VOG 2005 New Thread

A copy of the Hargreaves Landsdown tip printed below for anyone who has missed it.


Victoria Oil & Gas sprang into life
last month, more than tripling its
value inside three days following a
big resource confirmation at its key West
Medvezhye gas and condensate project. The
announcement prompted a swell of activity
in the group’s shares as investors were excited
about the potential for further success
from three other wells planned for next year,
which the company believes have at least
equal promise.
Independent specialists confirmed a half
a trillion cubic feet (Tcf) recoverable gas
resource from the first discovery well at the
Western Siberia site, although it estimates a
maximum of 2.3 Tcf. Victoria has a 74.8%
stake in the project located in a region of
Russia that already contributes around 20%
of the world’s annual gas production.
Executive director William Kelleher’s is
well placed to understand Victoria’s chances
of success. As vice president for Central Asia
at Yukos Oil, once Russia’s biggest oil producer,
the 46-year old was responsible for
managing and developing its exploration
and production companies in Kazakhstan
and Central Asia. Bullish chairman Kevin
Foo is already speculating that the West Med
discovery could transform the company.
In October, Victoria also secured 35m
barrels of proven and probable oil reserves at
the Kemerkol field in Kazakhstan, with production
due at the start of next year.
“Kemerkol has the potential to become a
significant cash generator,” said Kelleher.
Four wells at Kemerkol should start producing
up to 500 barrels of oil per day
(bopd) in the first quarter of 2006; while a
further seven new wells have the potential to
take production up to 1,800 bopd by the
end of the year.
The group also drilled the first of four
exploration wells at the Tamdykol oil project
in Kazakhstan.
Zac Phillips at broker Ambrian Partners
remains upbeat on prospects, putting a fair
value of 306p on the shares following the
West Med news.
Phillips believes potential reserves of 4.4
Tcf at West Med could place Victoria firmly
among the larger Russian and Former Soviet
Union players such as Sibir and JKX.
The shares soared on the back of the
West Med update, although news of fresh
fundraising has deflated the advance and an
element of political risk still remains.
But with oil prices expected to hold up,
President Nazarbayev’s success in the recent
Kazakhstan elections, three more discovery
wells to be drilled at West Med and production
starting at Kemerkol, Victoria is likely
to remain one to watch over the next 12
months.
This is the most speculative of the five
picks for 2006. The shares have already risen
sharply but there does appear to be more to
go for. Consider as a speculative buy.
Past performance should not be seen as
an indication of future performance
Past performance should not be seen as
an indication of future performance
KEY DATA
EPIC Code: ........................................................ VOG
Sector: ........................................................ Oil & Gas
Issue Price (27/07/04): .................................... 20p
Current Share Price:........................................ 100p
52-week Share Price Range: .......... 31.25p - 129p
Market Capitalisation: .............................. £84.2m
Nominated Broker: ...................... Brewin Dolphin
No. of Market Makers: .......................................... 6
Normal Market Size: .................................... 10,000
Free Market Capitalisation: ............................ 44%
Next Results: ........................ Interims, March 2006
Source: DigitalLook.com