrative expenses. There is no in Russia and Cameroon.
guarantee that future market conditions will permit the
Accordingly, the Directors believe that the relevant KPIs are
raising of the necessary funds by way of issue of new equity,
capital expenditure and net cash flow. This information is set
debt financing or farming out of interests. If unsuccessful, this
out in the financial statements together with comparative
may significantly affect the Group’s ability to execute its long-
information for the previous year.
term growth strategy.
The relevant non-financial KPIs are the level of proven and
Geological and development risks probable reserves and resources. These are derived from
Exploration activities are speculative and capital intensive and reports obtained from expert third-party advisers as well as
there is no guarantee of identifying commercially recoverable from the Group’s internal calculations.
reserves.
Capital expenditure incurred is a reflection of the exploration
and development activity of the Group. During the year,
Price of crude oil and gas
additions to intangible and tangible assets amounted to
Substantially all of the Group’s revenues will come from the
$23.4 million, of which $22.8 million relates to the Logbaba
sale of oil and gas. The price of oil and gas is volatile and
gas development in Cameroon and $0.6 million to the West
influenced by factors beyond the Group’s control. These
Medvezhye exploration project in Russia.
factors include levels of supply and demand, exchange rates
and political events. The price for gas is, in addition, Net cash inflow from financing activities for the year was
influenced by more regional factors such as proximity to a $20.3 million compared to $29.7 million for the previous
market and the local cost of alternative fuels. period. The prime source of cash inflow has been through the
issuance of new equity shares and loans from third parties.
Additionally, licence conditions and local legislation may
require production to be sold locally and at a significant
Going Concern
discount to world prices.
The Directors have given careful consideration to the
appropriateness of the going concern basis in the preparation
Tax risk
of the financial statements. The validity of the going concern
The Group is subject to local and national taxes, which are
concept is dependent on finance being available for the
subject to frequent change. The legislation often lacks clarity
working capital requirements of the Group in order to finance
and there is the added risk of receiving substantial fines for
the continuing development of its existing projects. Sufficient
non-compliance.
funds are available in the short term to fund the working
capital requirements of the Group. The Directors believe that
Exchange rate risk
this will enable the Group and the Company to continue in
Whilst future sales are likely to be denominated in local
operational existence for the foreseeable future and to
currency, a significant consideration in determining the selling
continue to meet obligations as they fall due. Further
price is the movement in the world price for oil, which is US
information in respect of going concern considerations is set
Dollar denominated. The Group’s expenses, which are
out in Note 3.
primarily to contractors on exploration and development, are
incurred primarily in US Dollars but also in Russian Roubles,
the Central African Franc, which is tied to the Euro, Sterling
and Euros. The Group’s policy is to conduct and manage its



Property, Plant and Equipment Annual General Meeting
In the opinion of the Directors, the Group’s property, plant The Annual General Meeting of the Company will be held in
and equipment have a value in excess of the Balance Sheet London on 29 November 2012. A Notice of the Meeting is
figure. Details of movements in such assets are shown in Note set out on pages 63 to 64. The Notice contains special
15 to the financial statements. business relating to the renewal of authority for the Board to
allot shares and the dis-application of statutory pre-emption
Creditor Payment Policy rights on equity issues for cash. Shareholders should complete
It is the Group’s normal policy to agree the terms of payment the Proxy Form received by post and also available on the
at the start of business with each supplier, ensure that Company’s website (www.victoriaoilandgas.com) in
suppliers are aware of the terms of the payment, and pay in accordance with the Notes contained in the Notice of Annual
accordance with contractual obligations and normal business General Meeting.
practice.
By Order of the Board,
Charitable and Political Donations
The Company made no political or charitable contributions Leena Nagrecha
during the year (2011: Nil). 24 October 2012

Directors’ Indemnities
The Company maintained Directors’ and officers’ liability
insurance during the year and it remains in force at the date of
this report.

Subsequent Events
Subsequent events which have occurred since 31 May 2012
are included in Note 35 to the attached financial statements.

Auditors
To the best of the Directors’ knowledge and belief, and
having made appropriate enquiries of other officers of the
Company, all information relevant to enable the auditors to
provide their opinion on the financial statements has been
provided. The Directors have taken all reasonable steps in
order to ensure their awareness of any relevant audit
information and to establish that the Company’s auditors are
aware of any such information. This confirmation is given and
should be interpreted in accordance with the provisions of
s418 of the Companies Act 2006.

A resolution to re-appoint the auditors, Deloitte & Touche,
will be proposed at the Annual General Meeting.


Statement of Directors’ Responsibilities

Review
The Directors are responsible for preparing the Annual Responsibility Statement
Report and the financial statements in accordance with We confirm that to the best of our knowledge:
applicable laws and regulations. > the financial statements, prepared in accordance with
International Financial Reporting Standards, give a true
Company law requires the Directors to prepare such financial
and fair view of the assets, liabilities, financial position and
statements for each financial year. Under that law, the Directors
profit or loss of the Company and the undertakings
are required to prepare the Group financial statements in
included in the consolidation taken as a whole; and

Governance
accordance with International Financial Reporting Standards
> the management report, which is incorporated into the
(“IFRSs”) as adopted by the European Union and have also
Directors’ Report, includes a fair review of the
chosen to prepare the Company financial statements under
development and performance of the business and the
IFRSs as adopted by the EU. Under company law, the
position of the Company and the undertakings included in
Directors must not approve the financial statements unless they
the consolidation taken as a whole, together with a
are satisfied that they give a true and fair view of the state of
description of the principal risks and uncertainties that

Accounts
affairs of the Company and of the profit or loss of the
they face.
Company for that period. In preparing these financial
statements, International Accounting Standard 1 requires that
By order of the Board
the Directors:
> properly select and apply accounting policies;
Kevin A. Foo Robert Palmer
> present information, including accounting policies, in a
Chairman Finance Director

Other information
manner that provides relevant, reliable, comparable and
24 October 2012 24 October 2012
understandable information;
> provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the Company’s financial
position and financial performance; and
> make an assessment of the Company’s ability to continue
as a going concern.

The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to
ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.


Independent Auditor’s Report
to the members of Victoria Oil & Gas Plc

We have audited the financial statements of Victoria Oil & Gas Plc > the financial statements have been prepared in accordance
for the year ended 31 May 2012 which comprise the with the requirements of the Companies Act 2006.
Consolidated Income Statement, the Consolidated Statement of
Comprehensive Income, the Consolidated and Parent Company Emphasis of Matter
Balance Sheets, the Consolidated and Parent Company Without qualifying our opinion, we draw your attention to Notes
Statements of Changes in Equity, the Consolidated and Parent 3, 14, 15, 16, 17 and 18 of the financial statements concerning
Company Cash Flow Statements and the related Notes 1 to 35. going concern, the valuation of exploration and evaluation assets,
The financial reporting framework that has been applied in their the valuation of unlisted investments, the recoverability of other
preparation is applicable law and International Financial Reporting receivables and amounts due from subsidiaries. The realisation of
Standards (“IFRSs”) as adopted by the European Union and as exploration and evaluation assets of $58.2 million, property, plant
regards the Parent Company financial statements, as applied in and equipment of $131.3 million and unlisted investments of
accordance with the provisions of the Companies Act 2006. $6.6 million included in the consolidated Balance Sheet and
investments in subsidiaries of $70.9 million, amounts due from
This report is made solely to the Company’s members, as a
subsidiaries of $98.1 million included in the Company Balance
body, in accordance with Chapter 3 of Part 16 of the
Sheet is dependent on the successful development and
Companies Act 2006. Our audit work has been undertaken so
completion of the Logbaba gas project in the Cameroon and the
that we might state to the Company’s members those matters
successful discovery and realisation of intangible assets in respect
we are required to state to them in an auditor’s report and for
of the West Medvezhye project in Russia as outlined in Note 14,
no other purpose. To the fullest extent permitted by law, we do
including the ability of the Group to raise sufficient finance to
not accept or assume responsibility to anyone other than the
develop current projects. The financial statements do not include
Company and the Company’s members as a body, for our audit
any adjustments relating to these uncertainties and the ultimate
work, for this report, or for the opinions we have formed.
outcome cannot, at present, be determined.

Respective Responsibilities of Directors and Auditor
Separate Opinion in Relation to IFRSs as Issued by the
As explained more fully in the Directors’ Responsibilities
IASB
Statement, the Directors are responsible for the preparation of
As explained in Note 1 to the Group financial statements, the
the financial statements and for being satisfied that they give a
Group in addition to complying with its legal obligation to
true and fair view. Our responsibility is to audit and express an
apply IFRSs as adopted by the European Union, has also
opinion on the financial statements in accordance with
applied IFRSs as issued by the International Accounting
applicable law and International Standards on Auditing (UK
Standards Board (“IASB”).
and Ireland). Those standards require us to comply with the
Auditing Practices Board’s Ethical Standards for Auditors. In our opinion the Group financial statements comply with
IFRSs as issued by the IASB.
Scope of the Audit of the Financial Statements
An audit involves obtaining evidence about the amounts and Opinion on Other Matter Prescribed by the Companies
disclosures in the financial statements sufficient to give Act 2006
reasonable assurance that the financial statements are free from In our opinion the information given in the Directors’ Report
material misstatement, whether caused by fraud or error. This for the financial year for which the financial statements are
includes an assessment of: whether the accounting policies are prepared is consistent with the financial statements.
appropriate to the Group’s and the Parent Company’s
circumstances and have been consistently applied and adequately Matters on Which We Are Required to Report by Exception
disclosed; the reasonableness of significant accounting estimates We have nothing to report in respect of the following matters
made by the Directors; and the overall presentation of the where the Companies Act 2006 requires us to report to you if,
financial statements. In addition, we read all the financial and in our opinion:
non-financial information in the Annual Report to identify > adequate accounting records have not been kept by the
material inconsistencies with the audited financial statements. If Parent Company, or returns adequate for our audit have
we become aware of any apparent material misstatements or not been received from branches not visited by us; or
inconsistencies we consider the implications for our report. > the Parent Company financial statements are not in
agreement with the accounting records and returns; or
Opinion on Financial Statements > certain disclosures of Directors’ remuneration specified by
In our opinion: law are not made; or
> the financial statements give a true and fair view of the state > we have not received all the information and explanations
of the Group’s and of the Parent Company’s affairs as at we require for our audit.
31 May 2012 and of the Group’s loss for the year then ended;
> the Group financial statements have been properly prepared in Ciarán O’Brien
accordance with IFRSs as adopted by the European Union; Senior Statutory Auditor for and on behalf of Deloitte & Touche
> the Parent Company financial statements have been Chartered Accountants and Statutory Auditors
properly prepared in accordance with IFRSs as adopted by Deloitte & Touche House, Dublin, Ireland
the European Union and as applied in accordance with the
provisions of the Companies Act 2006; and 24 October 2012


Consolidated Income Statement
for the year ended 31 May 2012

Review
2012 2011
Notes $000 $000

Continuing operations
Administrative expenses (4,526) (5,099)
Foreign exchange (losses) and gains 5 (62) 765
Operating loss (4,588) (4,334)

Governance
Finance revenue 6 200 52
Finance costs 7 (3,337) (415)
Loss before taxation 4, 8 (7,725) (4,697)
Income tax expense 9 – –
Loss after taxation for the financial year (7,725) (4,697)

Accounts
Cents Cents

Loss per share – basic 13 (0.33) (0.26)
Loss per share – diluted 13 (0.33) (0.26)

Other information
Consolidated Statement of Comprehensive Income

2012 2011
$000 $000

Loss for the financial year (7,725) (4,697)
Exchange differences on translation of foreign operations (4,111) 2,404
Total comprehensive income/(loss) for the year (11,836) (2,293)


Consolidated Balance Sheet
as at 31 May 2012

2012 2011
Notes $000 $000

Assets:
Non-current assets
Exploration and evaluation assets 14 58,212 130,899
Property, plant and equipment 15 131,318 7,807
Unlisted investments 16 6,600 –
Trade and other receivables 18 – 27,640
196,130 166,346

Current assets
Trade and other receivables 18 1,805 3,125
Cash and cash equivalents 19 1,887 8,425
3,692 11,550
Held for sale assets 20 – 1,000
3,692 12,550
Total assets 199,822 178,896

Liabilities:
Current liabilities
Trade and other payables 21 (14,260) (14,079)
Borrowings 22 (7,440) (1,101)
Convertible loan – debt portion 23 (3,066) –
(24,766) (15,180)
Net current liabilities (21,074) (2,630)

Non-current liabilities
Borrowings 22 (3,178) –
Convertible loan – debt portion 23 – (884)
Derivative financial instruments 23 – (28)
Deferred tax liabilities 9 (6,599) (6,599)
Provisions 24 (13,099) (12,765)
(22,876) (20,276)
Net assets 152,180 143,440

Equity:
Called-up share capital 26 20,803 17,178
Share premium 200,059 183,867
ESOP Trust reserve 27 (860) (587)
Translation reserve (12,411) (8,300)
Other reserve 28 5,440 4,408
Retained earnings – deficit (60,851) (53,126)
Total equity 152,180 143,440

The financial statements of Victoria Oil & Gas Plc, registered number 5139892, were approved by the Board of Directors on
24 October 2012.



Company Balance Sheet
as at 31 May 2012

Review
2012 2011
Notes $000 $000

Assets:
Non-current assets
Property, plant and equipment 15 18 16
Unlisted investments 16 6,600 –

Governance
Investments in subsidiaries and advances 17 70,881 69,840
77,499 69,856

Current assets
Trade and other receivables 18 99,329 76,643
Cash and cash equivalents 19 1,236 7,876

Accounts
100,565 84,519
Total assets 178,064 154,375

Liabilities:
Current liabilities
Trade and other payables 21 (1,471) (1,641)

Other information
Borrowings 22 (5,041) (1,000)
Convertible loan – debt portion 23 (3,066) –
(9,578) (2,641)
Net current assets 90,987 81,878

Non-current liabilities
Convertible loan – debt portion 23 – (884)
Derivative financial instruments 23 – (28)
– (912)
Net assets 168,486 150,822

Equity:
Called-up share capital 26 20,803 17,178
Share premium 200,059 183,867
Other reserve 28 5,440 4,408
Retained earnings – deficit (57,816) (54,631)
Total equity 168,486 150,822

The financial statements of Victoria Oil & Gas Plc, registered number 5139892, were approved by the Board of Directors on
24 October 2012.



