QUARTERLY REPORT FOR THE PERIOD ENDING MARCH 31, 2003

HIGHLIGHTS FOR THE QUARTER

1. Successful flow-testing of new oil field discovery Jingemia-1, with over 18,000 barrels of oil produced in ten day test interval at an average 1850 BOPD in December 2002.
2. Long-term oil production testing at Jingemia No. 1, to commence early May 2003 with expected flow rates of 2000 barrels of oil per day.
3. Awarded in March 2003 highly prospective South Australian Cooper Basin permit PEL 104 adjacent to Australia's largest onshore oil field, Tirrawarra with Victoria Petroleum interest of 80%. Planned two well drilling program in late 2003/early 2004.
4. Successful farmout of three wells in Surat Basin Queensland permits planned to commence drilling in June 2003 testing potential recoverable targets of 16 million barrels of oil in North Giligulgul, 12 million barrels of oil in Rookwood South and 6 million barrels of oil in Don Juan prospects, if oil is present.
5. Continuation of fracture stimulation and testing of good oil show zones in Vacqueros and Monterey Formation of up to 283 metres in San Antonio-1 in California through January/February 2003 targeting up to 106 million barrels of oil.
6. Planned two well California development and exploration program at Vallecitos Oil Field and Hyena Prospect in second half of 2003.
7. Active farmout effort to seek partner to resume horizontal development drilling at 24 million barrels of oil and 62 billion cubic feet of gas Eagle Oil Pool Development Project in mid 2003.
8. First oil production net to Victoria Petroleum in USA of 50 barrels of oil per day plus indirect interest in net estimated oil and gas production for the three months ending 31 December 2002 of 75 million cubic feet of gas and 5,400 barrels of oil equal to 198 barrels of oil equivalent per day for 16%-owned Kestrel Energy, Inc., a US NASDAQ public company (Code: KEST).
9. Continuing oil and gas production development activities in USA to increase oil and gas production in the USA producing properties in Louisiana, New Mexico, Oklahoma and Wyoming, to increase June 30, 2002 proved reserves of 2.3 million barrels of oil equivalent with a future undiscounted net cash flow of A$35 million and net present value of A$17 million at a discount rate of 10%.
10. Planned participation in a drilling and testing program of up to eight wells in the next six months.

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