Magellan Petroleum Sandhills-2 Update and Kiana-1 Spuds

Magellan Petroleum Corporation said that its 55-percent-held subsidiary, Magellan Petroleum Australia Limited, made the following release to the Australian Stock Exchange on August 23, 2005:

Magellan advises that the Sandhills-2 well reached a total depth of 1,317 metres MDKD. The primary objective, the Great Oolite Formation, was intersected low to prognosis, however, hydrocarbon shows were observed within the reservoir section. Wireline logs have been acquired and analysis of the logs indicated low oil saturations across a 19 metres interval. The Joint Venture has decided to drill a sidetrack well to evaluate the updip potential of the structure between Sandhills 2 and Sandhills 1. Accordingly, the Sandhills 2 well has been plugged back to the 9-5/8" casing shoe (618 metres) and sidetracking operations are now underway. It is expected that the sidetracking operations will take a further 10 to 15 days.


Magellan Petroleum Australia Limited advises that Kiana-1 in PEL 107 spudded at 08:00 hours 21 August and at 06:00 hours today was at a depth of 559 metres KB and installing blow out prevention equipment, having run and cemented 9-5/8" surface casing. The main objectives of the well are the Jurassic Namur Sandstone and Birkhead Formation. As previously advised, Magellan is earning a 30% interest in the Kiana prospect through an agreement with Great Artesian Oil and Gas whereby Magellan will fund Great Artesian's drilling costs on Kiana-1. The well is being operated by Beach Petroleum and it is expected to take approximately 14 days in total to drill and evaluate.