www.victoriaoilandgas.com
Victoria is an independent oil and gas exploration and production company with projects in Africa and the FSU. The Company’s principal assets are 95% of the Logbaba gas and condensate project in Cameroon and 100% of the West Medvezhye gas field in Siberia, Russia. Logbaba is located in Douala, the economic capital of Cameroon. West Medvezhye is situated in the prolific Yamal-Nenetsk hydrocarbon region in Siberia.
UPDATE: Victoria Oil & Gas raises £9.5 million to complete Logbaba project in Cameroon
Adds broker comments.....
Victoria Oil & Gas (LON:VOG) has raised £9.5 million through a placing to achieve first gas production from its Logbaba project in Cameroon.
This target remains on schedule for the fourth quarter of this year, said the firm.
The company said it has placed 292.3 million shares at 3.25 pence per share - a discount to the current price of 3.61 pence.
The funds will be used to complete the Logbaba gas and condensate project following the increase to its working interest to 95 percent.
The money will also fund the final payment to buy a one third interest in Cameroon Holdings Limited, which was announced in August this year, it said.
These transactions have considerably enhanced the project's economics, said Victoria, increasing net proved and probable gas reserves by around 80 billion cubic feet and the post tax NPV by $270 million to $676 million.
"This placing demonstrates continued investor confidence in VOG in very challenging markets," said Kevin Foo, chairman of the firm.
Victoria also revealed that it had issued a further 28.4 million shares to key suppliers and advisors at a price of 3.25 pence per share in settlement of outstanding costs and fees - an additional vote of confidence in the company.
Analyst Shahin Amini, at broker FoxDavies, which retains its 'buy' rating on the stock said the firm's shares were trading at a "substantial discount" to the broker's new core NAV (net asset value) of 8.7 pence.
"With the funding issue out of the way, investors can now look forward to the completion of Logbaba gas project and subsequent sale revenues towards the end of this year," said the analyst.
FoxDavies targets a price of 13 pence for the shares.
Meanwhile, broker Westhouse said the fundraising meant the firm was "further de-risked".
"We maintain that VOG represents excellent value at current levels, and reiterate our 'buy' recommendation and target price of 10.8p," it said.
Logbaba has proven and probable reserves of 212 billion cubic feet of gas (35.3 million barrels of oil equivalent) and the company expects gas sales of 8 million standard cubic feet per day (mmscf/d) in the first year of operations rising to 44 mmscf/d (7,300 barrels of oil a day equivalent) by the end of 2014.
The pipeline has a capacity of 60 mmscf/d, which is anticipated to be of sufficient size for the Douala (the largest city in Cameroon) industrial market over the medium term.
The company's current proved and probable reserves are sufficient to supply an average of 30 mmscf/d for the next 20 years. In the longer term, as further reserves may be proven, gas may be supplied to large gas fired power stations connected to the grid, with Victoria either investing in an independent power producer joint venture or selling the gas to third parties.
