Victoria Oil & Gas employees and suppliers take equity in lieu of cash

Employees and suppliers of Victoria Oil & Gas (LON:VOG)appear to be very willing to take their salaries and cash payments in VOG shares.

The Cameroon-focused gas producer announced today that nearly 4 million shares have been allotted to certain directors and employees in lieu of cash salary for the six months to 31 January 2011 at a weighted average month-end market price of 5 pence per share.

Another 300,000 shares were allotted to an employee for the period from 1 February to 31 May this year at a weighted average market price of 5.1 pence per share.

It is also notable that these prices represent a premium to the stock’s current market value of 4.6 pence.

VOG also announced that 30.6 million new shares have been allotted to certain of its advisers and suppliers in lieu of cash payments.

Victoria Oil & Gas is by no means cash strapped. The company raised £9.2 million from investors via a placing in September followed by a further £10.8 million in November. VOG had £7.2 million in cash at the end of November 2010.

It is fully funded through to first gas from its flagship Logbaba project in Cameroon.

Earlier this month, the group received the news it had been waiting for: the government granted a 25 year exploitation licence for Logbaba with an option to extend for an additional 10 years. It now intends to deliver first gas to industrial customers in the city of Douala in the fourth quarter 2011 and to build on its customer base.

Victoria's revised ownership of 57 percent remains the significant controlling stake.

Victoria currently has 11 gas sales agreements (GSAs) signed and executed together with a further 10 GSAs which have been contractually agreed subject to legal due diligence and signature approval.

All contracts will be signed at a price of US$16 per thousand cubic feet of gas, (US$96 per barrel of oil equivalent,) fixed for five years from the date of first gas delivery. Logbaba has proven and probable reserves of 212 billion cubic feet of gas (35.3 million barrels of oil equivalent).


by Sergei Balashov