QUARTERLY REPORT FOR THE PERIOD ENDING 31 DECEMBER 2004

HIGHLIGHTS FOR THE QUARTER

1. Exploration success with two oil discoveries in the South Australian Cooper Basin with estimated recoverable reserves of up to 2.8 million barrels of oil.
2. Oil discoveries at Mirage-1 and Ventura providing 50% oil exploration success in 2004 South Australian Cooper Basin.
3. Planned commencement of Mirage and Ventura oil field production at 500 barrels of oil per day in March 2005 (200 barrels of oil per day net to Victoria)
4. Development drilling on Mirage Oil Field planned for second quarter 2005 to increase oil production.
5. Continuing exploration drilling program in 2005 in South Australian Cooper Basin permits with minimum five wells planned.
6. Acquisition of first US gas producing interest, the Flour Bluff Gas Field, Texas Gulf Coast with 92.5 billion cubic feet of 3P recoverable gas reserves and the potential to contain additional gas reserves of up to 204 billion cubic feet for total field potential of up to 300 billion cubic feet of gas.
7. Commencement of three well deep development drilling program on Flour Bluff Gas Field in early February 2005 to increase production from current 3.2 million cubic feet per day to gas production target with development success within 12 months to 40 million cubic feet per day.
8. Planned increase in oil production in Jingemia Oil Field, North Perth Basin from current 4,000 barrels of oil per day (200 barrels of oil per day net to Victoria) to 5,000 barrels of oil per day in March 2005 by operator Origin Energy.
9. Planned drilling in second quarter 2005 of Eagle-2 development well on California Eagle Oil Pool Development Project, with potential to contain up to 34 million barrels of oil and 58 billion cubic feet of gas, after farmout.
10. Victoria Petroleum has 20.48% indirect interest in total proved reserves of NASDAQ listed company Kestrel Energy Inc of 367,700 barrels of oil and 4.74 billion cubic feet of gas with a 10% Net Present Value of A$19 million.
11. Planned exploration and development drilling program of up to 10 wells over the next three months as per the attached drilling schedule.
12. Victoria Petroleum exploration, development and production activities in Australia and USA are being carried out against a background of historical high oil prices in the range of A$60-70 per barrel. The current and planned Victoria net oil production of 400 barrels of oil per day in first quarter 2005 to generate net cash flow estimated at $5 million per year.

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