Full steam ahead for Victoria Oil & Gas

AIM-listed Victoria Oil and Gas (VOG) was not going to let heavy full-year losses dampen its spirit as it announced its intention to charge ahead with its Logbaba project in Cameroon.

The oil and gas exploration company expects the gas field, obtained at the close of 2008 as part of its Bramlin Limited acquisition, to start producing cash flow as early as next year.

The company adopted a bullish stance despite posting losses of $42.3 million for the year, compared to $1.17 million seen last year. The large year-on-year gap was mainly attributed to the company's write off of its £35.5 million Kemerkol asset in Kazakhstan.

Chairman Kevin Foo also said the company had faced the most "traumatic" 18 months in its history: "Markets in the last 18 months have been the most volatile and traumatic in memory. Following the near-collapse of the banking system, the equity markets, which are the life-blood of the resources sector, effectively closed for business until confidence returned in the middle of 2009."

Nevertheless, the company remained upbeat that its Logbaba acquisition had helped to position it for recovery after hailing it as "favourably positioned for swift development and monetisation." The project is well located to take advantage of the numerous neighbouring industrial customers such as Guinness and Nestle, Foo added.

Current energy consumption in the Douala region, where the gas field is located, is currently 12 million standard cubic feet of gas per day, but Victoria Oil expects this amount to double to 30 million standard cubic feet per day within three years of first sales.

The company, which raised over $28 million in equity since year-end, will also plough some of the project's cash flow into helping along its West Medvezhye project in Russia.

Since first being granted exploitation rights to the Russian project in 2008, Victoria Oil has made a discovery at well 103 and identified a further two promising structures close by which are set to be drilled by the end of 2013.

Looking ahead, the company said it was in discussions to extend its option for the acquisition of Falcon Petroleum, a private company with 50% of a production sharing agreement in Mali and 90% of a production sharing agreement for three blocks in Ethiopia.

"Our ambition remains to grow Victoria organically and through acquisition into a major E&P company and as we develop the Logbaba and West Med projects, we will continue to seek out new, exciting opportunities to add further value," Foo added.

Investors discussing the results on the Interactive Investor Victoria Oil and Gas Discussion Board believed it was in line with forecasts.

Newfreelancer commented: "These results are in-line with expectations and the asset impairmen on Kemerkol reflects a past situation that has no bearing on either the future of the company, nor on its valuation. The current focus is the drilling and testing of the Logbaba well which is progressing broadly on schedule."

Try Anything Once added "A good steady RNS for those of us holding long-term."

The company's share price rose by 0.6% to 5.15p.