Madagascar Oil to Apply for AIM Listing

Madagascar Oil intends to apply for admission to the AIM market of the London Stock Exchange and to proceed with an initial public offering of its common shares to institutional investors in the United Kingdom and elsewhere.

The joint brokers to the IPO are Mirabaud Securities LLP and GMP Securities Europe LLP. Strand Hanson Limited is acting as nominated adviser to the Company.

Summary of Madagascar Oil:

Two significant core assets with multi-billion barrels of heavy oil resources in place:

  • o Tsimiroro:
    • Best Estimate gross heavy oil in place (OOIP) of 965 MM bbl in known accumulations, with over 780 MM bbl potential in prospective, adjacent structures;
    • Production estimated at 87,500 bopd for 30 to 40 years;
    • 100% working interest held by the Company.
  • Bemolanga:
    • Best Estimate gross discovered bitumen in place (PIIP) of 1,179 MM bbl, with over 1,000 MM bbl potential upside subject to further delineation drilling;
    • Total E&P farm-in for a US $100 million consideration also provided the Company with a carried interest through US $100 million in exploration and development costs expended by Total E&P as license operator;
    • Madagascar Oil holds a 40% interest (Total E&P 60%).

Both core assets represent an oil recovery execution play:

  • o Well defined project field areas known to contain substantial heavy oil / bitumen accumulations; and
  • o Field tests and studies undertaken to date suggest the Company’s heavy oil assets have excellent potential for development.

Potential world class heavy oil resource being developed at Tsimiroro is well located for access to the world heavy oil market, including the expanding Asian markets.

Top tier team encompassing the following key characteristics:

  • World class technical expertise in executing and monetizing heavy oil resources through the application of steam flood;
  • Extensive expertise in managing, budgeting and executing multi-million dollar projects globally; and
  • A board with significant industry experience and will provide both strategic and operational oversight.

Potential upside from three significant exploration assets representing an area totaling approximately 17,400 km2:

  • Eight structural leads identified following a 2009 seismic program.

Comprehensive near term work program to prove up reserves and demonstrate commercial production capability, including:

  • additional drilling to expand and upgrade the resource base at Tsimiroro – first results from the current drilling and Electrical Resistance Tomography (ERT) program expected in early 2011;
  • executing a steam flood pilot facility at Tsimiroro – first production expected in late 2011;
  • evaluation of the mining options available at Bemolanga – next major operational decision in June 2011; and
  • development of drillable prospects on the Exploration Blocks – next results expected in early 2011.

Laurie Hunter, Chairman and CEO, commented, "The potential for Madagascar Oil is significant. It is primarily an execution play on two core and very sizeable heavy oil resources. Work completed to date by the Company’s technical team, which gained extensive heavy oil experience in California and at other similar operations in Indonesia, supports the potential for commerciality of a steam flood operation at Tsimiroro. The funds raised through the IPO will be sufficient to bring our largest core asset, Tsimiroro, to the point of commerciality, at which juncture the Company is likely at attract the interest of a larger entity, interested in heavy oil plays due to the potential for consistent and sizable long term revenue streams."