Consolidated Statement of Changes in Equity

Retained
earnings/
Share ESOP Trust Translation Other (accumulated
Share capital premium reserve reserve reserve deficit) Total
$000 $000 $000 $000 $000 $000 $000

At 31 May 2010 11,648 155,636 (293) (10,704) 3,828 (48,429) 111,686
Shares issued 5,530 30,667 – – – – 36,197
Share issue costs – (2,436) – – – – (2,436)
Shares purchased by ESOP Trust – – (370) – – – (370)
Shares granted to ESOP members – – 76 – – – 76
Recognition of share-based payments – – – – 580 – 580
Total comprehensive income/(loss)
for the year – – – 2,404 – (4,697) (2,293)
At 31 May 2011 17,178 183,867 (587) (8,300) 4,408 (53,126) 143,440
Shares issued 3,625 18,263 – – – – 21,888
Share issue costs – (2,071) – – – – (2,071)
Shares purchased by ESOP Trust – – (505) – – – (505)
Shares granted to ESOP members – – 188 – – – 188
Exchange adjustments – – 44 – – – 44
Recognition of share-based payments – – – – 1,032 – 1,032
Total comprehensive income/(loss)
for the year – – – (4,111) – (7,725) (11,836)
At 31 May 2012 20,803 200,059 (860) (12,411) 5,440 (60,851) 152,180

Share premium reserve
The share premium reserve comprises of the excess of monies received in respect of share capital over the nominal value of
shares issued, less direct and incremental share and debenture issue costs.

ESOP Trust reserve
The ESOP Trust reserve comprises of shares in the Company held by Victoria Oil & Gas ESOP Trust.

Translation reserve
The translation reserve represents the foreign exchange gain/loss on translation of financial statements of foreign subsidiaries.

Other reserve
The other reserve includes the share-based payment reserve and an amount of $2.9 million which was the difference between
the fair value on redemption and the redemption value of a convertible loan note settled in 2008. The loan was redeemed at par
and the carried value of the related embedded derivative was credited directly to reserves.

Accumulated deficit
Accumulated deficit comprises accumulated losses in the current and prior years.


Company Statement of Changes in Equity

Review
Retained
earnings/
Share Other (accumulated
Share capital premium reserve deficit) Total
$000 $000 $000 $000 $000

At 31 May 2010 11,648 155,636 3,828 (50,277) 120,835
Shares issued 5,530 30,667 – – 36,197

Governance
Share issue costs – (2,436) – – (2,436)
Recognition of share-based payments – – 580 – 580
Total comprehensive income/(loss) for the year – – – (4,354) (4,354)
At 31 May 2011 17,178 183,867 4,408 (54,631) 150,822
Shares issued 3,625 18,263 – – 21,888
Share issue costs – (2,071) – – (2,071)

Accounts
Recognition of share-based payments – – 1,032 – 1,032
Total comprehensive income/(loss) for the year – – – (3,185) (3,185)
At 31 May 2012 20,803 200,059 5,440 (57,816) 168,486

Share premium reserve

Other information
The share premium reserve comprises of the excess of monies received in respect of share capital over the nominal value of
shares issued, less direct and incremental share and debenture issue costs.

Other reserve
The other reserve includes the share-based payment reserve and an amount of $2.9 million which was the difference between
the fair value on redemption and the redemption value of a convertible loan note settled in 2008. The loan was redeemed at par
and the carried value of the related embedded derivative was credited directly to reserves.

Accumulated deficit
Accumulated deficit comprises accumulated losses in the current and prior years.


Consolidated Cash Flow Statement

2012 2011
Notes $000 $000

Cash flows from operating activities
Loss for the period (7,725) (4,697)
Finance costs recognised in the Income Statement 3,337 415
Investment revenue recognised in profit and loss (12) (52)
Depreciation and amortisation of non-current assets 485 16
Net foreign exchange gain/(loss) 106 (765)
Fair value gain on embedded derivatives (188) –
Value of shares vested by ESOP Trust 188 –
(3,809) (5,083)
Movements in working capital
Increase in trade and other receivables (943) (9,368)
Decrease in held for sale assets and inventories – 829
Increase in trade and other payables 9,293 2,565
Net cash generated from/(used in) operating activities 4,541 (11,057)

Cash flows from investing activities
Payments for exploration and evaluation assets (358) (8,721)
Payments for property, plant and equipment (23,445) (7,602)
Payment for investments (5,600) –
Interest received 12 52
Net cash used in investing activities (29,391) (16,271)

Cash flows from financing activities
Proceeds from issue of equity shares 14,666 31,596
Payment of equity share issue costs (1,039) (1,856)
Proceeds from borrowings 5,500 –
Repayment of borrowings (200) –
Payment of loan issue costs (497) –
Net cash generated from financing activities 18,430 29,740

Net (decrease)/increase in cash and cash equivalents (6,420) 2,412

Cash and cash equivalents – beginning of year 8,425 6,034
Effects of exchange rate changes on the balance of cash held in foreign currencies (118) (21)
Cash and cash equivalents – end of year 19 1,887 8,425


Company Cash Flow Statement

Review
2012 2011
Notes $000 $000

Cash flows from operating activities
Loss for the period (3,185) (4,354)
Finance costs recognised in the Income Statement 1,886 355
Investment revenue recognised in profit and loss (12) (52)

Governance
Depreciation and amortisation of non-current assets 6 16
Net foreign exchange gain 113 13
Fair value gain on embedded derivatives (188) –
(1,380) (4,022)
Movements in working capital
Increase in trade and other receivables (24,727) (23,595)

Accounts
Increase in trade and other payables 7,046 267
Net cash used in operating activities (19,061) (27,350)

Cash flows from investing activities
Payments for property, plant and equipment (8) (26)
Payment for investments (5,600) –

Other information
Interest received 12 52
Net cash used in investing activities (5,596) 26

Cash flows from financing activities
Proceeds from issue of equity shares 14,666 31,596
Payment of equity share issue costs (1,039) (1,856)
Proceeds from borrowings 5,200 –
Repayment of borrowings (200) –
Payment of loan issue costs (497) –
Net cash generated from financing activities 18,130 29,740

Net (decrease)/increase in cash and cash equivalents (6,527) 2,416

Cash and cash equivalents – beginning of year 7,876 5,473
Effects of exchange rate changes on the balance of cash held in foreign currencies (113) (13)
Cash and cash equivalents – end of year 19 1,236 7,876


Notes to the Consolidated Financial Statements

1. PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies adopted by the Group and > deferred tax assets or liabilities and liabilities or assets
Company are summarised below. related to employee benefit arrangements are recognised
and measured in accordance with IAS 12 Income Taxes
(i) Statement of Compliance and IAS 19 Employee Benefits respectively;
These financial statements, of Victoria Oil & Gas Plc and its > liabilities or equity instruments related to share-based
subsidiaries (“the Group”), for the year ended 31 May 2012, payment arrangements of the acquiree or share-based
have been prepared in accordance with the International payment arrangements of the Group entered into to
Financial Reporting Standards (“IFRS”). These financial replace share-based payment arrangements of the acquiree
statements have also been prepared in accordance with the are measured in accordance with IFRS 2 Share-Based
International Financial Reporting Standards adopted for use Payment at the acquisition date; and
by the European Union. They have also been prepared in > assets (or disposal groups) that are classified as held for sale
accordance with the Companies Act 2006. in accordance with IFRS 5 Non-current Assets Held for
Sale and Discontinued Operations are measured in
(ii) Basis of Preparation accordance with that Standard.
The financial statements are prepared under the historical cost
Goodwill is measured as the excess of the sum of the
convention except for the revaluation of certain non-current
consideration transferred, the amount of any non-controlling
assets, derivative financial instruments, non-current liabilities
interests in the acquiree, and the fair value of the acquirer’s
and held for sale assets which have been measured at fair
previously held equity interest in the acquiree (if any) over the
value. The financial statements are presented in US Dollars,
net of the acquisition-date amounts of the identifiable assets
rounded to the nearest thousand ($000) except where
acquired and the liabilities assumed. If, after reassessment, the
otherwise indicated.
net of the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed exceed the sum of the
(iii) Basis of Consolidation
consideration transferred, the amount of any non-controlling
The consolidated financial statements incorporate the
interests in the acquiree and the fair value of the acquirer’s
financial statements of the Company and its subsidiaries made
previously held interest in the acquiree (if any), the excess is
up to 31 May each year. All Group transactions, balances,
recognised immediately in profit or loss as a bargain purchase
income and expenses are eliminated on consolidation.
gain.

Subsidiaries The results of subsidiaries acquired or disposed of during the
Subsidiaries are entities over which the Company has the period are included in the Consolidated Income Statement
power to govern the financial and operating policies in order from the effective date of acquisition or up to the effective
to obtain benefits from their activities. Control is presumed to date of disposal.
exist where the Company owns more than one half of the
Where necessary, adjustments are made to the financial
voting rights (which does not always equate to percentage
statements of subsidiaries to bring the accounting policies
ownership) unless it can be demonstrated that ownership does
used into line with those used by the Group.
not constitute control. In assessing control, potential voting
rights that are currently exercisable or convertible are taken
(iv) Interest Income
into account. Subsidiaries are fully consolidated from the date
Interest income is accounted for on an accruals basis by
of acquisition, being the date on which the Group obtains
reference to the principal amount and the effective interest
control and continue to be consolidated until the date that
rate applicable.
such control ceases. The consolidated financial statements
included all the assets, liabilities, revenues, expenses and cash
(v) Operating Loss
flows of the Company and its subsidiaries after eliminating
Operating loss comprises general administration expenses,
intercompany balances, transactions and unrealised gains.
impairment charges and other gains and losses, which are not
Acquisitions of businesses are accounted for using the specific to exploration and evaluation projects. It is stated
acquisition method. The consideration transferred in a before finance income and finance costs.
business combination is measured at fair value, which is
calculated as the sum of the acquisition-date fair values of the (vi) Foreign Currencies
assets transferred by the Group, liabilities incurred by the The presentation currency of the Group financial statements
Group to the former owners of the acquiree and the equity is US Dollars and the functional currency and the
interests issued by the Group in exchange for control of the presentation currency of the Parent Company is US Dollars.
acquiree. Acquisition-related costs are generally recognised in The individual financial statements of each Group company
profit or loss as incurred. are maintained in the currency of the primary economic
environment in which it operates (its functional currency).
At the acquisition date, the identifiable assets acquired and
The Group’s expenses, which are primarily to contractors on
the liabilities assumed are recognised at their fair value at the
exploration and development, are incurred principally in
acquisition date, except that:
US Dollars, but also Russian Roubles, Central African Francs,


Notes to the Consolidated Financial Statements continued

Review
1. PRINCIPAL ACCOUNTING POLICIES continued
Sterling and Euros. For the purpose of the consolidated (viii) Intangible Assets
financial statements, the results and financial position of each Exploration and evaluation assets
Group company are expressed in US Dollars, the presentation Expenditure incurred in respect of research of potential
currency. hydrocarbon exploration, prior to the Group acquiring an
exploration licence, is expensed in the Income Statement.
In preparing the financial statements of the individual

Governance
companies, transactions in currencies other than the entity’s Exploration expenditure relates to the initial search for
functional currency (foreign currencies) are recorded at the deposits with economic potential. Evaluation expenditure
rates of exchange prevailing on the dates of the transactions. arises from a detailed assessment of deposits that have been
At each Balance Sheet date, monetary assets and liabilities that identified as having economic potential.
are denominated in foreign currencies are translated at the
The costs of exploration assets, which are based in geographic
rates prevailing on the Balance Sheet date. Non-monetary
areas, include the cost of acquiring rights to explore. Rights

Accounts
items carried at fair value that are denominated in foreign
and costs incurred in relation to evaluating the technical
currencies are translated at the rates prevailing at the date
feasibility and commercial viability of extracting a
when the fair value was re-determined. Non-monetary items
hydrocarbon resource are capitalised as part of exploration
that are measured in terms of historical cost in a foreign
and evaluation assets.
currency are not retranslated. Exchange differences arising on
the settlement of monetary items, and on the retranslation of Exploration costs include an allocation of administration and

Other information
monetary items, are included in the Income Statement for the salary costs, including share-based payments as determined by
year, other than when a monetary item forms part of a net management.
investment in a foreign operation, then exchange differences
Exploration costs are capitalised until technical feasibility and
on that item are recognised in equity. Exchange differences
commercial viability of extraction of reserves are
arising on the retranslation of non-monetary items carried at
demonstrable. At that point, all costs which have been
fair value are included in the Income Statement for the year
capitalised to date and included in exploration and evaluation
except for differences arising on the retranslation of non-
assets, are assessed for impairment. All impairment losses are
monetary items in respect of which gains and losses are
recognised immediately in the Income Statement. If they are
recognised directly in equity.
not impaired, then they are reclassified as either tangible
The assets and liabilities of foreign operations are translated assets or intangible assets. Costs which are deemed to be
into US Dollars at the rate of exchange ruling at the Balance intangible assets are written off over the life of the estimated
Sheet date and their income statements are translated at the reserve on a unit-of-production basis (accounted for under
average exchange rates for the year, unless exchange rates IAS 38 Intangible Assets). Costs which are tangible are
fluctuate significantly during that year in which case the accounted for under IAS 16 Property, Plant and Equipment.
exchange rates at the date of transaction are used. The
exchange differences arising on the translation are taken Impairment of intangible assets
directly to a separate component of equity. On disposal of a Exploration and evaluation assets are assessed for impairment
foreign entity, the deferred cumulative amount recognised in when facts and circumstances suggest that the carrying
equity relating to that particular foreign operation is amount may exceed its recoverable amount. The Company
recognised in profit or loss. reviews and tests for impairment on an ongoing basis and
specifically if the following occurs:
Fair value adjustments arising on the acquisition of a foreign
a) the period for which the Group has a right to explore in
entity are treated as assets and liabilities of the foreign entity
the specific area has expired during the period or will
and translated at the closing rate.
expire in the near future, and is not expected to be
renewed;
(vii) Employee Share Ownership Plan (“ESOP”)
b) substantive expenditure on further exploration for and
The Victoria Oil & Gas ESOP Trust was established on
evaluation of mineral resources in the specific area is
22 February 2006 to hold ordinary shares purchased to satisfy
neither budgeted nor planned;
share scheme awards made to the employees of the Group,
c) exploration for and evaluation of hydrocarbon resources in
which are transferred to the members of the scheme on grant
the specific area have not led to the discovery of
which is also the relevant vesting date. The Trust is
commercially viable quantities of hydrocarbon resources
consolidated in the financial statements in accordance with
and the entity has decided to discontinue such activities in
SIC 12 Special Purpose Entities. From the perspective of the
the specific area; and
consolidated financial statements, the shares of the Company
d) sufficient data exists to indicate that, although a
held by the Trust are treasury shares and are deducted from
development in the specific area is likely to proceed, the
equity in accordance with IAS 32 Financial Instruments:
carrying amount of the exploration and evaluation asset is
Presentation, until the shares are distributed by the Trust to
unlikely to be recovered in full from successful
members.
development or by sale.



