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Magellan Petroleum Corporation Provides Letter To Shareholders

Stocks in this article: MGN MPET

In the deeper interval within the Poplar Field, our industry partner, VAALCO Energy ( USA) Inc, has plans to commence drilling its first earning well in the near future, weather dependant.  We expect results from this exploration well to be available by the end of the first calendar quarter or early in the second calendar quarter of 2012.

On a different but related topic, we are extremely pleased to announce that we have hired an experienced and talented Williston Basin engineer to be our Operations Manager.  More details on this hiring will follow later this week.


Our Markwells Wood well is production testing and these results should be known within the next few weeks.  While too early for any definitive announcement regarding commerciality, oil has been sold from this property.  We continue to work with our co-owner, Celtique, on drilling plans on our prospective shale acreage holdings in the UK, and hope to be able to announce more on this by mid-year 2012.

As you can determine from this interim report, progress is being made regarding our existing assets.  Let me also update you on two other matters of importance.  We were very disappointed with the material weaknesses in the Company's internal controls that were disclosed in our recent 10-K for the fiscal year ending June 30, 2011.  I take this matter very seriously and commit to you that this will be successfully resolved as soon as possible.  After advising our independent auditor, EKS&H, of our remediation steps, we believe that we will accomplish this goal.  You will also see changes in the presentation of our second quarter financial statements.  As a result of these changes, Magellan's financial statements will much more closely follow the presentation of financial information used by our peers in the oil and gas industry.

The final, but also significant matter to present to you today is to announce that the Board has formed a Strategic Alternatives Committee (the "Committee") composed of me, Nikolay V. Bogachev, and William H. Hastings.  The idea of this Committee has been raised by shareholders and Board members alike, and the Board has embraced this idea.  I will say it again, I believe the Company is undervalued, and from what I have seen and heard, so does the Board and so do you.  We believe this Committee can be a useful tool in correcting the market's perception of the Company.

While there are no current proposals before this Committee or the Board, the Company is determined to review and consider any viable alternative strategy in its efforts to enhance shareholder value.  These alternatives could include, but are not limited to, finding additional strategic partners to accelerate or improve the testing of the Company's existing assets, additional financing alternatives, a merger or other combination with one or more public or private entity, the acquisition of either producing or non-producing oil and gas assets, the sale of all or a portion of the Company or any discrete asset of the Company, or any other business endeavor that we believe will unlock and improve shareholder value.

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