Victoria Oil and Gas Plc AIM LSE: VOG

Rayrac,

You deal with the valuation of oil and gas in the ground by the Value of the Resource, discounted by the probability of it being a commercial success discounted by the time it will take to extract, ie discounting future anticipated cashflows by a discount rate typically 5% 7.50% or 10% pa ie to calculate a Net Present Value.

I quote:-

"This statement confirms a new expected case gross prospective resource volume
for the Project of 1.0 billion barrels of oil equivalent consisting of 5.1
trillion cubic feet of gas, 124.0 million barrels of condensate and 24.6 million
barrels of oil."

Now think on this if 5,100,000,000,000 ft3, is around 1,531,531,532,000 M3 and the price in Russia tends to average US$83 per 1000 M3 (US$56 per 1000M3 Residential, US$93 per 1000M3 per Gazprom), the Prospective Resource encompasses US$127,117,117,155 Gross Prospective Asset in the Ground.

Now obviously each well has say a 19% to 23% to 30% Probability of Success, and costs around US$4,000,000 to US$5,000,000 to drill, and US$2,500,000 to case,will take months to drill to 3,850 metre target depths, and three or four months to flow test, but if each well targets 639,000,000,000 ft3 of Gas or 32,000,000 bbls of condensate type targets, they are targetting enormous structures, I reckon hosting not less than US$8,656,250,000 in the ground (I think 103 is actually US$15,927,027,027 Natural Gas ie 191,891,891,891 M3 plus US$2,000,000,000 Condensate assuming US$83 per 1000 M3 NG and US$62.50 bbl Condensate).

People just don't seem to realise quite how large these Russian Oil and Gas Fields are.

All IMHO, NAG, DYOR etc

Cheers

Ash:)

Per RNS DMM Numbers:-

Appendix

Below is a summary of total attributable contingent and prospective gas resource
volumes for the Danniella Accumulation confirmed by D&M in their latest report
prepared using definitions promulgated by the Society of Petroleum Engineers
("SPE") and the World Petroleum Congresses ("WPC"):

(Bcf) Low Estimate Best Estimate High Estimate Pg Factor Operator
Contingent Resource 174 322 501 100% ZAO SeverGas-Invest
Prospective Resource 86 196 344 23%
Total Gas Resource 260 518 845
Source: DeGolyer & MacNaughton
Pg Factor: Probability of geologic success
Bcf: Billion cubic feet

Below is a summary of total attributable contingent and prospective gas resource
volumes for the entire Project confirmed by D&M using definitions promulgated by
the SPE and the WPC:

(Bcf) Low Estimate Best Estimate High Estimate Pg Factor Operator
Contingent Resource 174 322 501 100% ZAO SeverGas-Invest
Prospective Resource 4,175 5,300 6,526 19%
Total Gas Resource 4,349 5,622 7,027
Source: DeGolyer & MacNaughton
Pg Factor: Probability of geologic success
Bcf: Billion cubic feet

Below is a summary of total attributable contingent and prospective hydrocarbon
resource volumes for the entire Project confirmed by D&M using definitions
promulgated by the SPE and the WPC:

Low Estimate Best Estimate High Estimate Pg Factor
Contingent Gas Resource (Bcf) 174 322 501 100%
Prospective Gas Resource (Bcf) 4,175 5,300 6,526 19%
Condensate Resource (Mbbl) 56 139 248 21%
Oil Resource (Mbbl) 14 25 37 10%
Total Resources (Mboe)* 795 1,101 1,457
Source: DeGolyer & MacNaughton
Pg Factor: Probability of geologic success
Bcf: Billion cubic feet
Mbbl: Million barrels of oil
Mboe: Million barrels of oil equivalent
* Gas converted to oil at the rate of six thousand cubic feet of gas to one
barrel of oil