(ix) Property, Plant and Equipment (xi) Leasing
Plant and equipment Leases are classified as finance leases whenever the terms of
Plant and equipment is stated at cost less any subsequent the lease transfer substantially all the risks and rewards of
accumulated depreciation and any accumulated impairment ownership to the lessee. All other leases are classified as
losses. Expenditure is pooled into regional cost pools of operating leases.
Cameroon, Russia and Other.
The Group as lessee
Depreciation of an asset begins when it is available for use,
Assets held under finance leases are initially recognised as
i.e. when it is in the location and condition necessary for it to
assets of the Group at their fair value at the inception of the
be capable of operating in the manner intended by
lease or, if lower, at the present value of the minimum lease
management. Depreciation of an asset ceases at the earlier of
payments. The corresponding liability to the lessor is included
the date that the asset is classified as held for sale and the date
in the Balance Sheet as a finance lease obligation.
that the asset is de-recognised.
Lease payments are apportioned between finance expenses
Depreciation is charged so as to write-off the cost of plant
and reduction of the lease obligation so as to achieve a
and equipment over their useful lives using the straight line
constant rate of interest on the remaining balance of the
method, on the following basis:
liability. Finance expenses are recognised immediately in profit
or loss, unless they are directly attributable to qualifying
Plant and equipment 10%
assets, in which case they are capitalised in accordance with
Fixtures and fittings 25%
the Group’s general policy on borrowing costs (see
Note 1(xii) below). Contingent rentals are recognised as
Oil and gas interests
expenses in the periods in which they are incurred.
Costs less assessed impairment losses are transferred to
property, plant and equipment assets in each regional cost Operating lease payments are recognised as an expense on a
pool when technical feasibility and commercial viability of straight-line basis over the lease term, except where another
extraction of reserves are demonstrated. systematic basis is more representative of the time pattern in
which economic benefits from the leased assets are consumed.
Depreciation and depletion of costs in depreciable pools is
Contingent rentals arising under operating leases are
provided under the unit-of-production method based on
recognised as an expense in the period in which they are
estimated commercial reserves in each regional cost pool.
incurred.
Commercial reserves are developed and undeveloped oil and
gas reserves. In the event that lease incentives are received to enter into
operating leases, such incentives are recognised as a liability.
Changes in estimates affecting unit-of-production calculations
The aggregate benefit of incentives is recognised as a
for depreciation, decommissioning and production tax
reduction of rental expense on a straight-line basis, except
provisions are accounted for prospectively.
where another systematic basis is more representative of the
Expected decommissioning costs of a property are provided time pattern in which economic benefits from the leased asset
on the basis of net present value of the liability. An equivalent are consumed.
amount is added to the oil and gas asset and charged to the
Income Statement on a unit-of-production basis. (xii) Borrowing Costs
Borrowing costs directly attributable to the acquisition,
Assets under construction construction or production of qualifying assets, which are
Assets under construction are stated at cost less impairment assets that necessarily take a substantial period of time to get
losses. They are not depreciated until construction is ready for their intended use or sale, are added to the cost of
complete and the assets are ready for use, at which time the those assets, until such time as the assets are substantially
assets are reclassified to another asset pool and depreciated ready for their intended use or sale.
according to the policy used for that pool.
Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
(x) Held for Sale Assets
assets is deducted from the borrowing costs eligible for
Held for sale assets represents tangible assets no longer
capitalisation.
required in the Group’s business which are actively being
marketed for sale and are stated at the lower of carrying All other borrowing costs are recognised in profit or loss in
amount and fair value less cost to sell. the period in which they are incurred.



Review
(xiii) Provisions financial assets at fair value through profit or loss, loans and
Provisions are recognised when the Group has a present receivables, held-to-maturity investments, or available-for-sale
obligation as a result of a past event, it is probable that the financial assets, as appropriate. When financial assets are
Group will be required to settle that obligation and a reliable recognised initially, they are measured at fair value, plus, in
estimate can be made of the amount, taking into account the the case of investments not at fair value through profit or loss,
risks and uncertainties surrounding the obligation. directly attributable transaction costs. The Group determines

Governance
the classification of its financial assets on initial recognition
Provisions are measured at the Directors’ best estimate of the
and, where allowed and appropriate, re-evaluates this
expenditure required to settle the obligation at the Balance
designation at each financial year-end.
Sheet date and are discounted to present value where the
effect is material. The amortisation or “unwinding” of the Loans and receivables are non-derivative financial assets with
discount applied in establishing the net present value of fixed or determinable payments that are not quoted in an

Accounts
provisions is charged to the Income Statement in each active market. After initial measurements, loans and
accounting period. The amortisation of the discount is shown receivables are carried at amortised cost using the effective
as a finance cost, rather than as an operating cost. interest method less any allowance for impairment. Gains and
losses are recognised in profit or loss when the loans and
Decommissioning provision receivables are de-recognised or impaired, as well as through
Decommissioning costs include the dismantling and the amortisation process.

Other information
demolition of infrastructure and the removal of residual
The Group assesses, at each Balance Sheet date, whether a
materials and remediation of disturbed areas.
financial asset or group of financial assets is impaired. If there
The amount recognised as a decommissioning provision is the is objective evidence that an impairment loss on assets carried
best estimate of the consideration required to settle the at amortised cost has been incurred, the amount of the loss is
present obligation at the Balance Sheet date. measured as the difference between the asset’s carrying
Decommissioning costs are a normal consequence of amount and the present value of estimated future cash flows
exploration, development and production activities and the (excluding future expected credit losses that have not been
majority of such expenditure is incurred at the end of the life incurred) discounted at the financial asset’s original effective
of the field. Although the ultimate cost to be incurred is interest rate (i.e. the effective interest rate computed at initial
uncertain, the provision has been estimated in accordance recognition). The carrying amount of the assets is reduced
with management’s expectation of the decommissioning costs through use of an allowance account. The amount of the loss
and of the period when those costs are to be incurred. is recognised in profit or loss.

The initial decommissioning provision, together with other If, in a subsequent period, the amount of the impairment loss
movements in the provision, including those resulting from decreases and the decrease can be related objectively to an
new disturbance, updated cost estimates, changes to the event occurring after the impairment was recognised, the
estimated lives of operations and revisions to discount rates is previously recognised impairment loss is reversed, to the
included within exploration and evaluation assets or property, extent that the carrying value of the asset does not exceed its
plant and equipment as appropriate. These costs are then amortised cost at the reversal date. Any subsequent reversal of
depreciated over the lives of the assets to which they relate. an impairment loss is recognised in profit or loss.
Where rehabilitation is conducted systematically over the life
of the operation, rather than at the time of closure, provision Unlisted investments
is made for the estimated outstanding continuous Unlisted investments are stated at cost, less any accumulated
rehabilitation work at each Balance Sheet date and the cost is impairments.
charged to the Income Statement.
Investment in subsidiaries
When some or all of the economic benefits required to settle
Investments in subsidiaries are stated in the Company Balance
a provision are expected to be recovered from a third party,
Sheet at cost, less any accumulated impairments.
the receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
Advances to subsidiaries
receivable can be measured reliably.
Agreed balances between companies are formally signed off
by authorised people on behalf of each company. Any disputes
(xiv) Financial Instruments
regarding amounts are settled by a Director of the Company.
Financial instruments are recognised in the Group’s Balance
For cash in transit, Group policy is that the entity sending the
Sheet when the Group becomes a party to the contractual
money that has not been received at financial period end
provisions of the instrument.
writes back the amount to its own cash balances.

Financial assets
Trade receivables
Financial assets within the scope of IAS 39 Financial
Trade receivables are measured at initial recognition at fair
Instruments: Recognition and Measurement are classified as
value, and are subsequently measured at amortised cost using



the effective interest rate method. In relation to trade Convertible bond – hybrid financial instruments
receivables, an allowance for impairment is made when there Where a convertible loan meets the definition of a compound
is objective evidence (such as the probability of insolvency or financial instrument, the component parts are classified
significant financial difficulties of the debtor) that the Group separately as financial liabilities and equity in accordance with
will not be able to collect all of the amounts due under the the substance of the contractual arrangements. However,
original terms of the invoice. The carrying amount of the where, at inception, the conversion option is such that the
receivable is reduced through use of an allowance account. option will not be settled by the Company exchanging a fixed
Impaired debts are de-recognised when they are assessed as number of its own equity instruments for a fixed amount of
uncollectible. cash, the convertible loan does not meet the definition of a
compound financial instrument. In such cases, the convertible
VAT receivable loan (the host contract) is a hybrid financial instrument and
VAT incurred is recognised to the extent permitted under the option to convert is an embedded derivative. Attached
current legislation. A provision is included to the extent that options (options entered into in consideration for entering
recovery is not foreseeable within the next three years. into the host contract) on similar terms are also embedded
derivatives.
Cash and cash equivalents
The embedded derivatives are separated from the host
Cash and cash equivalents comprises short-term, highly liquid
contract as their risks and characteristics are not closely related
investments that are readily convertible to known amounts of
to those of the host contract and the host contract is not
cash and which are subject to an insignificant risk of changes
carried at fair value. At each reporting date, the embedded
in value.
derivatives are measured at fair value with the changes in fair
value recognised in the Income Statement as they arise. The
Financial liabilities
host contract carrying value on initial recognition is based on
Financial liabilities are classified as either financial liabilities at
the net proceeds of issuance of the convertible loan reduced
fair value through profit or loss or other financial liabilities
by the fair value of the embedded derivatives and is
depending on the substance of the contractual arrangements
subsequently carried at each reporting date at amortised cost.
entered into.
The embedded derivatives and host contract are presented
under separate headings in the Balance Sheet.
Financial liabilities at fair value through profit or loss
The Group does not have any financial liabilities at fair value The fair values of the embedded derivatives are calculated
through the profit or loss other than the embedded using appropriate valuation models depending on the
derivatives included in the convertible bond – hybrid financial characteristics of the derivatives.
instruments, which are discussed below.
Interest expense is calculated using the effective interest rate
method.
Trade payables
Trade payables classified as financial liabilities are initially On conversion or redemption, the embedded derivative is
measured at fair value and are subsequently measured at reflected at fair value immediately prior to redemption or
amortised cost using the effective rate method. conversion and the resulting change is recognised in the
Income Statement. Any difference between the fair value and
Other financial liabilities the redemption or conversion value is recognised directly in
Other financial liabilities, including borrowings, are initially equity through other reserves.
measured at fair value, net of transaction costs.
Equity instruments
Other financial liabilities are subsequently measured at
Equity instruments issued by the Company are recorded at
amortised cost using the effective interest method, with
the proceeds received, net of direct issue costs.
interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the (xv) Taxation
amortised cost of a financial liability and of allocating interest The tax expense represents the sum of the tax currently
expense over the relevant period. The effective interest rate is payable and deferred tax.
the rate that exactly discounts estimated future cash payments
The current tax payable is based on taxable profit for the year.
through the expected life of the financial liability, or (where
Taxable profit differs from net profit as reported in the
appropriate) a shorter period, to the net carrying amount on
Income Statement because it excludes items of income or
initial recognition.
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible.
De-recognition of financial liabilities
The Group’s liability for current tax is calculated using tax
The Group de-recognises financial liabilities when the
rates and laws that have been enacted or substantively enacted
Group’s obligations are discharged, cancelled or they expire.
by the Balance Sheet date.



Review
Deferred tax is recognised on temporary differences between suppliers or employees, they are measured at the fair value at
the carrying amounts of assets and liabilities in the financial the date of grant. The fair value at the grant date is expensed
statements and the corresponding tax bases used in the on a straight-line basis over the vesting period, based on the
computation of taxable profit. Group’s estimate of shares that will eventually vest and
adjusted for the effect of non-market based vesting conditions.
Deferred tax liabilities are generally recognised for all taxable

Governance
temporary differences. Deferred tax assets are generally Where the value of the goods and services received in exchange
recognised for all deductible temporary differences to the for the share-based payment cannot be reliably estimated, the fair
extent that it is probable that taxable profits will be available value is measured by use of an appropriate valuation model. The
against which those deductible temporary differences can be expected life used in the model is adjusted, based on
utilised. Such deferred tax assets and liabilities are not management’s best estimate, for the effects of non-transferability,
recognised if the temporary differences arise from goodwill or exercise restrictions and behavioural considerations.

