Magellan Commences Its 2004 Drilling Program

Magellan Petroleum Australia Limited will spud the first well in its eight well 2004 drilling program at its Palm Valley gas field in the Amadeus Basin of the Northern Territory in the week commencing 17 May 2004, using OD&E's Rig 16. The development well, Palm Valley-11, is designed to increase gas deliverability from the field. The Palm Valley field is a naturally fractured gas reservoir and the well will be deviated from the vertical to increase the probability of intersecting fractures in the producing horizons of the field. Magellan has a 52.023% interest in, and is operator of, Production Lease (PL) No. 3 over the Palm Valley gas field.

Magellan (PLs 4 and 5 - 35% interest) will also participate in two gas development wells at the Mereenie oil and gas field in the Amadeus Basin. These two wells will be drilled by Santos, operator of the Mereenie field, following the Palm Valley-11 well, using the same rig. These wells are designed to increase gas deliverability from the Pacoota Sandstone reservoir.

Elsewhere in Australia, Magellan will participate in two exploration wells in the South Australian Cooper-Eromanga Basin and one in the southern Browse Basin, offshore Western Australia. In South Australia, the Myponga-1 (PEL 94 - Magellan 35%) and Noarlunga-1 (PEL 95 - Magellan 50%) wells will be drilled by the joint venture operator, Beach Petroleum in June. These wells will target oil plays in the Jurassic, Triassic and Permian sequences of the Cooper-Eromanga Basin.

The South Galapagos-1 offshore well (WA-306-P - Magellan 12.5%) will be drilled by Antrim Energy Australia, operator of the WA-306-P joint venture. Magellan has farmed out a 37.5% interest in the permit to Antrim, who is responsible for funding the well which is currently scheduled for drilling in September. The well will be drilled using the Transocean Sedco 703 semi- submersible drilling rig, and will target oil in the Lower Cretaceous and Jurassic-aged sandstones of the southern Browse Basin.

In New Zealand, Tap Oil, operator of the PEP 38765 joint venture (Magellan 12.5% interest) will drill the Miromiro-1 exploration well in the permit in the onshore Taranaki Basin. Miromiro-1 will target oil in the Mount Messenger and Moki Formations, and is expected to be drilled during the third quarter of 2004.

In the UK, Northern Petroleum, operator of the PEDL 113 joint venture (Magellan 22.5% interest) will drill the Sandhills-2 well on the Isle of Wight licence in September/October. Magellan has farmed out a 17.5% interest in the permit to Northern Petroleum and a 5% interest to Montrose Industries, both of whom will be responsible for funding Magellan's participation in the well. Sandhills-2 will target oil in the middle Jurassic Great Oolite Formation of the Weald-Wessex Basin of Southern England.

Magellan's current firm 2004 drilling schedule for its Australian, New Zealand and the UK tenements is as follows:

    Permit     Basin                Well              Magellan   Proposed 2004
                                                      Interest   Spud

    PL 3       Amadeus NT           Palm Valley-11    52.023%     May
    PL 4&5     Amadeus NT           Mereenie East-43    35.0%     3rd Quarter
                                    Mereenie West-18    35.0%
    PEL 94     Cooper-Eromanga SA   Myponga-1           35.0%     June
    PEL 95     Cooper-Eromanga SA   Noarlunga-1         50.0%     June
    WA-306-P   Browse Offshore WA   South Galapagos-1   12.5%     September
    PEP 38765  Taranaki NZ          Miromiro-1          12.5%     3rd Quarter
    PEDL 113   Weald-Wessex UK      Sandhills-2         22.5%     3rd Quarter

Additional wells, one in the Cooper Basin PEL 95 licence, two in the Taranaki Basin PEP 38748 permit and one in UK permit PEDL 125, are also being considered for drilling this year by the respective joint ventures.

The PEP38748 joint venture (Magellan 25% interest) is considering the drilling of a permit commitment well, plus one other well in PEP 38748 in the Taranaki Basin, during the fourth quarter of 2004.

The Hedge End-2 well in PEDL 125 (Magellan 40% interest), which will target the Jurassic Great Oolite Formation in the Weald-Wessex Basin of the Hampshire area of Southern England, is being considered for drilling by the joint venture. Northern Petroleum, operator of the joint venture, plans to drill Hedge End-2 following the Sandhills-2 well.