Madagascar Oil Completes US$60 Million Private Placement

Madagascar Oil Ltd, a London headquartered oil exploration and production company holding the largest current onshore exploration and development rights in Madagascar, has completed a US$60 million private placement of 40 million common voting shares at a share price of US$1.50.

The newly issued shares were sold to a range of United States institutional investors, with Jefferies & Company, Inc. acting as placement agent for the offering.

Proceeds from the placement will be used to develop the company's heavy oil interests in the large, onshore Tsimiroro field in western Madagascar, for use on the group's exploration programs, for repayment of debt and for general corporate purposes, according to Sam Malin, Chief Executive Officer of Madagascar Oil.

``The successful completion of the private placement further expands and diversifies the company's shareholder base and provides us with the funds to initiate an aggressive capital program enabling us to move the Tsimiroro field towards first oil,'' said Mr. Malin.

In addition, the company has recently entered into a 50% joint venture with one of Europe's largest independent exploration and production companies, U.K. headquartered Tullow Oil plc. The intention is to develop the onshore conventional light oil area (block 3109) covering 11,050 square kilometers (4,266 sq mi) situated in the Morandava Basin in southwestern Madagascar. The license still needs to be published in the government gazette before it becomes effective.

Headquartered in London and domiciled in Bermuda, Madagascar Oil Ltd is an oil and gas exploration and production company focusing on the development of onshore heavy oil fields and exploration of onshore conventional oil and gas prospects in Madagascar. Through its subsidiaries, Madagascar Oil SA and Majunga Oil SARL, Madagascar Oil holds production sharing contracts (PSC) for oil and gas exploration and development on six onshore blocks covering nearly 53,000 square kilometers (20,500 sq mi) in Madagascar, including a heavy oil field at Tsimiroro and an ultra heavy oil field at Bemolanga. Madagascar Oil and its management team are committed to supporting the country of Madagascar's efforts to develop its oil and gas resources in an efficient and environmentally sensitive manner and to contributing actively to the social and economic advancement of the island nation.