Accounts
from the initial recognition of other assets and liabilities in a
transaction that affects neither the taxable profit nor the (xvii) Warrants
accounting profit. Deferred tax liabilities are recognised for The Company settles certain financing fees by the issue of
taxable temporary differences associated with investments in warrants. Each warrant entitles the holder to purchase an
subsidiaries and associates, and interests in joint ventures, ordinary share in the Company at a specific price and within a
except where the Group is able to control the reversal of the certain time frame. The warrants are fair valued using an

Other information
temporary difference and it is probable that the temporary appropriate pricing model. The fair value of the warrants is
difference will not reverse in the foreseeable future. credited to Other Reserve with a corresponding debit to
Share Premium. For information on warrants outstanding and
Deferred tax assets arising from deductible temporary
pricing assumptions, see Note 30.
differences associated with such investments and interests are
only recognised to the extent that it is probable that there will
(xviii) Critical Accounting Judgements and Key Sources
be sufficient taxable profits against which to utilise the
of Estimation Uncertainty
benefits of the temporary differences and they are expected to
Critical judgements in applying the Group’s accounting
reverse in the foreseeable future.
policies
The carrying amount of deferred tax assets is reviewed at each In the process of applying the Group’s accounting policies
Balance Sheet date and reduced to the extent that it is no above, management has made the following judgements that
longer probable that sufficient taxable profits will be available have the most significant effect on the amounts recognised in
to allow all or part of the asset to be recovered. the financial statements (apart from those involving
estimations, which are dealt with below).
Unrecognised deferred tax assets are reassessed at each
Balance Sheet date and are recognised to the extent that it has
Impairment of intangible assets
become probable that future taxable profits will allow the
The assessment of intangible assets for any indications of
deferred tax asset to be recovered.
impairment involves judgement. If an indication of
Deferred tax assets and liabilities are measured at the tax rates impairment exists, a formal estimate of the recoverable
that are expected to apply in the period when the liability is amount is performed and an impairment loss recognised to
settled or the asset is realised, based on tax rates (and tax the extent that the carrying amount exceeds the recoverable
laws) that have been enacted or substantively enacted at the amount. The recoverable amount is determined as the higher
Balance Sheet date. The measurement of deferred tax of fair value less costs to sell and value in use. This assessment
liabilities and assets reflects the tax consequences that would requires judgement as to: the amount of potential reserves;
follow from the manner in which the Group expects, at the likely future commerciality of the asset; when such
end of the reporting period, to recover or settle the carrying commerciality should be determined; future revenues; capital
amount of its assets and liabilities. and operating costs; the discount rate to be applied to such
revenues and costs; and the ability to raise sufficient finance to
Deferred tax assets and liabilities are offset when there is a
develop the Group’s projects. There have been no significant
legally enforceable right to set off current tax assets against
changes to the assumptions during the year.
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the Group intends The West Medvezhye project in Siberia is an exploration and
to settle its current tax assets and liabilities on a net basis. evaluation asset and in the view of management, none of the
impairment indicators listed in IFRS 6 Exploration for and
(xvi) Share-Based Payments Evaluation of Mineral Resources are present. In forming this
The Group has applied the requirements of IFRS 2 Share- view, the management compared the carrying value at the
Based Payment. In accordance with the transitional reporting date with the expected discounted cash flows from
provisions, IFRS 2 has been applied to all equity instruments the project. To do this management used production profiles
vesting after 1 June 2006. based on its estimates of proven and probable reserves and a
range of assumptions including internal estimates of oil, gas
When the Group issues equity-settled share-based payments to



and condensate prices, development expenditure requirements Deferred tax assets
and a pre-tax discount rate of 8.5%. The assessment of availability of future taxable profits involves
judgement. A deferred tax asset is recognised to the extent
Impairment of oil and gas assets that it is probable that taxable profits will be available against
Proven oil and gas assets are reviewed for impairment which deductible temporary differences and the carry forward
whenever events or changes in circumstances indicate that the of unused tax credits and unused tax losses can be utilised. In
carrying amount may not be recoverable. An impairment loss the event that all tax losses could be utilised, a deferred tax
is recognised for the amount by which the asset’s carrying asset of $11.2 million would be recognised in the financial
amount exceeds its recoverable amount. The recoverable statements.
amount is the higher of an assets’s fair value less costs to sell
and value in use. For the purposes of assessing impairment, oil Key sources of estimation uncertainty
and gas assets are evaluated on a field-by-field basis. The preparation of financial statements requires management
to make estimates and assumptions that affect the amounts
Going concern reported for assets and liabilities as at the Balance Sheet date
The assessment of the Group’s ability to execute its strategy and the amounts reported for revenues and expenses during
by funding future working capital requirements involves the year. The nature of estimation means that actual outcomes
judgement. could differ from those estimates. The key sources of
estimation uncertainty that have a significant risk of causing
The Directors monitor future cash requirements and are
material adjustment to the carrying amounts of assets and
confident that the Group is able to continue as a going
liabilities within the next financial year are discussed below.
concern and no adjustment is required to the financial
statements. Further information regarding going concern is
Operating in Russia, Cameroon and Kazakhstan
outlined in Note 3.
The Group’s activities are conducted through its investments
As part of the assessment, management reviewed budgets and and subsidiaries operating in the oil and gas industry. These
cash flow forecasts and compared the requirements to operations are subject to political, economic and regulatory
available resources, existing funding facilities and potential uncertainties prevailing in these countries.
sources of additional funds.
The legislation regarding taxation and foreign exchange
transactions is constantly evolving and many new laws and
Exploration and evaluation
regulations are not always clearly written and their
The assessment of the classification of costs between
interpretation is subject to the opinions of local inspectors.
intangible assets and tangible assets and whether general
administration costs and salary costs are capitalised or
Arbitration
expensed involves judgement. Management consider the
The Group increased its interest in the Logbaba gas and
nature of each cost incurred and whether it is deemed
condensate field to 95% in July 2011 following the default of
appropriate to capitalise it and the appropriate classification.
RSM Production Corporation (“RSM”) in meeting its
Costs which can be demonstrated as project related and not a
obligations under the Operating Agreement. RSM is
corporate cost are included in the cost of exploration and
challenging the default through arbitration. However, having
evaluation assets. The amount of exploration and evaluation
taken legal advice, the Directors are confident that the claim
assets is shown in Note 14 and the sensitivity of the carrying
raised by RSM will not be successful.
amounts to different methods or assumptions is within the
range of plus or minus 10%.
Decommissioning provision
The amount of provisions in respect of decommissioning
Unit-of-production depreciation method
costs is based on legal requirements currently enacted or
The Group’s policy is to use the unit-of-production method
substantially enacted, assumptions regarding the life of certain
of depreciation based on estimated proven and probable
exploration, development and production assets, expected site
reserves in each regional cost pool for depreciation and
restoration costs, current prices for similar activities and the
amortisation of its oil and gas assets. These calculations
discount rate.
require the use of estimates and assumptions and significant
judgement is required in assessing the amount of estimated Similarly, the laws and regulations concerning environmental
recoverable reserves. Estimates of oil and gas reserves are assessments and site rehabilitation continue to evolve.
inherently imprecise, require the application of judgement Accordingly, the Group may be liable to substantial costs in
and are subject to future revision. Changes in proved the future relating to past and current operations.
and probable reserves will prospectively affect the
The Directors do not expect the key sources of estimation
unit-of-production depreciation charges to the Income
uncertainty to be resolved in the next 12 months.
Statement.



Review
2. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
The Group did not adopt any new International Financial Reporting Standards (“IFRS”) or Interpretations in the year that had
a material impact on the Group’s financial statements.

The following Standards and Interpretations became effective since the last Annual Report but had no material impact on the
financial statements.

Governance
Name of new Standards/Amendments Effective from

IFRIC 14 (Amendment November 2009) – Prepayments of a Minimum Funding Requirement 1 January 2011
IAS 24 (Amendment November 2009) – Related Party Disclosure 1 January 2011
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010
IFRS 1 (Amendment January 2010) – Limited Exemption from Comparative IFRS 7 Disclosures
for First-time Adopters 1 July 2010

Accounts
Standards and Interpretations in issue but not yet adopted
At the date of approval of these financial statements, the following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet adopted:

Name of new Standards/Amendments Effective from

Other information
IFRS 7 (Amendment October 2010) – Disclosures – Transfers of Financial Assets 1 July 2011
IFRS 1 (Amendment December 2011) – Severe Hyperinflation and Removal of Fixed Dates
for First-time Adopters 1 July 2011
IFRS 9 Financial Instruments 1 January 2015
IAS 19 (revised June 2011) – Employee Benefits 1 January 2013
IFRS 13 Fair Value Measurement 1 January 2013
IFRS 12 Disclosure of Interests in Other Entities 1 January 2013
IFRS 11 Joint Arrangements 1 January 2013
IFRS 10 Consolidated Financial Statements 1 January 2013
IAS 28 (revised May 2011) – Investments in Associates and Joint Ventures 1 January 2013
IAS 27 (revised May 2011) – Separate Financial Statements 1 January 2013
IFRS 1 (Amendment March 2012) – Government Loans 1 January 2013
IAS 32 (Amendment December 2011) – Offsetting Financial Assets and Financial Liabilities 1 January 2014
IFRS 7 (Amendment December 2011) – Disclosures – Offsetting Financial Assets and Financial Liabilities 1 January 2013
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 1 January 2013

The Directors are currently assessing the impact in relation to the adoption of these Standards and Interpretations for future
periods of the Group. None are expected to have a material impact.

3. GOING CONCERN
The Directors have given careful consideration to the The Directors have also reviewed forecasts in respect of the
appropriateness of the going concern basis in the preparation of operating activities and planned work programme of the
the financial statements particularly as the Income Statement Group’s Cameroon and Russian assets. The funds and
reports that the Group incurred a loss of $7.7 million for the facilities available, after allowing for funds required for
year ended 31 May 2012 (2011: $4.7 million) and the administration and development costs, are expected to cover
Consolidated Balance Sheet shows that the Group had net the cost of these activities. In the event of a delay in build-up
current liabilities of $21.1 million at the year-end date of gas sales or significant cost overruns, the Group will
(2011: $2.6 million). reschedule the development expenditure. In addition, the
Group has mandated a top tier bank for a large senior secured
At 31 May 2012, the Group had $1.9 million of cash.
revolving credit facility to provide additional funding in order
However, as stated in Note 35, the Group raised $4.9 million
to fund expansion of the pipeline network in Cameroon.
in the period between the year-end and the date of approval
of these financial statements. At 23 October, the Group had On this basis, the Directors have concluded that the Group
cash of $1.9 million, undrawn loan facilities of $2.8 million and Company currently have adequate resources available to
and undrawn facilities of £10.0 million ($16.0 million) in maintain the Group and Company’s base operation and to
respect of the SEDA, as described in Note 26. continue in operational existence for the foreseeable future.

Based on their forecasts, the Directors expect that the Group On this basis the Directors consider it appropriate to prepare
will need to spend approximately $4.0 million to maintain its the financial statements on a Going Concern basis. Accordingly,
base operations (excluding its exploration and development these financial statements do not include any adjustments to the
programme) for the 12 month period from the date of carrying amount and classification of assets and liabilities that
approval of these financial statements. may arise if the Group was unable to continue as a going concern.



4. SEGMENTAL ANALYSIS
IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about the Group that
are regularly reviewed by the chief operating decision maker. The Board is deemed the chief operating decision maker within
the Group. The Group has one class of business, exploration and development, and this is analysed on a location basis. The
accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 1.

The analysis of turnover, the loss before taxation, assets, liabilities, other gains and losses, depreciation, additions to non-current
assets and provisions by segment is shown below:

Segment Revenue, Segment Result, Segment Assets and Segment Liabilities
There was no revenue or inter-segmental revenue.

Cameroon Russia Kazakhstan Corporate Total
Twelve months to 31 May 2012 $000 $000 $000 $000 $000

Administrative expenses (3,008) (211) (333) (974) (4,526)
Foreign exchange gains and (losses) 84 – – (146) (62)
Operating loss (2,924) (211) (333) (1,120) (4,588)
Finance revenue – – – 200 200
Finance costs (1,410) (34) – (1,893) (3,337)
Loss before taxation (4,334) (245) (333) (2,813) (7,725)
Income tax expense – – – – –
Loss after taxation for the financial year (4,334) (245) (333) (2,813) (7,725)

Total assets 139,032 58,137 126 2,527 199,822

Total liabilities (37,419) (336) (15) (9,872) (47,642)

Cameroon Russia Kazakhstan Corporate Total
Twelve months to 31 May 2011 $000 $000 $000 $000 $000

Administrative expenses (404) (72) (229) (4,394) (5,099)
Foreign exchange gains and (losses) (2) 4 – 763 765
Operating loss (406) (68) (229) (3,631) (4,334)
Finance revenue – – – 52 52
Finance costs (36) – – (379) (415)
Loss before taxation (442) (68) (229) (3,958) (4,697)
Income tax expense – – – – –
Loss after taxation for the financial year (442) (68) (229) (3,958) (4,697)

Total assets 109,574 60,882 108 8,332 178,896

Total liabilities (26,054) (275) (14) (9,113) (35,456)

5. FOREIGN EXCHANGE (LOSSES) AND GAINS
2012 2011
$000 $000

Foreign exchange (losses) and gains (62) 765



Review
6. FINANCE REVENUE
2012 2011
$000 $000

Interest income 12 52
Fair value gain on embedded derivatives 188 –
200 52

Governance
The fair value gain represents a decrease in the fair value of the embedded derivatives in the convertible loan notes described
more fully in Note 23. At each year-end, and immediately prior to redemption or conversion, the embedded derivatives are
re-valued to fair value as explained in Note 1(xiv) Financial Instruments: Convertible bond – hybrid financial instruments.

7. FINANCE COSTS

Accounts
2012 2011
$000 $000

Convertible loan interest (1,289) (354)
Loan interest (107) (20)
Loan finance fees (497) –
Interest on obligations under finance leases (730) –

Other information
Fair value loss on embedded derivatives – (5)
Unwinding of discount on reserve bonus provision (642) –
Unwinding of discount on decommissioning costs (72) (36)
(3,337) (415)
Accrued interest on the convertible loans is calculated at the effective interest rate.

8. LOSS BEFORE TAXATION
2012 2011
The loss before taxation is stated after crediting/(charging): $000 $000

Directors’ remuneration (Note 11) (1,300) (974)
Auditors’ remuneration (240) (206)
Depreciation and amortisation (485) (16)
Fair value gain/(loss) on embedded derivatives 188 (5)

2012 2011
The analysis of auditors’ remuneration is as follows: $000 $000

Fees payable to the Group auditors for the audit of the Group’s annual accounts (240) (206)
$150,000 of the above audit fees relate to the Company (2011: $135,000).

2012 2011
Administrative expenses comprise: $000 $000

Wages and salaries (1,688) (1,157)
Professional fees (1,492) (2,394)
Office and other administrative expenditure (433) (716)
Allowance for unpaid receivables – (625)
Travel (221) (131)
Rent (207) (60)
Depreciation and amortisation (485) (16)
(4,526) (5,099)



9. INCOME TAX EXPENSE
2012 2011
$000 $000

Income tax expense – –

2012 2011
Factors affecting the tax expense: $000 $000

Loss on ordinary activities before tax (7,725) (4,697)
Income tax calculated at 24% (2011: 26%) (1,854) (1,221)

Effects of:
Effect of expenses not deductible for tax 134 14
Effect of finance costs not deductible for tax 335 97
Fair value adjustment on derivatives not taxable (45) 1
Increase in tax losses not utilised 1,430 1,109
Income tax expense – –

Deferred tax liability
Arising on Bramlin acquisition (6,599) (6,599)
The deferred tax liability arose on the acquisition of Rodeo Development Limited by Bramlin Limited prior to Bramlin Limited
becoming part of the Group.

At the Balance Sheet date, the Group has unused tax losses of $46.6 million (31 May 2011: $40.8 million) available for offset
against future profit. No deferred tax asset has been recognised in either year due to the unpredictability of future profit streams
in the companies that have accrued tax losses. Accordingly, at the year-end, deferred tax assets amounting to $11.2 million
(31 May 2011: $10.6 million) have not been recognised.

