PILOT ENERGY LIMITED — Capital/Financing Update 2007

Oct 21, 2007

VICTORIA PETROLEUM N.L. A.B.N 50 008 942 827

Incorporated in Western Australia

22 October 2007

Company Announcements Australian Stock Exchange Limited Level 4, 20 Bridge Street SYDNEY NSW 2000

OIL PRODUCTION COMMENCES AT WEST FLORENCE-1, WEST FLORENCE PROJECT AREA, COLORADO, USA

Victoria Petroleum N.L. has been advised by the operator Mountain Petroleum Corporation that the West Florence-1 well after having been successfully set up for oil production with a beam pump and associated production facilities has commenced oil production at an initial average rate of 32 barrels of oil per day and 101 barrels of water from the Codell Formation.

Following the early success achieved and in looking to advance development of the West Florence project, the joint venture is now planning the drilling of a further well in order to evaluate the potential of the Pierre Shale Formation.

This fractured shale historically produced about 15 million barrels up to the 1940s from the adjacent Florence Oil Field.

A modern well, the Javernick Royal Gorge#1, located approximately 4 miles SE of West Florence-1, was completed in 2005 and is currently flowing oil at a rate of 100 barrels of oil per day from the Pierre Formation.

Additionally the joint venture is now planning a 3D seismic survey in the West Florence acreage to advance development of the project.

The total gross leasehold of 25,000 acres provides the participants in the West Florence project with a significant leasehold position. Victoria Petroleum N.L. holds a 25% working interest in 12,000 acres and up to a 17.5% working interest in 13,000 acres.

West Florence-1 is the first well to be drilling in the West Florence Oil and Gas Project and its associated leasehold of 12,000 acres located in the Florence sub basin of the Denver basin. The leasehold is approximately 160 kilometres south of Denver, Colorado, USA.

The project area is to the west of the Florence Oil Field which produced approximately 15 million barrels of oil from fractured shales of the Pierre Formation up to the 1940’s.

The prospective resource for the West Florence play as estimated by the Operator ranges between 100 BCF and 200 BCF of recoverable gas in the sands of the Muddy ‘J’ and Dakota

36[TH ] FLOOR, EXCHANGE PLAZA, 2 THE ESPLANADE, PERTH, WESTERN AUSTRALIA 6000 TELEPHONE: (08) 9220 9800, FACSIMILE: (08) 9220 9801, EMAIL: admin@vicpet.com.au WEBSITE: www.vicpet.com.au CORRESPONDENCE TO PO BOX Z5441, ST GEORGES TERRACE, PERTH, WESTERN AUSTRALIA 6831

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Formation, and cumulatively up to 15 million barrels of oil for the three secondary targets, the Pierre, Niobrara and Codell Formations, if oil or gas be present.

Commenting on the installation of a pump and production facilities at West Florence-1 and commencement of production testing, Victoria Petroleum managing director John Kopcheff said:

“Victoria Petroleum is pleased to have started oil production from this well to and is looking forward to establishing the long term productivity of this well on pump and to advance development of this project.”

“The first up success with West Florence-1 from these zones alone augurs well for the interpreted presence of a large oil and gas development opportunity over the large acreage position held by the project.”

“We envisage a scenario based on adjacent historical production of numerous modest rate producing oil wells with the potential to providing cumulative significant oil production. Further testing and drilling success is required to establish this scenario.”

The participants in the drilling of West Florence-1 and the West Florence Oil and Gas Project and their respective interests through their wholly owned subsidiaries are as follows:

Mountain Petroleum Corporation. (Operator)	25%
Victoria Petroleum N.L. (ASX code: VPE)	25%
Fall River Resources Limited (ASX code: FRV)	15%
Adelaide Energy Limited (ASX code: ADE)	15%
North American Oil Gas Energy Pty Ltd	5%
Private American Interest	15%

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JOHN KOPCHEFF MANAGING DIRECTOR VICTORIA PETROLEUM N.L.

Information of this report was completed by the Managing Director of Victoria Petroleum N.L, J T Kopcheff BSc (Hons Eco.Geol), FAIMM, MAAPG, MSPE, MPESA, with 35 years experience in petroleum geology and geophysics.

This document contains certain forward looking statements which involve known and unknown risks, delays and uncertainties not under the company’s control which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectation implied by these forward looking statements.

For information on Victoria Petroleum N. L. drilling activities visit our website at www.vicpet.com.au

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Drilling of West Florence–1 well – May / June 2007

West Florence Oil and Gas Project Colorado, USA

• West Florence Oil & Gas Project –200 BCFG & 15 MMBO (P10)

• multiple gas & oil targets to 2,100 metres

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West Florence-1
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• large acreage position of 25,000 acres

• West Florence-1 well placed on production in October 2007 at 30 bopd as first well of major development drilling program for 2008

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Map courtesy of Victoria Petroleum NL
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• Victoria Petroleum interest – 17.5% - 25%