Mr. Cliff James reports

TVI PACIFIC INC. SIGNS A MEMORANDUM OF AGREEMENT TO DEVELOP THREE OIL FIELDS IN SC 54A

TVI Pacific Inc.'s wholly owned subsidiary, TG World (BVI) Corp., along with SC 54A joint venture partners Nido Petroleum Philippines Pty. Ltd., Trafigura Ventures III BV and Yilgarn Petroleum Philippines Pty. Ltd., have signed a memorandum of agreement with Viking Energy Holdings 2 Ltd. to develop three oil fields in SC 54A. The agreement is subject to the negotiation and execution of a formal agreement between the parties.

The agreement outlines key commercial terms upon which a farm-in agreement will be subsequently negotiated in the next few weeks. Broadly, these terms are as follows:

• The participants will collectively assign a 60-per-cent equity interest in SC 54A in return for Viking assuming operatorship and carrying the participants in three oil field developments up until first oil.
• Viking will finance all required capital expenditures associated with bringing the Yakal, Tindalo and Nido 1X1 undeveloped oil fields into production. This will include the drilling of one well in each field.
• The final investment amount will be agreed between Viking and the participants on the selection of the most appropriate technical and commercial solution.
• Viking will receive a preferential proportion of the net cash flow generated from SC 54A until such time as it has recovered in full its capital expenditures in the project.

Viking anticipates bringing the Yakal and Tindalo discoveries into production first, followed by Nido 1X1 at a later stage.

Viking plans to use cost-effective offshore production and storage facilities, comprising a mobile offshore production unit, and a floating storage and offloading vessel/storage tanker moored to a CALM buoy to commercialize the three oil fields. The participants and Viking will work in collaboration with Offshore Production Solutions and Thome Oil & Gas on the project, whereby Offshore Production will provide offshore production facilities under bareboat charter arrangements on competitive market terms to be agreed, and Thome Oil & Gas will provide operation and maintenance services for the offshore production facilities under an operation and maintenance agreement on competitive market terms to be agreed.

It is anticipated that the first field will be brought into production by the second quarter of 2013, subject to relevant approvals from third parties and the Department of Energy of the Republic of the Philippines, and the availability of rig and production facilities.

Cliff James, TVI's chief executive officer, commented: "The signing of this memorandum of agreement is a key step for TVI to realize cash flow from its interest in SC 54A. Furthermore, this collaboration provides a relatively low-risk approach for TVI to participate in the development of these assets. I am pleased to work together with Viking and the rest of the joint venture participants to advance the opportunity presented in SC 54A."

Participating interests in SC 54A relating to this agreement are shown in the attached table.

                                Present  Postfarm-in 
Company                             (%)          (%) 

Nido Petroleum Philippines        42.40        16.96 
Yilgarn Petroleum Philippines     30.10        12.04 
TG World BVI                      12.50         5.00 
Trafigura Ventures III            15.00         6.00 
Viking Energy Holdings 2           0.00        60.00 
Total interest                   100.00       100.00

Note: Nido Petroleum is the current operator. Viking
      Energy will be the operator under the 
      agreement. 

Information on Viking Energy

Viking Energy Group, a London-based private exploration and production company, is focused on the development and monetization of offshore oil and gas fields in Africa and Asia using cost-effective offshore production and storage facilities developed and operated in collaboration with the Thome Group. The Viking Energy Group currently has operated interests in two oil fields that will be brought into production at 24,000 barrels per day during 2013 and will generate in excess of $500-million (U.S.) of posttax cash flow within the next five years. The Viking Energy Group is in the process of acquiring interests in four additional fields with 2P reserves of about 30 million barrels.