Factors that may affect future tax charges
The Group commenced production in Cameroon after the year-end. Such production is likely to result in taxable profits in
Cameroon where the applicable tax rate is 38.5%.

10. EMPLOYEE INFORMATION
2012 2011
The average number of persons employed by the Group during the year was: Number Number

Directors 5 5
Technical 28 16
Management and administration 42 27
75 48

2012 2011
Staff costs for the above persons were: $000 $000

Wages and salaries (2,884) (1,804)
Social security costs (303) (213)
(3,187) (2,017)
Included in the above is $1,499,000 (2011: $860,000) of staff costs which were capitalised within exploration and evaluation
assets and property, plant and equipment.



Review
11. DIRECTORS’ REMUNERATION
Payable Shares Awarded Consultancy Total Total
in cash in lieu by ESOP fees 2012 2011
$000 $000 $000 $000 $000 $000

Kevin Foo* (240) (80) – – (320) (302)
Grant Manheim (115) – (279) – (394) (113)
Robert Palmer† (115) (76) – – (191) (205)

Governance
Austen Titford (240) – – – (240) (221)
Philip Rand (24) – – (131) (155) (133)
(734) (156) (279) (131) (1,300) (974)
* Part paid to HJ Resources Limited
†
Part paid to The Gallagher Partnership LLP

Accounts
The Deputy Chairman was the highest paid Director and received $394,000. In 2011, the Chairman was the highest paid
Director and received $302,000.

The number of Directors to whom retirement benefits are accruing is nil and all remunerations were short-term employee
benefits.

During the year, no short-term employee benefits or share-based payments relating to the remuneration of Directors were

Other information
capitalised within exploration and evaluation expenditure (2011: Nil).

12. KEY MANAGEMENT COMPENSATION
2012 2011
The compensation paid to key management personnel is set out as follows: $000 $000

Short-term employee benefits (1,249) (1,431)
Payment in shares (435) (328)
Termination benefits – (482)
Professional fees (1,195) (789)
(2,879) (3,030)
Key management comprises the Directors of the Company and its subsidiaries, the Chief Operating Officer and the General
Managers of each operation. The Company does not provide a pension scheme or other post-employment benefits to any
employees, including Directors.

13. 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.
2012 2011
$000 $000

Numerator:
Numerator for basic and diluted loss per share – retained loss (7,725) (4,697)

Number Number

Denominator:
Denominator for basic and diluted loss per share 2,339,317,651 1,803,827,144

Cents Cents

Loss per share – basic and diluted (0.33) (0.26)
Basic and diluted loss per share are the same, as the effect of the outstanding warrants is anti-dilutive and is therefore excluded.

Refer to Notes 23, 26, 30 and 35 for details of transactions which could have a dilutive effect on loss per share.



14. EXPLORATION AND EVALUATION ASSETS
Group
2012 2011
Exploration and evaluation assets: $000 $000

Cost
Opening balance 164,753 149,728
Exchange adjustments (4,101) 2,433
Additions 358 13,252
Transfer from other receivables 30,137 –
Transfer to receivables – (660)
Transfer to property, plant and equipment (98,938) –
Closing balance 92,209 164,753

Accumulated amortisation and impairment
Exchange adjustments 143 43

Carrying amount

Segmental Analysis
Cameroon Russia Total
Twelve months to 31 May 2012 $000 $000 $000

Opening balance 69,586 61,313 130,899
Exchange (327) (3,917) (4,244)
Transfer from other receivables 30,137 – 30,137
Additions 43 315 358
Transfer to property, plant and equipment (98,938) – (98,938)
Closing balance 501 57,711 58,212

Cameroon Russia Total
Twelve months to 31 May 2011 $000 $000 $000

Opening balance 58,205 57,712 115,917
Exchange – 2,390 2,390
Additions 12,041 1,211 13,252
Transfer to receivables (660) – (660)
Closing balance 69,586 61,313 130,899



Review
14. EXPLORATION AND EVALUATION ASSETS continued
Exploration and evaluation assets at 31 May 2012 represent exploration and related expenditure on the Group’s licences and
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.

Governance
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 31 May 2012. Exploration and evaluation
assets have been assessed for impairment having regard to the likelihood of further expenditures and ongoing appraisal for each
geographical area.

During the period, $30.1 million previously included in other receivables was transferred to exploration and evaluation assets
following the withdrawal of RSM Production Corporation from the Logbaba gas development (see Note 18).

Accounts
On commissioning of the Logbaba gas processing facilities and the gas pipeline network in Cameroon, exploration and
evaluation assets of $98.9 million were transferred to property, plant and equipment as, in the opinion of the Directors, the
project had achieved technical feasibility and commercial viability. These assets were reviewed for impairment at the date of
transfer and the Directors concluded that no provision was required. Refer also to Note 15.

When considering the possible impairment of intangible assets, the management developed each key assumption using

Other information
internally generated data, which was confirmed by external consultants where possible. The projected cash flows are calculated
over the remaining life of the project (up to 25 years) as this is appropriate for the type of assets involved. Growth rates for
revenues and costs were taken from the advice provided by external consultants.

A pre-tax discount rate of 8.5% was used to calculate the present value of projected cash flows. The impact of a 1% increase and
decrease in the pre-tax discount rate percentage on the movement in recoverable amount is 14.5% and 16.3% respectively and
would not result in an impairment charge.

The Directors are aware that by its nature there is an inherent uncertainty in exploration and evaluation, and therefore inherent
uncertainty in relation to the carrying value of capitalised exploration and evaluation assets.
The realisation of this intangible asset is dependent on the discovery and successful development of economic reserves and is
subject to a number of significant potential risks including:
> Funding requirements (see Note 3);
> Uncertainties over development and operational costs, including taxation;
> Other operational risk including access to active markets and a suitable supply chain;
> Currency and commodity price fluctuations;
> Political and legal risks;
> Environmental risks; and
> Market risk, including demand for natural resources.

Should the discovery and successful development of economic reserves prove unsuccessful, the value included in the Balance
Sheet would be written off to the Income Statement.

The West Medvezhye licence in Russia represents a large exploration prospect which includes an oil discovery made in 2006 for
which a 20 year exploitation licence has been granted. Because of constraints on the availability of both human and financial
resources to the Group, management has focussed its efforts and available resources primarily on the development of the
Logbaba project in Cameroon. However, the Group has also completed geochemical, passive seismic surveys and reprocessed
seismic data on its asset in Russia as part of integrated geological studies. The purpose of this programme is to identify the
location and size of prospects, the hydrocarbon potential and ultimately to decide on the next drilling locations. In view of the
potential scale of the project and risks to delivery, the Board continues to appraise all strategic options for maximising the
Group’s return on investment including a variety of development scenarios, funding strategies and sale of the asset. In
completing their assessment of the recoverable amount of the Group’s investment to date in the project, the Directors have
taken into account the various options outlined above and the risks associated with each option. The Directors are unable to
test their view of the recoverable amount of the assets against current market data for similar assets as there is insufficient data
available.

Having reviewed the exploration and evaluation expenditure, the Directors are confident that the capitalised value of the asset is
recoverable and are satisfied that the value of the asset is not less than its carrying value at 31 May 2012.



15. PROPERTY, PLANT AND EQUIPMENT
Group Assets under
Plant and Oil and gas construction
equipment interests at cost Total
Twelve months to 31 May 2012 $000 $000 $000 $000

Cost
Opening balance 1,366 2,090 6,852 10,308
Additions 1,526 3,815 19,720 25,061
Transfer from exploration and evaluation assets – 98,938 – 98,938
Disposals (23) (4) – (27)
Closing balance 2,869 104,839 26,572 134,280

Depreciation
Opening balance 459 2,042 – 2,501
Disposals (20) (4) – (24)
Charge for the year 257 228 – 485
Closing balance 696 2,266 – 2,962

Carrying amount
31 May 2012 2,173 102,573 26,572 131,318

Group Assets under
Plant and Oil and gas construction
equipment interests at cost Total

Cost
Additions 1,058 – 6,852 7,910
Closing balance 1,366 2,090 6,852 10,308

Depreciation
Charge for the year 324 – – 324
Closing balance 459 2,042 – 2,501

Carrying amount
31 May 2011 907 48 6,852 7,807



Review
15. PROPERTY, PLANT AND EQUIPMENT continued
Segmental Analysis
Cameroon Russia Corporate Total

Cost
Opening balance 7,916 2,351 41 10,308
Additions 25,053 – 8 25,061

Governance
Transfer from exploration and evaluation assets 98,938 – – 98,938
Disposals – – (27) (27)
Closing balance 131,907 2,351 22 134,280

Depreciation
Opening balance 177 2,299 25 2,501

Accounts
Disposals – – (24) (24)
Charge for the year 482 – 3 485
Closing balance 659 2,299 4 2,962

Carrying amount
31 May 2012 131,248 52 18 131,318

Other information
Cameroon Russia Corporate Total

Cost
Additions 7,562 322 26 7,910
Closing balance 7,916 2,351 41 10,308

Depreciation
Charge for the year 94 214 16 324
Closing balance 177 2,299 25 2,501

Carrying amount
31 May 2011 7,739 52 16 7,807
As reported in Note 14, during the year evaluation assets of $98.9 million relating to the Logbaba gas and condensate project
were reclassified as oil and gas assets as in the opinion of the Directors the project achieved technical feasibility and commercial
viability following commencement of commissioning of the production facilities and the gas pipeline network. These assets were
reviewed for impairment at the date of transfer and the Directors concluded that no provision was required. As at the date of
this report, the oil and gas assets in Cameroon are generating revenue from continuous gas production. Refer to Notes 14 and
35 for more details.

Oil and gas assets are depreciated on a unit-of-production basis as per Note 1(ix). No depreciation was recorded for the
transferred assets for the year ended 31 May 2012 because continuous production did not begin until after year-end (refer to
Note 35 for details).

Assets under construction comprise of expenditure on the pipeline network and surface infrastructure on the Logbaba gas and
condensate project in Cameroon.

Property, plant and equipment of $103.2 million in Cameroon includes the interest previously held by RSM and relinquished
by them on default of their obligations under the Operating Agreement as noted in Note 1(xviii) Arbitration. The Group
fully expects the Arbitration to be resolved in its favour, but if the Group fails to successfully defend the claim an amount of
$37.3 million would be transferred to receivables, of which $11.5 million would immediately fall due for payment. The
remainder of the receivable would be recoverable from RSM’s share of net cash flows.

The Directors have reviewed the carrying value for impairment as at 31 May 2012 based on internally generated assumptions
applicable to the future asset life and have concluded that no provision is required.



15. PROPERTY, PLANT AND EQUIPMENT continued
Plant and Plant and
equipment equipment
2012 2011
Company $000 $000

Cost
Opening balance 41 15
Additions 8 26
Disposals (23) –
Closing balance 26 41

Depreciation
Opening balance 25 9
Disposals (23) –
Charge for the year 6 16

Carrying amount

16. UNLISTED INVESTMENTS
Group and Company
2012 2011
$000 $000

Unlisted investments – available for sale 6,600 –
During the period, the Company acquired a 35% interest in Cameroon Holdings Limited (“CHL”) for a total cost of
$6.6 million. CHL is controlled by Logbaba Projects Limited, a company in which HJ Resources Limited (see Note 35) has a
significant interest. Drilling equipment shown as held-for-sale assets at 31 May 2011 formed $1.0 million of the consideration
for the interest acquired in CHL (refer Note 20). Details of the investment are as follows:
Proportion ownership
interest and voting power
Company Principal activity Place of incorporation and operation held by the Group

Cameroon Holdings Limited Oil and gas services Guernsey 35%
The fair value of the investment is not materially different from its carrying value.

Despite the interest in CHL being above 20%, the Directors of the Company do not consider that the Company has significant
influence over CHL, and therefore CHL has not been classified as an associate. The Company acquired the investment in CHL
as a mechanism to buy back part of the royalty payable on the Logbaba revenue stream (refer Note 34 for more details) rather
than to be an active participant in CHL. The Company does not have a CHL board representative and is not involved in the
management of CHL’s operations or its policy decisions.



Review
17. INVESTMENTS IN SUBSIDIARIES AND ADVANCES
Company
2012 2011
$000 $000

Investments in subsidiaries 29,789 29,789
Advances to subsidiary 41,092 40,051
70,881 69,840

Governance
Additional advances by the Company to subsidiaries are included in Note 18.

Segmental Analysis of Investments in and Advances to Subsidiaries
Company
2012 2011
Exploration and evaluation assets: $000 $000

Accounts
Unlisted
Russian Federation 58,481 57,440
Republic of Cameroon 12,400 12,400
Investments in and advances to subsidiaries 70,881 69,840

Other information
Investments in Subsidiaries
Company
2012 2011
Unlisted investments $000 $000

Cost:
Cost of investments at beginning of the year 49,764 49,764
Cost of investments at end of the year 49,764 49,764

Impairment:
Opening balance (19,975) (19,975)
Closing balance (19,975) (19,975)

Carrying amount:
The value of the Company’s unlisted investments at 31 May 2012 represents the investment in the subsidiaries owning the West
Medvezhye project and the Logbaba gas and condensate project. The realisation of investments in, and advances to, subsidiaries
by the Company is dependent on the 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 Balance
Sheet will be written-off.

The significant investments in the Company’s Balance Sheet were $17.4 million in respect of West Medvezhye
(2011: $17.4 million) and $12.4 million in the Logbaba project (2011: $12.4 million).

Advances to Subsidiary
Advances to subsidiary include an amount of $41.1 million (2011: $40.1 million) due from the Company’s Russian subsidiary,
ZAO SeverGas-Invest. The Directors are of the view that these advances are in substance part of the Company’s net investment
in the Russian operations, as settlement is neither planned nor likely to occur in the foreseeable future, the project is explorative
in nature and there exists uncertainty regarding successful development of reserves and timing thereof. The loan is unsecured
and the Company has not accrued interest on these intercompany advances on the basis that settlement is not likely to occur in
the foreseeable future.

Additional advances by the Company to subsidiaries are included in Note 18.



