Quarterly report - Victoria Petroleum

Queensland Gas Company Limited (QGC) increases interest in Victoria Petroleum N.L. (VPE) to 19.24% through VPE 15% placement to QGC raising $9.4 million.
Presence of QGC as VPE's largest shareholder is significant as VPE is now aligned with Australian's largest pure Coal Seam Gas (CSG) company ($3.5 billion market capital) in development of VPE CSG assets.
Placement funds ($9.4 million) earmarked for accelerated exploration and development of VPE's coal seam gas resources in the Surat Basin Queensland.
Continuation of focussed Australian growth strategy on the two key Victoria Petroleum (Vicpet: VPE) projects: Cooper Basin Oil exploration, development and production in South Australia and Queensland and the Surat Basin Queensland CSG development.
Active drilling program of up to 20 wells through 2008 as per the attached "VPE Planned 2008 Drill Schedule", with a continuous 6 well exploration and development drilling program starting in early August through to Christmas 2008 in VPE's South Australian "Western margin Oil Project Cooper Basin permits
Ongoing VPE exploration and development drilling activity funded by $17.7 million cash on hand.
Estimated oil and gas net cash flow of $1.46 million on gross oil and gas sales of $2.33 million.
Decision of VPE Board to divest the assets in the USA.