Victoria Oil (200% Potential)

Dear Shareholder

It is my pleasure to report to you again on the progress of your Company, Victoria Oil & Gas Plc (“VOG” or

the “Company”).

Since the release of our 2009 annual accounts, we have made exceptional progress at the Logbaba gas and

condensate field in Cameroon and it is worth reflecting briefly on these achievements:

years. Despite some delays, the well encountered over 300 feet of gross sandstone pay and has been

cased ready for testing and production;

been excellent and we hope to complete the well on schedule within 60 days;

available at the beginning of Q2;

data on the Logbaba block since Elf abandoned the field in the 1950s. The survey has not only given

us valuable additional information on the existing discovery, which we have integrated into our design

for La-106, but also highlighted a significant new prospect (potentially much larger than the existing

discovery), which has not been seen before;

Whilst it is easy to get distracted by the daily market movements, it is always important to keep a clear view

of the fundamentals of your Company: Logbaba is the only proven onshore gas field in Cameroon and has

had significant upside potential highlighted by the passive spectroscopy survey; the field lies beneath the

largest industrial market in Central Africa, which is starved of cheap energy; Cameroon itself is facing a

power crisis and recent initiatives announced by the Government point to huge future investment in thermal

as well as hydroelectric power stations in the country.

At present, La-106 has reached a measured depth of 4,450 feet after the 13 3/8 - inch casing was set to

3,208 feet. With some hard-earned experience from our first well, our progress to date as been excellent. We

are on course to reach total depth of around 8,700 feet within the 60 day schedule, possibly even earlier.

The design of La-106 has been modified following the passive seismic spectroscopy survey to favour the

northern flank of the sands intersected by La-101 in 1955 and access new areas with potentially higher

prospectivity. If the drill bit continues to perform, we will have first data back from logging of this new well in

early Q2.

Now that we are at a safe depth at La-106, testing of La-105 has commenced. The testing programme

started in the lower sands and will progressively introduce shallower zones while monitoring flow rates,

pressures and taking gas and liquid samples. The first sands being flowed are actually part of a new horizon,

below the Logbaba Formation, and so could be an addition to the known reserves if productive. The total

testing period will depend on the rates achieved at the various intervals, but by the beginning of Q2 we

should have enough data to enable a recalculation of the July 2008 reserve estimate for the Logbaba field.

At that time, using only data from Elf's operations in the 1950s, the independent reserve auditors calculated

proven and probable reserves for the field of over 100 billion cubic feet of gas.

Since acquiring the asset and throughout all of the activities so far, we have worked closely with the

Government of Cameroon and State companies to ensure their approval of our operations. We have been

delighted by the interest and support of the local regulators in the development of Logbaba and we hope that

this relationship will only strengthen as we progress. As announced previously, we are now qualified to apply

for the exploitation rights to the field and we do not perceive any difficulties in process. Cameroon has a

huge demand for energy and needs a great deal of foreign investment to assist in the development of its

natural resources. This makes it an excellent location for companies such as VOG to do business. There is a

structured process for the granting of an exploitation licence and we cannot accurately forecast when this

might be achieved, but we anticipate that it will be by mid-year.

Of course, any natural resource is only as good as its available market and this is where the strength of

Logbaba truly lies. When Elf abandoned the field 50 years ago it was because there was no market for

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natural gas close to Douala to make the project economically viable, but now Douala is one of the trading

and manufacturing hubs of Central Africa. Major international and domestic firms such as Guinness, SABC,

Nestle and Chococam rely solely on imported liquid fuels to power their facilities and Douala has become the

most expensive city in Africa. Half the available customers have signed in-principle agreements to take

natural gas from us at a price of US$16 per thousand cubic feet, which is a 30 percent or more discount to

the equivalent fuel prices they are currently paying. So far, these agreements cover around 8 million cubic

feet of gas per day from Logbaba and we know from speaking to our future consumers that their demand will

grow. We expect new binding contracts will be signed as part of the financial closing of the project finance for

the downstream elements of this project.

There remains the obvious question of how we would monetise any additional reserves that may be proven

up, for instance through exploration of the big prospect revealed by the passive seismic spectroscopy, given

that the industrial market can only grow to a certain size. In our eyes and those of the Government, the

answer lies in the massive drive for power which has already begun in Cameroon. Through the addition of

new hydroelectric and thermal, gas-fired power stations, the Government is looking to treble its generating

capacity to 3,000 megawatts by 2020 and any source of accessible natural gas will be a key player in

helping to achieve this aim. We have been working with the State electricity company on a small-scale

project to take gas from Logbaba for purely local power generation, but we have also seen the reports of a

deal for a much larger gas-fired power station to be constructed in Douala by Hyundai. If such a project does

come into fruition then it would be excellent news for us, but we are in no way dependent upon it.

Accessing the industrial market, through a basic processing facility and a short pipeline, is not a huge feat in

engineering terms, but is a significant step for VOG and Cameroon as it would be the only gas infrastructure

in the whole region. Whilst it is rare for small upstream companies to get involved in downstream facilities,

owning our own transmission system will cement our competitive advantage. At present, there is no

competition for gas in the country as all offshore operations currently face major problems in bringing

production to land. As the onshore potential is explored, our status as the sole gas provider will change, but

we have a valuable opportunity to mould the market with our first mover advantage.

We have recently engaged a major international engineering group to head up the engineering of the

downstream phase and are assessing a number of options for efficient transport of the gas to the customers.

We are under no illusions as to how long these projects can take, but we have challenged both management

and our advisers to find a process to allow early-stage revenue production, even if this begins before the

pipeline is completed. As fellow investors, I am sure you will agree that cash flow is the key to re-rating VOG

as a growth company and so getting revenue from Logbaba as soon as possible is our priority. A number of

banks have approached us with interest in financing and so we are confident that this stage of the project

can be funded with debt.

The West Medvezhye story should not be forgotten in the excitement surrounding Logbaba. For us, it is still

the Company's most exciting asset. With recoverable prospective resources of over a billion barrels of oil

equivalent, West Med dwarfs Logbaba, but it is still in its infancy and the pace of development is slow. Given

the long periods when activity on the ground is impossible, it is best to have multiple target locations before

embarking on any prolonged drilling campaign to save on costs. With that in mind, most of 2010 will be

dedicated to adding further prospects to the existing discovery location around Well 103. We have two

surveys, one passive and one geochemical, planned for the coming spring and we hope that the findings will

give us enough information to be able to specify areas for acquisition of further 2D seismic or justify new

drilling. Ideally, we could be drilling in 2011 if the analysis shows clear areas for exploration and we are able

to mobilise swiftly. By that time, we should also be producing significant revenues from Logbaba to help

support West Med's development.

Despite the amount of activity going on in Russia and Africa at the moment, we feel that it is very important

that VOG maintains a strong pipeline of new projects and I am pleased to announce that we recently signed

the 12 month extension to our option to acquire Falcon Petroleum Limited. Falcon has over 45,000 square

kilometers of exploration acreage in Ethiopia and Mali, two very prospective new regions which have already

stirred up interest with major producers. We are also seeing more and more attractive projects coming to

market both in Africa and the FSU, which could augment our portfolio and ensure we have a clear path to

further growth. Logbaba is forging a solid platform, but the real excitement of VOG is yet to come.

Kevin Foo

Chairman