17. INVESTMENTS IN SUBSIDIARIES AND ADVANCES continued
Holdings
The principal holdings of the Group are:
Percentage
Company Country of incorporation Class of shares of capital Status

Victoria Petroleum Limited England & Wales Ordinary 100% Holding company
Victoria Oil & Gas International Limited British Virgin Islands Ordinary 100% Active
ZAO SeverGas-Invest Russia Ordinary 100% Active
Bramlin Limited Guernsey Ordinary 100% Holding company
Rodeo Development Limited British Virgin Islands Ordinary 100% Active
Victoria Oil & Gas Central Asia Limited England & Wales Ordinary 100% Representative office
Feax Investments Company Limited Cyprus Ordinary 100% Holding company
Victoria Energy Central Asia UK Limited England & Wales Ordinary 100% Holding company
Victoria Energy Central Asia LLP Kazakhstan Ordinary 100% Active
The principal activity of these undertakings for the relevant financial period was exploration for, and development of, oil and gas
assets. The investments of the Group at 31 May 2012 principally represent investments in the Logbaba gas and condensate
project in Cameroon, which was acquired as part of the Bramlin acquisition and the West Medvezhye project in Russia.
Following a review by the Company of the carrying amounts of its subsidiary undertakings for impairment, the investment in
Kemerkol was fully provided against in 2009.

As outlined in Note 14, the value of the investments is dependent on the successful discovery and development of economic
reserves.

18. TRADE AND OTHER RECEIVABLES
Group Company
2012 2011 2012 2011
$000 $000 $000 $000

Amounts due within one year:
VAT recoverable 156 193 154 57
Prepayments 523 88 148 –
Amounts due by subsidiaries – – 98,114 76,305
Other receivables 1,126 3,469 913 906
Allowance for unpaid receivables – (625) – (625)
1,805 3,125 99,329 76,643

Group
2012 2011
$000 $000

Amounts in more than one year:
Other receivables – 27,640
The Directors review all receivables that are past their agreed terms and assess whether any amounts are irrecoverable, which is
determined with reference to past default experience. No receivables disclosed above are past due and none are considered
irrecoverable or impaired.

The value of the amounts due from subsidiaries is dependent on the successful discovery and development of economic
reserves. Note 14 highlights a number of significant potential risks concerning this.

Other receivables due in the prior periods included amounts relating to the RSM Production Corporation’s (“RSM”) 40%
carried interest in the Logbaba gas development. RSM have failed to make payment of cash calls in accordance with the
Operating Agreement and, following notice of default, failed to make payment within the period provided for remediation of
the default. Accordingly, following legal advice, on 18 July 2011 the Group exercised its right under the Operating Agreement
to require RSM to withdraw from the Operating Agreement and the Concession contract. An amount of $30.1 million relating
to expenditure incurred by the Group which was expected to be recovered from RSM was therefore transferred to exploration
and evaluation assets. Refer to Note 14 for more details.



Review
18. TRADE AND OTHER RECEIVABLES continued
Group and Company
2012 2011
Movement in the allowance for unpaid receivables $000 $000

At 1 June 625 –
Impairment losses recognised on receivables – 625
Impairment losses reversed (625) –

Governance
– 625
In determining the recoverability of a receivable, the Group considers any change in the credit quality of the receivable from the
date credit was initially granted up to the end of the reporting period.

The impairment loss in respect to Falcon Petroleum was reversed in the year following agreement of a repayment schedule.
$0.4 million was received after the year-end.

Accounts
19. CASH AND CASH EQUIVALENTS
Group Company
2012 2011 2012 2011
$000 $000 $000 $000

Other information
Cash 1,887 8,425 1,236 7,876
Funds are held in US Dollars, Sterling, Central African Francs, Russian Roubles, Kazakh Tenge and Euros in order to enable the
Group to trade and settle its debts in the currency in which they occur and in order to mitigate the Group’s exposure to short-
term foreign exchange fluctuations. Cash is also held in floating rate accounts or deposits maturing in three months or less.

The carrying amount of these assets approximates to their fair value.

Group Company
2012 2011 2012 2011
Denomination: $000 $000 $000 $000

US Dollar 1,328 5,810 1,022 5,793
Sterling 267 2,179 211 2,083
Central African Franc 113 271 – –
Russian Rouble 56 57 – –
Kazakh Tenge 120 108 – –
Euro 3 – 3 –
1,887 8,425 1,236 7,876

20. HELD FOR SALE ASSETS
Group
2012 2011
$000 $000

Drilling equipment – 1,000
The drilling equipment in the prior year formed part of the consideration of the interest acquired in Cameroon Holdings
Limited as described in Note 16.



21. TRADE AND OTHER PAYABLES
Group Company
2012 2011 2012 2011
$000 $000 $000 $000

Trade payables (9,613) (7,296) (1,137) (1,123)
Taxes and social security costs (395) (1,227) (74) –
Accruals and deferred income (4,252) (5,556) (260) (480)
Other creditors – – – (38)
(14,260) (14,079) (1,471) (1,641)
It is the Group’s normal practice to agree terms of transactions with suppliers, including payment terms. Provided suppliers
perform in accordance with the agreed terms, payment is made accordingly. In the absence of agreed terms it is the Group’s
normal policy that payment is made in accordance with general business practice.

The carrying value of these liabilities approximates to their fair value.

22. BORROWINGS
Group Company
2012 2011 2012 2011
$000 $000 $000 $000

Loans from other entities (5,448) (1,101) (5,041) (1,000)
Finance lease liabilities (1,992) – – –
(7,440) (1,101) (5,041) (1,000)

Amounts due in more than one year but less than five years:
Finance lease liabilities (3,178) – – –
On 21 February 2012, the Company entered into a loan agreement with YA Global Master SPV Ltd which allowed for an
aggregate maximum loan sum of $8.0 million, subject to the terms and conditions included within the agreement. Interest on
the loan is payable at the rate of 9% per annum (calculated on a daily basis) and accrues from the date of the advance of the loan
until the date of full repayment. On the agreement date, the Company drew down an initial tranche of $4.0 million from the
facility, which is repayable by 14 February 2013 via instalments as set out in the agreement. On 16 May 2012, the Company
drew down an additional $1.2 million. As at 31 May 2012, the Company had repaid principal of $200,000, the principal
amount outstanding was $5.0 million, and $2.8 million of the facility was undrawn.
In addition to the above, borrowings include an unsecured loan of $407,000 which accrues interest at a fixed rate of 0.5% per
month due to HJ Resources Limited (see Note 34).

The finance lease liabilities are secured by the assets leased, and more details are provided in Note 25.

In prior years an unsecured, non-interest bearing loan of $1.0 million (repayable on demand) from a shareholder of the
Company was also included in borrowings. However, in 2012 it was agreed that this loan would be treated as an additional
tranche of the convertible loan note facility described in Note 23.



Review
23. CONVERTIBLE LOAN NOTES
Group and Company
2012 2011
$000 $000

Debt
Noor Petroleum convertible loan (3,066) –

Governance
Amounts due in more than one year:
Debt
Noor Petroleum convertible loan – (884)

Accounts
Derivative financial instruments
Noor Petroleum convertible loan – (28)

Noor Petroleum Convertible Loan ($3.0 million)
In December 2007, the Company created a $10.0 million unsecured convertible loan note facility with United Arab Emirates
based Noor Petroleum Limited, a company of which former Company Director, Rashed Al Suwaidi, is a director. $2.0 million

Other information
was placed on 29 January 2008. Additionally, it was agreed during the year that a further $1.0 million loan that previously had
been treated as unsecured would be treated on the same terms and conditions as the loan note facility (refer Note 22).

The movement in the year reflects both this additional tranche and effective interest of 93.9% on the original note. Refer to
Note 1(xiv) for the basis for the initial valuation of the host note and determination of the applicable interest rate.

The note is due for repayment on 31 December 2012 and bears interest at the rate of 2.5% per annum, payable biannually and
is convertible into ordinary shares of the Company at a conversion price of 16.5 pence per ordinary share. In the event that the
note is redeemed at term, the effective interest rate increases to 6.5% per annum and interest will be payable accordingly. This
loan is accounted for as hybrid financial instrument (refer Note 1(xiv) for the definition of a hybrid financial instrument).

The fair value of the derivative financial instrument was calculated using a Binomial Lattice model for the conversion option.

The inputs used were as follows: 2012 2011

Option term – years 0.6 1.6
Conversion price – pence Sterling 16.5 16.5
Risk-free rate 0.44% 0.89%
Expected volatility 39.43% 68.84%
Dividend yield Nil Nil
Expected volatility is a measure of the amount by which a share price is expected to fluctuate during a period. The measure of
volatility used is the annualised standard deviation of the continuously compounded rate of return on the share over a period of
time. In valuing the convertible loan, volatility has been calculated for a period preceding each valuation date equal to the
expected life of the conversion option.

The calculation is based on the historical volatility of the Company’s share price for a period preceding each valuation date
equal to the expected life of the conversion option. As the term loan reduces, the period considered in calculating share price
volatility reduces. The earlier periods now excluded (particularly in late 2008) were very volatile and their exclusion has led to a
significant reduction in the expected volatility used in calculation of the fair value of the derivative financial instrument.

The Directors consider that the expected volatility assumption is the most important driver of the fair value of the embedded
derivative within the hybrid financial instruments. However, given the difference between the conversion price and the current
share price, there would be no impact on the fair value of the derivative or the gain or loss recognised in the Income Statement
based on an expected volatility figure 25 percentage points lower and 25 percentage points higher.



24. PROVISIONS
Group
2012 2011
$000 $000

Decommissioning provision (2,404) (719)
Reserve Bonus provision (6,695) (6,053)
Development funding obligation (4,000) (4,000)
Contingent consideration provision – (1,993)
(13,099) (12,765)

Provision for Decommissioning Costs
A provision has been recognised at the present value of the Group’s year-end obligation for expected decommissioning costs of
the West Medvezhye project and the Logbaba gas and condensate project based on an estimate of the decommissioning costs
and the year when those costs are likely to be incurred. While it is certain decommissioning will take place, the cost and timing
cannot be predicted with any certainty.
Group
2012 2011
Decommissioning costs $000 $000

At 1 June (719) (1,413)
Additional provision in year (1,612) –
Provision released in year – 730
Unwinding of discount charged to the Income Statement (73) (36)
(2,404) (719)

Reserve Bonus Provision
Under an agreement between Bramlin Limited and Rodeo Resources Inc. on the Logbaba gas and condensate project, Bramlin
is liable to pay a bonus determined four years after commencement of hydrocarbon production by reference to the reserves of
the field, as assessed at that time, with a maximum amount of $10.0 million payable over a period of not less than four years
from the date of calculation of the reserves. The Directors have provided for the full amount of the bonus being payable based
on the expected reserves four years from first production. The provision represents the present value of the maximum amount
payable, discounted at 8.5%, as at the Balance Sheet date.

Rodeo Resources Inc. is not a related party of the Group.

Group
2012 2011
Reserve bonus $000 $000

At 1 June (6,053) –
Additional provision in year – (6,053)
Unwinding of discount charged to the Income Statement (642) –
(6,695) (6,053)

Development Funding Obligation and Royalty
As part of the drilling contract for the two development wells at the Logbaba field, the Group received an amount of
$4.0 million, which is to be offset against royalties payable on future production. Continuous production was announced on
9 July 2012, and this provision will be released as sales are generated. Further details are provided in Note 34.

There is uncertainty regarding timing of the settlement of this obligation due to the inability to accurately predict the timing
and quantum of future sales revenue.

Contingent Consideration Provision
On 27 September 2011, the Company issued a total of 29,354,285 shares in the Company in settlement of deferred
consideration and deferred bonus obligations contained in agreements previously entered into by the Company’s subsidiary
Bramlin Limited.



Review
25. OBLIGATIONS UNDER FINANCE LEASES
The Group has entered into a contract for the construction, operation and maintenance of the processing facility for Logbaba
gas and condensate project for the next two years, which will give rise to an annual expense of $4.0 million from the date of
processing first hydrocarbons. The annual expense of $4.0 million comprises both an ongoing operation and maintenance cost
and a finance lease cost with regard to the processing facility and associated equipment. At the end of the two year period, the
Group has the option to acquire the processing facility or continue to lease it. The Directors intend to purchase the processing
facility at the end of the two year period to minimise the ongoing costs associated with the facility. The Group’s obligations

Governance
under the finance lease are secured by the lessor’s title to the leased assets.

The implied interest rate underlying the Group’s obligations under the finance lease is a fixed rate of 20%.

The Group’s obligations under the finance lease are as follows:
Present value
Minimum of minimum
lease payments lease payments

Accounts
2012 2011 2012 2011
$000 $000 $000 $000

Not later than one year (2,490) – (1,992) –
Later than one year and not later than five years (3,941) – (3,178) –
(6,431) – (5,170) –
Less: future finance charges 1,261 – – –

Other information
Present value of minimum lease payments (5,170) – (5,170) –

Group
2012 2011
Included in the consolidated financial statements as: $000 $000

Current borrowings (Note 22) (1,992) –
Non-current borrowings (Note 22) (3,178) –
(5,170) –

26. CALLED-UP SHARE CAPITAL
Group and Company
2012 2011
Allotted, Called-Up and Fully Paid: $000 $000

Ordinary shares of 0.5 pence each:
Opening balance: 2,138,840,271 shares (2011: 1,427,794,447) 17,178 11,648
Issued during the year: 462,876,993 shares (2011: 711,045,824) 3,625 5,530
Closing balance: 2,601,717,264 shares (2011: 2,138,840,271) 20,803 17,178
Shares issued are translated at the exchange rate prevailing at the date of issue.

The Directors of the Company continue to be limited as to the number of shares they can allot at any time and remain subject
to the allotment authority granted by the shareholders pursuant to section 551 of the Companies Act 2006.



26. CALLED-UP SHARE CAPITAL continued
Share Issues
Issue price
The Company issued the following shares during the period: Number Date (pence)

Standby Equity Distribution Agreement placing 14,690,827 29 July 2011 4.1
Bramlin Limited deferred consideration 29,354,285 19 August 2011 3.7
Shares in lieu of salary to Directors 1,026,514 19 August 2011 4.8
Shares in lieu of salary to employees 357,566 19 August 2011 4.8
Placing for working capital 292,307,687 27 September 2011 3.3
Settlement of amounts due to creditors 28,439,087 27 September 2011 3.3
Subscription by ESOP Trust 63,500,000 11 November 2011 0.5
Settlement of amounts due to creditors 500,000 11 November 2011 4.0
Shares in lieu of salary to Directors 1,288,883 3 April 2012 3.8
Shares in lieu of salary to employees 460,794 3 April 2012 3.8
Settlement of amounts due to creditors 30,951,350 3 April 2012 4.0
462,876,993

Standby Equity Distribution Agreement (“SEDA”)
On 1 April 2009, the Company entered into a £5.0 million SEDA with YA Global Master SPV Limited (the Investor) which
was extended to £10.0 million on 17 June 2009. The SEDA was renewed on 16 May 2012 for £10.0 million. The SEDA
enables the Company, at its discretion, to draw down funds in exchange for ordinary shares in the Company in tranches subject
to the terms of the agreement. The primary terms of the agreement are:
> The Company may draw down an amount up to £200,000 per tranche. Higher amounts may be drawn down if agreed with
the Investor in advance of the drawdown.
> The purchase price of the ordinary shares shall be 95% of the lowest daily Volume Weighted Average Price of the ordinary
shares in the five trading days following the notification of a draw down.
> The Investor is also entitled to a placing fee of 3% of each draw down.

