QUARTERLY REPORT FOR THE PERIOD ENDING 30 SEPTEMBER 2006

HIGHLIGHTS FOR THE QUARTER

Exploration Activity - Australia and USA

1. Fourteen well exploration program over next twelve months in "core area" of South Australian and Queensland Cooper Basin where Victoria Petroleum (VPE) holds largest gross and net acreage exploration area in 14 permits with average 30% interest.
2. Continuing drilling success in South Australian Cooper Basin permits with July 2007 oil discovery at Growler-2 in PEL 104 following on from initial Growler-1 oil discovery in September 2006, confirming 15 metre oil column in Growler Oil Field.
3. Wirraway and Growler oil discoveries providing further confirmation of possible aerially significant "Jurassic oil fairway" in western portion of PEL 104 and PEL 111. The Western Margin Oil Project covers up to 1,200 square kms with potential with further exploration success to contain a resource of up to 100 million barrels of oil in place, if oil is present.
4. Warhawk-1 planned to commence drilling in March 2008 to test recent interpretation that Wirraway-Growler- Warhawk structures could be combined resource with unrisked mean to P10 oil in place range of 44 -68 million barrels of oil and recoverable 8-14 million barrels of oil, if oil is present.
5. Some 32 prospects and leads mapped in the Western Margin Oil Project with seven drillable prospects identified with unrisked P10 recoverable reserves of 21 million barrels of oil in the Birkhead formation, if oil is present.
6. Successful farmout of southwest Queensland Cooper Basin permit ATP 752P to Santos and Avery Resources providing VPE with a 15% staged free carry through a 7 well drilling and seismic exploration program with total expenditure of $18.5 million. Initial two well drilling program planned to start in January 2008 in the Barta block and two wells in mid 2008 in Wompi block of ATP 752P.
7. All drilling is adjacent to Santos oil production and infrastructure, with Santos the new operator for the permit.
8. Planned commencement of drilling of two wells in late October 2007 in Coal Seam Gas (CSG) joint venture with Bow Energy Ltd in Surat Basin Don Juan CSG Project targeting potential gross resource of up to 500 PJ of methane gas, if gas is present.
9. Commercial 50% success rate in the Margarita Gas Exploration Project with three wells out of six connected to sales line and planned to commence production in fourth quarter 2007 at a rate of 1.7 million cubic feet of gas and fifty barrels of oil per day.
10. Drilling and successful completion of first exploration well with initial production rate of 35 barrels of oil per day in the West Florence Oil Project, Colorado USA.
11. Twenty four exploration and appraisal wells are planned over the next twelve months as per the current drilling schedule with fourteen of the wells in the SA and Qld Cooper Basin, a "core area" for VPE.

Development and Production Activity - Australia and USA

12. 12. Total gross production over the quarter estimated at 190,365 barrels of oil equivalent with net 17,762 barrels of oil equivalent to Victoria Petroleum at an average production rate of 195 barrels of oil equivalent per day.
13. 13. During the quarter estimated oil and gas net cash flow was $0.84 million on gross oil and gas sales of $1.4 million.
14. 14. The Mirage and Ventura oil fields in PEL 115, South Australian Cooper Basin continued production during the quarter at an average combined gross rate of 207 barrels of oil per day, with net production to VPE of 83 barrels of oil per day. Current Proved and Probable (2P) recoverable reserves for the fields are estimated at 1.59 million barrels.
15. 15. Short Term Production test of the Growler-1 oil discovery in the South Australian Cooper Basin during the quarter indicates combined potential production on pump of up to 250 barrels of oil per day for the Growler-1 and 2 wells to be confirmed by an Extended Production Test planned for late December 2007/January 2008.
16. 16. Increase in Flour Bluff Gas Field onshore Gulf Coast, Texas gross production from 1.3 million cubic feet per day and 20 bopd to 3 million cubic feet per day and 40 bopd with successful work overs.
17. 17. It is anticipated that by the end of calendar 2007 that with successful development drilling from existing oil discoveries, the current and planned future Victoria Petroleum net oil and gas production will generate net cash flow estimated at $5 million for the year.

Other Assets

18. 18. Victoria Petroleum N.L. has a 5.3% interest in Samson Oil & Gas Limited, an active oil and gas explorer and producer in North America listed on the Australian Stock Exchange.
19. 19. Victoria Petroleum N.L. has a 16 2/3% to interest in the public unlisted geothermal energy company Greenearth Energy Limited. Greenearth Energy has been granted three promising geothermal exploration licenses in Victoria. Two of these, GEL 12 and 13 are adjacent to and containing the Trifon-2 well that has flowed steam and hot water at 90 degrees C from the relatively shallow depth of 2,200 metres. Greenearth Energy is planned to list in December 2007 with an entitlement to Victoria Petroleum shareholders.
20. 20. Cash and current investments as at September 30, 2007 to fund planned exploration and development drilling activities, as follows:

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