QUARTERLY REPORT FOR THE PERIOD ENDING 31 DECEMBER 2006

HIGHLIGHTS FOR THE QUARTER

Exploration Activity - Australia and USA

1. Commencement of ten well exploration program over next six months in South Australian and Queensland Cooper Basin where Victoria Petroleum holds largest gross and net acreage exploration area in 14 permits with average 30% interest.
2. First up drilling success at Wilpinnie-4 on the Tomcat Prospect in January 2007, the first of ten well exploration drilling program in five Queensland and South Australian Cooper Basin permits over the next six months. Wilpinnie-4 cased and suspended as a potential future oil producer to be production tested in the near future.
3. In the South Australian Cooper Basin permits, up to further seven wells are to be drilled over next six months with the next wells to be drilled in mid February,Tunkallila-1 and Telowie-1 in the Beach Petroleum operated permit PEL 94 targeting up to 11 million barrels of oil, if oil is present.
4. Rain is affecting drilling operations in the northern part of the Cooper Basin with Wirraway-1 now to commence drilling in PEL 104 in March 2007 targeting up to 8 million barrels of oil, if oil is present. Adjacent Growler-1 oil discovery provides encouragement for chance of drilling success at Wirraway-1.
5. Ascender-1 exploration well in adjacent permit PEL 111 to follow after Wirraway-1. Ascender-1 is targeting a prospect with the potential to contain up to 9 million barrels of oil, if oil is present
6. The potential of the oil pool present in the Tomcat Prospect to extend from PPL93, where it was drilled, into PEL 115 is considered promising based on the up dip gross oil column of 18 metres drilled and partially tested in Wilpinnie-4. The Tomcat oil pool is interpreted to straddle PEL 115 and PPL 93 with up to 6 million barrel oil potential subject to production testing of Wilpinnie-4 and up dip drilling in PEL 115. Wilpinnie-4 was drilled by Santos under a farmout agreement with Santos and the PPL 93 parties.
7. In southwest Queensland Cooper Basin permits, the first of three wells over the next two months commenced drilling with Marracoonda-2 to be followed by Nora and Gamma testing cumulative recoverable oil potential up to 12 million barrels, if oil is present. All drilling is adjacent to Santos oil production and infrastructure.
8. Commencement of drilling of the first of up to six gas exploration wells based on 3D seismic data on the Margarita onshore Texas Gulf Coast gas exploration project.
9. Eighteen exploration and appraisal wells are planned over the next six months as per the attached drilling schedule with ten of the wells in the SA and Qld Cooper Basin.

Development and Production Activity - Australia and USA

10. Total gross production over the quarter estimated at 247,171 barrels of oil equivalent with net 223,336 barrels of oil equivalent to Victoria Petroleum at an average production rate of 253 barrels of oil equivalent per day.
11. High oil prices during the quarter provided estimated oil and gas net cash flow of $1.33 million on gross oil and gas sales of $1.90 million, an 11% increase over last quarter net cash flow arising from new oil production from Jingemia-8 in the Jingemia Oil Field, North Perth Basin and a period of high oil prices.
12. Late October 2006 return of Jingemia Oil Field production from 1,700 barrels of oil per day to levels of up to 4,400 barrels of oil per day stabilising at 3200 barrels of oil per day.
13. The Mirage and Ventura oil fields in PEL 115, South Australian Cooper Basin continued production during the quarter at an average combined rate of 294 barrels of oil per day.
14. Production testing of the September 2006 Growler-1 oil discovery in the South Australian Cooper Basin during the quarter to evaluate the recovery of 36 barrels of 49 degree API oil with no water from a 12 metre interval of the Birkhead formation during a two and a half hour open hole drill stem test delayed due to extensive rain and flooding in the Cooper Basin and is anticipated to take place in February 2007.
15. Production testing of Eagle North-1 appraisal well in California continued in August 2006 to test 177 metres of horizontal lower Mary Bellocchi oil sand. Efforts to retrieve the casing guns stuck in the casing to allow further testing of the known oil sand were not successful during the past quarter. The Eagle North-1 well has been suspended to allow for a future re-entry and side track to further appraise the Eagle Oil Pool with its potential to contain up to 34 million barrels of oil and 58 billion cubic feet of gas.
16. Production testing of the Wiplinnie-4 oil zone within the Tomcat oil pool is planned for the second quarter 2007 to evaluate the wells production capabilities and the extent to which the Tomcat oil pool may extend into PEL 115.
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 $5.5 million for the year (calculated at US$55/ bbl and US$6.50/mcf). A return to higher oil prices through 2007 will increase this net cash flow estimate for calendar 2007.
18. Victoria Petroleum development and production activities in Australia and USA have being carried out against a background of historical high oil prices in the range of A$70-A$80 per barrel.

Other Assets

19. 19. 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.
20. 20. Successful 1 for 10 reconstruction of Victoria Petroleum N.L. shares from 1,916,739,444 million shares on issue to 191,673,944 shares on issue approved by shareholders and Bonus loyalty option on basis of one free three year life option exercisable at 25 cents for every four post reconstruction shares held by shareholders registered at 31 January 2007.
21. 21. Cash and current investments as at December 31, 2006 of $9.3 million to fund planned exploration and development drilling activities, as follows:

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