At 31 May 2012, £10.0 million of the facility remained undrawn.

27. ESOP TRUST RESERVE
The Victoria Oil & Gas ESOP Trust is consolidated in these accounts as if it were a subsidiary undertaking in accordance with
SIC 12. The ESOP Trust Reserve eliminates the value of the shares in the Company held by the ESOP Trust, by treating these
as treasury shares.
The balance of the reserve is analysed separately in the Consolidated Statement of Changes in Equity, shown on page 28, and
reflects the subscription for new shares by the ESOP Trust.

28. OTHER RESERVE
Group and Company
2012 2011
$000 $000

At 1 June 4,408 3,828
Share-based payments 1,032 580
At 31 May 5,440 4,408
Other reserve includes an amount of $2.9 million in respect of settlement of an embedded derivative following the early
redemption of an associated convertible loan note and a reserve for share-based payments. Further details of share-based
payments in the year are given in Note 30.



Review
29. FINANCIAL RISK MANAGEMENT
The Group’s financial instruments comprise cash balances and various items such as trade receivables and trade payables which
arise directly from trading operations.

The Group undertakes certain transactions denominated in foreign currencies. Hence, it has an exposure to exchange rate
fluctuations that arise. Exchange rate exposures are managed within approved policy parameters.

The Group holds cash as a liquid resource to fund the obligations of the Group. The Group’s cash balances are held in

Governance
US Dollars, Sterling, Central African Francs, Russian Roubles, Kazakh Tenge and Euros. The Group’s strategy for managing
cash is to maximise interest income whilst ensuring its availability to match the profile of the Group’s expenditure. This is
achieved by regular monitoring of interest rates and monthly review of expenditure.

Except for embedded derivatives contained in hybrid financial instruments, the Group does not enter into any derivative
transactions and it is the Group’s policy that no trading in derivatives shall be undertaken. The issue of hybrid financial

Accounts
instruments forms an important part of the Group’s funding of working capital and the associated risks are considered by the
Board at that time.

The main financial risks arising from the Group’s financial instruments are as follows:

Credit Risk
Credit risk is the risk that the Group’s counterparties will cause the Group financial loss by failing to honour their obligations.

Other information
The Group’s receivables relate primarily to cash and cash equivalents, loans receivable, prepayments, and reimbursable customer
conversion costs. The credit risks faced by the Group are the risk that the prepaid services are not received, loans are not repaid,
or conversion costs are not reimbursed. The Group manages credit risk by only dealing with creditworthy counterparties and
obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. Credit
exposure is controlled by counterparty limits that are reviewed and approved by the Directors from time to time. The Group
credit risk on liquid funds is limited because the Group only holds funds with banks with investment grade credit ratings.
Low-credit-quality receivables are managed such that, in the opinion of the Directors, the Group’s credit risk is minimal.

The credit risk of the Company relates to cash and cash equivalents, and to amounts due from subsidiaries in respect to
exploration and evaluation expenditure (described further in Note 14). The credit risk on liquid funds is limited because the
Company only holds funds with banks with investment grade credit ratings.

The maximum credit risk exposure relating to financial assets is represented by the carrying value as at the Balance Sheet date.

Liquidity Risk
With regards to liquidity, the Group’s exposure is confined to meeting obligations under short-term trade payables agreements
and under longer term borrowing arrangements. This exposure is considered significant. The risk is partially managed by the
majority of longer term borrowings being taken on terms that allow conversion to new shares.

The Group’s commitments have been fully met from cash flows generated from equity and loan finance raised to date. The
Directors are confident of financing future exploration and development operations from internally generated funds, existing
facilities and access to debt and equity. Controls over expenditure are carefully managed.

The Company’s and the Group’s contractual maturity for its non-derivative long-term financial liabilities is more than one but
not more than five years.

At 31 May 2012 and 31 May 2011, the Group’s and Company’s other non-derivative financial liabilities were payable on
demand.

Foreign Currency Risk
Although the Group is based in the UK, it has significant investments in overseas subsidiaries which operate in Russia,
Cameroon and Kazakhstan. These overseas operations are funded primarily in US Dollars (and occasionally in Euros and
Sterling) which is largely converted to local currency to fund operations, as it is a legal requirement to make all in country
payments in local currency. The Group holds surplus cash in both US Dollars and Sterling, and buys Roubles, Central African
Francs and Kazakh Tenge as required, at the most advantageous rates available, to meet short-term creditor obligations and
fund other expenditure.

The Group is exposed at any point in time to exchange rate fluctuations.

The Group seeks to minimise its exposure to currency risk by closely monitoring exchange rates and restricting the buying and
selling of currencies to predetermined exchange rates within specified bands.



29. FINANCIAL RISK MANAGEMENT continued
The functional currency of the majority of the Group’s operations is US Dollars, and the reporting currency is US Dollars. The
carrying amounts of the Group’s significant foreign currency denominated monetary assets and liabilities at the reporting dates
are as follows:
Assets Liabilities
2012 2011 2012 2011
Group $000 $000 $000 $000

Sterling 1,484 2,523 (5,859) (10,093)
Russian Rouble 74 261 (336) (275)
Kazakh Tenge 111 108 (15) (14)
Central African Franc 671 351 (7,897) (5,253)
Euro 3 – – –
2,343 3,243 (14,107) (15,635)
US Dollar 1,349 35,947 (26,936) (13,222)
3,692 39,190 (41,043) (28,857)

Assets Liabilities
2012 2011 2012 2011
Company $000 $000 $000 $000

Sterling 1,426 2,479 (1,784) (1,641)
Euro 3 – – –
1,429 2,479 (1,784) (1,641)
US Dollar 99,136 82,040 (7,794) (1,912)
100,565 84,519 (9,578) (3,553)
The Group does not utilise swaps or forward contracts to manage its currency exposures.

Foreign Currency Sensitivity Analysis
If the US Dollar had gained/lost 5% against all currencies significant to the Group at 31 May 2012, the loss would have
been $0.6 million lower/higher (2011: $0.6 million) and the net equity would have been $0.8 million higher/lower
(2011: $0.6 million). The impact on the Company’s Income Statement and net equity would be immaterial.

Price Risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to
the individual financial instrument or its issuer or factors affecting similar financial instruments traded in the market. The
Group’s overall market positions are monitored on a monthly basis by the Directors.

Interest Rate Risk
At year-end, the Group had outstanding borrowings of $5.0 million from YA Global Master SPB Ltd with interest payable at
the fixed rate of 9% per annum (calculated on a daily basis). Additionally, the Group had interest-bearing non-bank borrowings
of $0.4 million (2011: $0.1 million) with interest accrued at a fixed rate of 0.5% per month from HJ Resources Limited. Refer
to Note 22 for more information regarding these loans.

New projects and acquisitions are financed by a combination of existing cash surpluses and through funds raised from equity
share issues and other financial instruments. The Group may use project finance in the future to finance exploration and
development costs on existing licences. The Company manages its interest rate exposure by borrowing at fixed rates of interest.

Capital Management
The objective of managing capital is to maximise shareholder value. The capital structure of the Group and Company consists
of equity attributable to equity holders of the Parent Company, comprising issued capital, reserves and retained earnings and
convertible loans (see Note 23).

The Group meets its capital management objectives by reviewing the capital structure from time to time during the year in
relation to its future capital expenditure requirements based on forecasts prepared by management. When required, the Board
decides on the mix and level of capital to raise in order to allow all ongoing projects to continue without delay. As part of this
review, the Board considers the cost of capital and the risks associated with each class of capital.



Review
Gearing ratio
The Group monitors capital on the basis of the net debt ratio, that is, the ratio of net debt to equity. The gearing ratio at the end
of the reporting period was as follows:
Group Company
2012 2011 2012 2011
$000 $000 $000 $000

Governance
Debt 13,684 2,013 8,107 1,912
Cash and cash equivalents (1,887) (8,425) (1,236) (7,876)
Net debt/(negative net debt) 11,797 (6,412) 6,871 (5,964)

Equity 152,180 143,440 168,486 150,822

Accounts
Net debt/(negative net debt) to equity ratio 7.75% (4.47%) 4.08% (3.95%)
In relation to the above, debt is defined as long- and short-term borrowings as described in Notes 22 and 23, and equity
includes all capital and reserves.

Categories of financial instruments Group Company
2012 2011 2012 2011

Other information
$000 $000 $000 $000

Financial assets
Unlisted investments 6,600 – 6,600 –
Investments in subsidiaries and advances – – 70,881 69,840
Cash and cash equivalents 1,887 8,425 1,236 7,876
Loans and receivables 1,805 30,765 99,329 76,643

Loans and payables (27,944) (16,064) (9,578) (3,525)
The Directors consider that the fair value of the Group’s financial assets and liabilities are not considered to be materially
different from their carrying values. All of the above financial assets are unimpaired.

Significant Accounting Policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each material class of financial asset,
financial liability and equity instrument are disclosed in Note 1 to the financial statements.
The fair values of financial assets and financial liabilities are valued at amortised cost value less any credit risk provision in respect
of assets. Due to the short-term nature of these assets and liabilities, such values approximate to their fair values at 31 May 2012
and 31 May 2011.

Valuation Techniques and Assumptions Applied for the Purposes of Measuring Fair Value
The fair values of financial assets and financial liabilities are determined as follows:
> The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid
markets are determined with reference to quoted market prices (including listed redeemable notes, bills of exchange,
debentures and perpetual notes).
> The fair values of derivative instruments are calculated using quoted prices. Where such prices are not available, a discounted cash
flow analysis is performed using the applicable yield curve for the duration of the instruments for non-optional derivatives, and
option pricing models for optional derivatives. Foreign currency forward contracts are measured using quoted forward exchange
rates and yield curves derived from quoted interest rates matching maturities of the contracts. Interest rate swaps are measured at the
present value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates.
> The fair values of other financial assets and financial liabilities (excluding those described above) are determined in
accordance with generally accepted pricing models based on discounted cash flow analysis.

Specifically, significant assumptions used in determining the fair value of the following financial assets and liabilities are set out below.

Convertible loan notes
The fair value of the liability component of convertible loan notes is determined assuming redemption on 31 December 2012
and using 93.9% effective interest rate for the original $2.0 million loan and 11.1% for the $1.0 million previously recognised as
an unsecured, non-interest bearing loan (refer Notes 22 and 23).



Fair value measurements recognised in the Consolidated Balance Sheet
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value,
grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
> Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities.
> Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
> Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that
are not based on observable market data (unobservable inputs).

Level 1 Level 2 Level 3 Total
2012 $000 $000 $000 $000

Finance lease liabilities – – (5,170) (5,170)
Convertible loan – debt portion – (3,066) – (3,066)
– (3,066) (5,170) (8,236)

Level 1 Level 2 Level 3 Total
2011 $000 $000 $000 $000

Financial assets
Held for sale assets – – 1,000 1,000

Derivative financial instruments – (28) – (28)
Convertible loan – debt portion – (884) – (884)
– (912) – (912)

30. SHARE-BASED PAYMENTS
Other than as disclosed below, no grants of warrants or options were made in the current or prior year.

Warrants to Subscribe for Ordinary Shares
Details of warrants outstanding during the year are as follows (monetary amounts are denominated in pence Sterling, this being
the currency in which the shares are quoted):
2012 2011
Weighted Weighted
Number of average Number of average
warrants exercise price warrants exercise price
000s Pence 000s Pence

1 June 18,142 4.5 7,066 6.2
Granted during the year 45,104 5.0 11,076 3.5
63,246 5.0 18,142 4.5

During the year, the Company issued 45,103,516 warrants to various suppliers in settlement of placing agreement fees. Each
warrant entitles the holder to purchase an ordinary share in the Company. The warrants have been fair valued using a Black-
Scholes option pricing model. The inputs into the Black-Scholes model were as follows:
2012 2011

Number of warrants 45,103,516 11,076,445
Weighted average share price – pence Sterling 3.0 to 8.0 2.73 to 5.22
Option term – years 1.1 to 3.0 3.0
Share exercise price – pence Sterling 3.0 to 8.0 2.5 to 4.9
Risk-free rate 0.44% to 0.89% 0.25%
% expected volatility 72% to 125% 125%
Expected dividend yield Nil Nil



Review
30. SHARE-BASED PAYMENTS continued
The expected volatility was determined based on the historical movement in the Company’s share price over a period
equivalent to the option period. The total fair value of the warrants of $1,032,000 (2011: $580,000) was charged to the
Consolidated Income Statement with a corresponding credit charged to Other Reserve. During the year no warrants were
exercised (2011: Nil).

The total number of warrants exercisable at the year end is 63,246,314 (2011: 18,142,798). The aggregate of the estimated

Governance
weighted average fair values of these options is $2.1 million (2011: $1.1 million).

31. NON-CASH TRANSACTIONS
During the 2012 financial year, the Group entered into the following non-cash investing and financing activities which are not
reflected in the statement of cash flows:

Accounts
> Shares issued in settlement of professional fees and contractor services of $3.4 million (2011: $3.6 million).
> Shares issued as deferred consideration for the acquisition of Bramlin Limited $1.7 million (2011: Nil).
> Shares issued in lieu of salary of $0.5 million (2011: $0.5 million).
> Shares issued as part payment of a seismic survey of $Nil (2011: $0.5 million).
> Held for sale assets of $1.0 million exchanged as part consideration for the interest acquired in CHL.

Other information
32. FINANCIAL COMMITMENTS
The Group has certain royalty obligations in respect to its share of revenues from hydrocarbon sales relating to the Logbaba gas
and condensate project. The royalties are as follows:
> 8% to the State of Cameroon as provided by the Petroleum Code.
> Royalties averaging 8.3% over the project life which were assumed on acquisition of Bramlin Limited or arose under
commercial contracts for the provision of drilling and other services (refer Note 34).

33. PARENT COMPANY INCOME STATEMENT
As permitted by section 408 of the Companies Act 2006, the Parent Company’s Income Statement has not been presented in
this document. The loss after taxation for the Parent Company for the year is $3.2 million (2011 loss: $4.4 million).

