Victoria Oil & Gas

Next month Victoria Oil & Gas starts surveying its West Medvezhye gas project in Siberia, with an estimated potential resource equivalent to 1.1bn barrels of oil.  

The AIM-quoted company, a mid-2000s high flyer now languishing at a fraction of its peak levels, expresses high hopes for West Medvezhye, a neighbour to Russian giant Gazprom’s Medvezhye field, which has produced 75trn cubic feet of gas since the 1970s. Observers suggest Victoria, headed by Australian entrepreneur Kevin Foo, an old hand in the region, will need a joint venture partner to develop the project and would not be averse to talking to Gazprom, if the opportunity arose.

London-headquartered Victoria recently tapped the market for £14m in a well-received placing at 3.25p both to fund the seismic spectroscopy and geochemical surveys needed for West Medvezhye and to complete drilling and testing at its other main prospect, at Logbaba in Cameroon, West Africa. The company has 60% of Logbaba, near the city of Douala, with infrastructure now being built and firm potential demand from power-starved local companies and multinationals.

Following encouraging test results from one well at Logbaba, La-105, Victoria is awaiting new reserve estimates for the field. The company also has options on potentially interesting prospects in Ethiopia, but at present regards West Medvezhye as the real jewel in its crown.

Spun out of Foo’s Celtic Resources at 20p six years ago, Victoria shares nearly hit 70p before beginning their long descent to 3.15p during the past 12 months, as a result of Russian setbacks. The company argues there has been an easing of tension over resource assets in Russia, while it is already clinching off-take deals for Logbaba.

Now 3.91p, the shares offer recovery potential for the bold, despite obvious risks.