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Magellan Petroleum Corporation has completed a Montana oil acquisition and provides commercial updates on Australian and European activities.

The Company has acquired an 83.5% controlling interest in Nautilus Poplar, LLC (Nautilus). Nautilus, based in Denver, Colorado, owns and operates oil development assets in Roosevelt County, Montana known as the East Poplar Unit and the Northwest Poplar field. The Company paid gross $10.9 million for this controlling interest with a cash payment totaling approximately $7.3 million, with the issuance of 1.7 million new shares of Company stock valued at $1.40 per share, and with an adjustment for $1.2 million of net debt. The controlling interest in Nautilus is from White Bear LLC and YEP I, SICAV- FIS, entities affiliated with Nicolay Bogachev and Thomas Wilson, two Directors of the Company.

Based on Proven Developed Reserves of 1.6 million barrels (net ownership
interest), the acquisition price is approximately $6.81 per barrel.

The transaction is Magellan’s first entry into the domestic US oil market. This market is stable with oil prices heading up. Nautilus holds a 68.75% interest in the East Poplar Unit and varied interests ranging from 60% to 75% in the Northwest Poplar Oil Field. The two fields, with 23,000 combined licensed acres, have between 700 and 800 million barrels of oil in-place with 52 million barrels recovered to-date (largely from just one horizon) or approximately 7% of in-place reserves. Typical recovery factors in other fields with like characteristics are 20 to 30% Magellan (through Nautilus) will embark on an active development program utilizing both secondary infill and tertiary programs shown to be successful and productive in adjacent, similar fields in both the US and in nearby Canada. Although certain contingencies must materialize, attractive upside potential is seen in the three producing oil horizons in the Mississippian Charles formation, up to 23,000 acres of Bakken shale, and both shallow and deep gas plays.

Magellan’s President and Chief Executive Officer, William H. Hastings said, “Our entry into North America is a fairly substantive one. We gain a highly-regarded technical staff and a key development position. The two fields purchased were first discovered in the early 1950s and have unrecovered oil reserves. Our neighbors there have had strong success with Tertiary development programs — we aim to establish a Pilot Program to determine the viability of those strategies at Poplar Dome and to drill infill sites in the fields.”

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