Victory Energy (VYEY)

[BMiles]

Updated Mesa Prospect Information:

In my previous DD post I did not know the royalty of the Mesa prospect so thus I used what I said was a very conservative and inflated figure as not to mislead anyone. Today I discovered the royalty on the Mesa Prospect to be only 1/8 (12.5%) so I will update the valuation projections if Mesa does prove out.

VTYE had 78,210,259 shares outstanding as of August 11, 2006 in which the CEO currently holds 10 million shares himself per the most recent 10KSB filing. In addition, VTYE currently has 200 million shares authorized.

Keep in mind these numbers are to be kept conservative so I will do two things in these numbers, I will not include oil but only natural gas and I will use the authorized shares instead of current O/S. The reason I will use the Authorized shares is to cover any false expectations if VTYE was to issue every share it had available to issue. Lets keep this real and remember that this is a penny stock and penny stocks do issue shares from time to time to raise capital, pay for services, pay for acquisitions, and etc...

Mesa Prospect Potential: (To start drilling by the end of September)

1 trillion cubic feet of gas = 1,011,569,138 MMBtu

1 MMBtu = Say an annual average of $6.75

1,011,569,138MMBtu x 2.5% interest = 25,289,228 MMBtu for VTYE

25,289,228MMBtu x $6.75 per MMBtu = $170,702,292 Assets for VTYE

$170,702,292 x 12.5% Royalty’s = $21,337,756.50

$170,702,292 - $21,337,756.50 in Royalties = 149,364,505.50 Assets

$149,364,505.50 / 200,000,000 Authorized Shares = 75 cents added to book value

Now if you do not like me being conservative by the way I used the authorized shares instead of the last reported O/S then here is how it would have calculated out using the 78,210,259 shares outstanding as of August 11, 2006. I must however warn you to be conservative and expect the outstanding to grow until they are generating revenue, it only make sense.

$149,364,505.50 / 78,210,259 Authorized Shares = $1.91 cents added to book value

I hope all of this has helped to identify the potential upside we could be dealing with down the road if only gas is prove out at Mesa. For me I believe it is an excellent risk reward ratio when you consider you can buy in under three cents at this time. If drilling information and time frame comes out on the other prospects we hold an interest in then I will update this again to also include the potential of those prospects as well.

Brad