QUARTERLY REPORT FOR THE PERIOD ENDING 31 DECEMBER 2007

HIGHLIGHTS FOR THE QUARTER

Continuation of focussed growth strategy on the two key Victoria Petroleum (Vicpet: VPE) projects: the Cooper Basin Oil projects in South Australia and Queensland and the Queensland Coal Seam Gas interests.

In 2008 within the Cooper Basin interests of Vicpet, 14 wells are planned to be drilled and up to 25 coal seam gas wells are planned to be drilled in the Queensland CSG interests, to prove a certifiable gross recoverable gas reserve of up to 250 billion cubic feet of gas.

Up to forty exploration and appraisal wells are planned over the next twelve months in the key project areas of Vicpet: the SA and Qld Cooper Basin, and Queensland coal seam gas interests.

Exploration Activity - Australia and USA

Cooper Basin, South Australia and Queensland

1. Fourteen well exploration program planned over next twelve months in South Australian and Queensland Cooper Basin where Victoria Petroleum (VPE) holds major gross and net acreage exploration area with average 30% interest in 14 permits.
2. 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. (VPE - 40%).
3. Warhawk-1 planned to be drilled in mid 2008 following successful Extended Production Test of Growler Oil Field to test recent interpretation that Wirraway-Growler- Warhawk structures could be a 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 (VPE - 40%).
4. Some 32 prospects and leads mapped in the Western Margin Oil Project with seven drillable prospects identified with unrisked P10 recoverable resource of 21 million barrels of oil in the Birkhead formation, if oil is present (VPE - 40%).
5. Successful farmout of southwest Queensland Cooper Basin permit ATP 752P to Santos (new operator) and Avery Resources providing Vicpet with a 15% staged free carry through a 7 well drilling and seismic exploration program with total estimated expenditure of $18.5 million. Initial two well drilling program planned to start in March 2008 in the Barta block, Hudson and Cuisinier, with two wells in mid 2008 in Wompi block. (VPE - 40%).
6. Following withdrawal of Impress Energy Limited and Roma Petroleum N.L. from PEL 115, Vicpet is currently in farmin discussions with interested parties with the aim, if a farmin is concluded, to provide Vicpet with a free carried 25% interest through drilling of up to 5 wells in 2008.

Surat Basin Coal Seam Gas Interests, Queensland

7. Potential gross Coal Seam Gas (CSG) resource in four permits in Surat Basin, Queensland could be as high as 2 trillion cubic feet with potential net resource to Vicpet in excess of 600 billion cubic feet of recoverable gas, if gas is present.
8. The first three exploration wells of the Don Juan CSG Joint Venture located north of Roma were cased as future pilot wells by operator Bow Energy in late 2007/early 2008. The first well, Taringa South-1 flowed methane gas to surface at a rate of 0.37 million cubic feet per day (VPE - 45%).
9. The Don Juan CSG Project is immediately adjacent to the Sunshine Gas CSG Project, with a reported reserve of up to 1.1 trillion cubic feet of gas (3P).
10. Bow Energy N.L. as operator plans to drill with 2 rigs some 18 CSG wells commencing in late January with the aim of proving by late 2008 an initial certifiable gross recoverable CSG reserve of up to 200 billion cubic feet of gas (VPE - 45%).
11. Seven CSG wells are planned to be drilled in 2008 in the CSG permit interests held by Vicpet in separate joint ventures operated by Queensland Gas Company and Roma Petroleum N.L. The aim of this drilling is to prove up certifiable gross recoverable CSG reserves of up to 50 billion cubic feet.

USA

12. Commercial 50% exploration success rate in the Margarita Gas Exploration Project with three wells connected to sales line with gross average production in December 2007 quarter at a rate of 1.42 million cubic feet of gas equivalent per day.

Development and Production Activity - Australia and USA

13. Total gross production over the quarter estimated at159,820 barrels of oil equivalent with net 16,222 barrels of oil equivalent to Victoria Petroleum at an average production rate of 176 barrels of oil equivalent per day.
14. During the quarter estimated oil and gas net cash flow was $1.1 million on gross oil and gas sales of $1.6 million.
15. 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 163 barrels of oil per day, with net production to VPE of 65 barrels of oil per day. Current Proved and Probable (2P) recoverable reserves for the fields are estimated at 1.59 million barrels (VPE - 40%).
16. Construction of Growler Oil Field production facilities and road to tanker crude oil to Moomba ongoing with anticipated start of Growler Extended Production Test in mid March 2008 to confirm initial gross production of 300 barrels of oil per day. Further development wells drilled on the Growler Oil Field in 2008 could see field gross production rates of up to 750 bopd (VPE 40%).
17. Total Texas Gulf Coast gross production while of 2.4 million cubic feet per day from the Flour Bluff Gas Field onshore Gulf Coast, and the Margarita Gas Project wells (VPE 12.5 - 20%).
18. It is anticipated that by the end of calendar 2008 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 $6 million for the year.

Other Assets & Corporate Activity

19. Victoria Petroleum N.L. has a 5.3% interest in Samson Oil & Gas Limited (ASX Code: SSN), an active oil and gas explorer and producer in North America listed on the Australian Stock Exchange and AMEX.
20. Victoria Petroleum N.L. has a 6.24% interest in Greenearth Energy Limited (ASX code: GER), an active geothermal exploration company. 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.
21. Cash and current investments as at 31 December 2007 to fund planned exploration and development drilling activities, as follows:

* Includes proceeds of VPE Share Purchase Plan of $3.3 million of which $863,000 was received subsequent to 31 December 2007

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