34. RELATED PARTY TRANSACTIONS
The consolidated financial statements include the financial statements of the Company and the subsidiaries listed in Note 17.
The Company is the ultimate parent entity of the Group.

Related parties include key management personnel. Payments to directors and other key management are set out in Notes 11
and 12.

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

Purchases from/ Cash Amounts due
(recharges to) Loans repaid advances from/(to)
related to related to related related
parties during parties during parties during parties at
the year the year the year the year end
2012 $000 $000 $000 $000

Subsidiaries (1,420) – 21,809 98,114
Directors – – – (407)
Key management personnel 1,064 – – (239)

Cash Amounts due
Purchases Loans repaid advances from/(to)
from related to related to related related
parties during parties during parties during parties at
the year the year the year the year end
2011 $000 $000 $000 $000

Subsidiaries – – 26,620 76,305
Directors – (794) – (101)
Key management personnel 1,624 – – –
Amounts due from subsidiaries are non-interest bearing US Dollar denominated loans repayable on demand.



34. RELATED PARTY TRANSACTIONS continued
The balance at 31 May 2012 is stated net of an allowance against the amount due from Victoria Energy Central Asia LLP of
$17.2 million (2011: $17.2 million). There were also movements during the year as a result of changes in foreign exchange
rates.

There was no intergroup trading or transactions between Group subsidiaries.

Robert Palmer is a Director of the Company and a member of The Gallagher Partnership LLP, an accountancy practice. These
accounts include $4,000 (2011: $3,000) in relation to general accountancy services provided by The Gallagher Partnership LLP
to the Company.

Radwan Hadi is included in key management personnel due to his position as Chief Operating Officer of the Company, and he
is also a Director of Blackwatch Petroleum Services Limited, a firm of upstream oil and gas consultants. These accounts include
professional fees of $1.1 million (2011: $1.6 million) in relation to oil and gas technical services provided by Blackwatch
Petroleum Services Limited to the Company.

HJ Resources Limited
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 of $1.0 million
and £130,000. Interest accrues at 0.5% per month. In July 2009, HJ Resources Limited elected to convert $418,000 to shares
at 3.7 pence per share and in October 2010, $623,000 was repaid in cash. On 30 May 2012, HJ Resources Limited loaned a
further $300,000 to Victoria Oil & Gas International Limited. The balance outstanding at 31 May 2012 was $407,000 and has
been repaid in full after the year-end.

Cameroon Holdings Limited
On 9 July 2009, through its subsidiary Rodeo Development Limited, the Group signed agreements for the provision of drilling
services at the Logbaba project with a private company, Cameroon Holdings Limited. As per Note 16, the Company acquired a
35% interest in Cameroon Holdings Limited from an unrelated party during the year. Additionally, HJ Resources Limited is a
significant shareholder in Cameroon Holdings Limited.

All drilling services were completed before 31 May 2010. Cameroon Holdings Limited provided a drilling rig at a discounted
day rate and $4.0 million of funding for operational expenses in exchange for a sliding scale production royalty averaging 4.6%
of revenue over the project life. Further details of the development funding are provided in Note 24.

Employee Share Ownership Plan (“ESOP”)
The Victoria Oil & Gas ESOP Trust purchases and holds ordinary shares in the Company to satisfy scheme awards made to the
employees of the Group. During the year, the Trust purchased 63,500,000 shares and granted 23,300,000 shares to employees.
At the year-end, the Trust owed the Company $0.8 million (2011: $0.3 million) for shares subscribed for but not yet paid.

35. SUBSEQUENT EVENTS
On 31 May 2012, the Board approved the placing and allotment of 105,000,000 new ordinary shares of 0.5 pence at a price of
3 pence per share. The issue of relevant shares was completed on 11 June 2012, raising £3.15 million ($4.9 million) before
expenses.

On 9 July 2012, the Company announced that continuous gas production had commenced at the Logbaba gas and condensate
project. Three thermal customers were connected, with a combined demand of 0.7 million standard cubic feet per day
(mmscf/d), satisfying the minimum throughput conditions of the gas production facilities.

Philip Rand resigned as a Director effective 28 August 2012.


Notice of the Annual General Meeting

Review
Notice is hereby given that the Annual General Meeting of Victoria Oil & Gas Plc (“the Company”) will be held on Thursday
29 November 2012, at 11.00am at 1st Floor Meeting Room, Hatfield House, 52/54 Stamford Street, London SE1 9LX to
consider and if thought fit to pass the following Resolutions of which 1 to 6 will be proposed as Ordinary Resolutions and
Resolution 7 will be proposed as a Special Resolution:

Ordinary Business:
As Ordinary Resolutions:

Governance
1. To consider the financial statements and reports of the Auditors and the Directors for the year ended 31 May 2012.
2. To re-elect Kevin Foo as a Director of the Company.
3. To re-elect Grant Manheim as a Director of the Company.
4. To re-elect Austen Titford as a Director of the Company.
5. To re-appoint Deloitte & Touche as Auditors of the Company and to authorise the Directors to fix their remuneration.

Accounts
Special Business:
As Ordinary Resolution:
6. That the Directors be and they are hereby generally and unconditionally authorised for the purposes of Section 551 of the
Companies Act 2006 (the “Act”) to exercise all the powers of the Company to allot relevant securities (within the meaning
of section 560(1)) up to an aggregate nominal amount of £4,466,083 provided that such authority shall expire at the
commencement of the Annual General Meeting next held after the passing of this resolution save that the Company may

Other information
pursuant to the authority make offers or agreements before the expiry of the authority which would or might require
relevant securities to be allotted after such expiry, and the Directors may allot relevant securities in pursuance of such offers
or agreements as if the power conferred thereby had not expired.

As Special Resolution:
7. That (subject to the passing of Resolution 6 as an Ordinary Resolution) the Directors be and are hereby empowered
pursuant to Section 570 and 573 of the Act to allot equity securities (within the meaning of Section 561(1) of the Act)
wholly for cash pursuant to the authority conferred by Resolution 6 above as if Section 561(1) of the Act did not apply to
any such allotment, provided that this power shall not exceed the aggregate nominal amount of £4,466,083 and this power
shall be limited to the allotment of equity securities:
(a) in connection with an offer of such securities by way of rights (including without limitation, under a rights issue, open
offer or similar arrangement) to holders of equity securities in proportion (as nearly as may be practicable) to their
respective holdings of such securities, but subject to such exclusions or other arrangements as the Directors may deem
necessary or expedient to deal with fractional entitlements, record dates or any other legal or practical problems under
the laws of any territory, or the requirements of any regulatory body or stock exchange;
(b) otherwise than pursuant to the resolution referred to in above 7(a) above and 7(c) and (d) below of up to an aggregate
nominal amount equal to five per cent of the issued share capital of the Company in any calendar year for applications in
connection with the discretionary employee share incentive scheme operated by the Company;
(c) otherwise than pursuant to the resolutions referred to in 7(a) and (b) above and 7(d) below of up to an aggregate
nominal amount equal to twenty per cent of the issued ordinary share capital of the Company from time to time; and
(d) otherwise than pursuant to the resolutions referred to in above 7(a), (b) and (c) of up to an aggregate nominal amount
equal to three per cent of the issued ordinary share capital of the Company in any calendar year in connection with
applications received from staff, consultants and advisers representing their remuneration and/or fees from time to time;
provided that (unless renewed):
(i) the authority contained in this resolution shall expire at the commencement of the Annual General Meeting held
next after the passing of this resolution, and
(ii) the Company may before such expiry make such offers or agreements which would or might require equity
securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer
or agreement notwithstanding that the power conferred hereby has expired.

By Order of the Board

Leena Nagrecha Victoria Oil & Gas Plc
Company Secretary Hatfield House
52/54 Stamford Street
London
24 October 2012 SE1 9LX


Notice of the Annual General Meeting continued

Notes to the Notice of Annual General Meeting:
Appointment of proxies Electronic proxy voting through CREST
1. As a member of the Company, you are entitled to appoint a proxy 10. CREST members will be able to cast their vote using CREST
to exercise all or any of your rights to attend, speak and vote at electronic proxy voting using the procedures described in the
the meeting and you should have received a proxy form with this CREST Manual (available via www.euroclear.com/CREST).
notice of meeting. You can only appoint a proxy using the To appoint one or more proxies or to give an instruction to a
procedures set out in these notes and the notes to the proxy proxy (whether previously appointed or otherwise) via the
form. CREST system, CREST messages must be received by the
issuer’s agent (ID number 3RA50) not later than 11.00am on
2. A proxy does not need to be a member of the Company but must 27 November 2012. For this purpose, the time of receipt will be
attend the meeting to represent you. Details of how to appoint taken to be the time (as determined by the timestamp generated
the Chairman of the meeting or another person as your proxy by the CREST system) from which the issuer’s agent is able to
using the proxy form are set out in the notes to the proxy form. retrieve the message.
If you wish your proxy to speak on your behalf at the meeting
you must appoint your own choice of proxy (not the Chairman) Appointment of proxy by joint members
and give your instructions directly to the relevant person. 11. In the case of joint holders of shares, where more than one of the
joint holders purports to appoint a proxy, only the appointment
3. You may appoint more than one proxy provided each proxy is submitted by the most senior holder (being the first named
appointed to exercise rights attached to different shares. You may holder in respect of the shares in the Company’s register of
not appoint more than one proxy to exercise rights attached to members) will be accepted.
any one share. To appoint more than one proxy, you must
complete a separate proxy form for each proxy and specify against Changing proxy instructions
the proxy’s name the number of shares over which the proxy has 12. To change your proxy instructions simply submit a new proxy
rights. If you are in any doubt as to the procedure to be followed appointment using the method set out in paragraphs 5 to 9
for the purpose of appointing more than one proxy you must above. Note that the cut off time for receipt of proxy
speak with the Company Secretary. If you fail to specify the appointments specified in those paragraphs also applies in relation
number of shares to which each proxy relates, or specify a number to amended instructions. Any amended proxy appointment
of shares greater than that held by you on the record date, proxy received after the specified cut off time will be disregarded.
appointments will be invalid.
13. If you submit more than one valid proxy appointment, the
4. If you do not indicate to your proxy how to vote on any appointment received last before the latest time for the receipt of
resolution, your proxy will vote or abstain from voting at his proxies will take precedence.
discretion. Your proxy will vote (or abstain from voting) as they
think fit in relation to any other matter which is put before the Termination of proxy appointments
meeting. 14. In order to revoke a proxy instruction you will need to inform
the Company by sending a signed hard copy notice clearly stating
Proxy voting using hard copy proxy form your intention to revoke your proxy appointment to Registrar of
5. The notes to the proxy form explain how to direct your proxy the Company at Computershare Investor Services PLC, The
how to vote on each resolution or withhold his vote. Pavilions, Bridgwater Road, Bristol, BS99 6ZY. In the case of a
member which is a company, the revocation notice must be
6. To appoint a proxy using the proxy form, it must be: executed under its common seal or signed on its behalf by an
6.1 completed and signed; officer of the company or an attorney for the company. Any
6.2 sent or delivered to Registrar of the Company at power of attorney or any other authority under which the
Computershare Investor Services PLC, The Pavilions, revocation notice is signed (or a duly certified copy of such power
Bridgwater Road, Bristol, BS99 6ZY; and or authority) must be included with the revocation notice.
6.3 received by the Registrar no later than 11.00am on
27 November 2012. 15. The revocation notice must be received by the Registrar of the
Company no later than 11.00am on 27 November 2012.
7. In the case of a member which is a company, the proxy form
must be executed under its common seal or signed on its behalf 16. If you attempt to revoke your proxy appointment but the
by an officer of the company or an attorney for the company. revocation is received after the time specified then, your proxy
appointment will remain valid.
8. Any power of attorney or any other authority under which the
proxy form is signed (or a duly certified copy of such power or 17. Appointment of a proxy does not preclude you from attending
authority) must be included with the proxy form. the meeting and voting in person. If you have appointed a proxy
and attend the meeting in person, your proxy appointment will
Electronic proxy voting through the internet automatically be terminated.
9. You are able to appoint a proxy online by visiting
www.investorcentre.co.uk/eproxy. You will be required to enter
your Control Number, Shareholder Reference number and PIN
which can be found either on your proxy form or within the
email notifying you of the Annual General Meeting. The proxy
appointment and instructions must be received by the Registrar
of the Company no later than 11.00am on 27 November 2012.


Definitions, Abbreviations & Glossary

Review
“1C Contingent Resources” The amount of petroleum which geophysical, geological and engineering
data indicate to be in place or recoverable (as the case may be) to a high
degree of certainty, but due to the existence of one or more contingencies,
recovery of the resource may not be commercially viable. For the
purposes of this definition, there is a 90 per cent. chance that the actual
quantity will be more than the amount estimated as 1C and a 10 per cent.
chance that it will be less.

Governance
“bbl(s)” Barrel(s), or 42 US gallons.

“bcf” Billion cubic feet.

“boe” Barrels of oil equivalent.

Accounts
“mmbbls” Million barrels.

“mmbtu” Million British thermal units.

“mmsfc/d” Million standard cubic feet per day.

Other information
“Proven”, “Proved” or “1P” The amount of petroleum which geophysical, geological and engineering
data indicate to be in place or recoverable (as the case may be) to a high
degree of certainty. For the purposes of this definition, there is a 90 per
cent. chance that the actual quantity will be more than the amount
estimated as Proven and a 10 per cent. chance that it will be less.

“Probable” or “2P” As for Proven but with a greater element of risk. For the purposes of this
definition, there is a 50 per cent. chance that the actual quantity will be
more than the amount estimated as Proven + Probable and a 50 per cent.
chance that it will be less.

“Possible” or “3P” As above but entailing a substantial element of attached risk. For the
purposes of this definition, there is a 10 per cent. chance that the actual
quantity will be more than the amount estimated as Proven + Probable +
Possible and a 90 per cent. chance that it will be less.

“Prospect” A potential accumulation that is sufficiently well defined to represent
a viable drilling target.

“tcf” Trillion cubic feet.

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Victoria Oil & Gas Plc Annual Report and Accounts 2012

www.victoriaoilandgas.com

Victoria Oil & Gas Plc
Hatfield House
52/54 Stamford Street
London
SE1 9LX

Tel: +44 20 7921 8820
Fax: +44 20 7921 8821
Email: info@victoriaoilandgas.com

Company Registration No. 5139892
(England and Wales)

Annual Report & Accounts 2012

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Annual Report & Accounts 2012