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Magellan Petroleum Signs Definitive Agreement For $23.5 Million Of Convertible Preferred Stock Financing

Stocks in this article: MPET

DENVER, May 13, 2013 /PRNewswire/ -- Magellan Petroleum Corporation ("Magellan" or the "Company") (NASDAQ: MPET) today announced that on May 10, 2013, the Company entered into a Series A Convertible Preferred Stock Purchase Agreement (the "Series A Purchase Agreement") with One Stone Holdings II LP (" One Stone"), an affiliate of One Stone Energy Partners LP, a New York based private equity firm focused on investments in the oil and gas industry.

Pursuant to the terms of the Series A Purchase Agreement, upon the fulfillment of certain customary closing conditions, Magellan will issue and sell to One Stone 19,239,734 shares of Series A Convertible Preferred Stock ("Series A Preferred Stock") for aggregate cash proceeds of $23,501,216.  Subject to certain conditions, including stockholder approval to the extent required by NASDAQ, each share of Series A Preferred Stock will be convertible into one share of Magellan's Common Stock at an initial conversion price of $1.22 per share, representing a 20% premium to the volume-weighted average closing price per share of Common Stock for the ten trading days preceding the signing of the Series A Purchase Agreement.  Furthermore, the Company will pay no capital raising advisory fees or issue any warrants in relation to this transaction.  The Company and One Stone anticipate that the closing of the transactions contemplated by the Series A Purchase Agreement will occur on or before May 22, 2013.

The Company intends to use the proceeds of this transaction, in addition to the Company's $15 million in cash and equivalents at March 31, 2013, to fund (i) the $10.0 to $20.0 million necessary for the drilling, completion, and execution of a CO 2-enhanced oil recovery ("CO 2-EOR") pilot project at Poplar, including the purchase of necessary CO 2 volumes; (ii) the current cash flow loss from operations of approximately $1.0 million per month until the ramp up of gas sales from the Company's onshore Australian assets in calendar year 2014; and (iii) the Company's efforts to further establish the value of its United Kingdom acreage through the participation in one or more exploratory wells in calendar year 2014.

J. Thomas Wilson, President and CEO of Magellan, stated, "This transaction is a critical milestone in the path to delivering value to our shareholders.  The proceeds from this transaction are expected to place the Company on a sound financial footing with sufficient liquid resources to progress the development of the Company's assets over the next two years.  We consider One Stone's investment, and the premium they are willing to pay to our current share price, to be a vote of confidence in our assets and strategy, and we are excited to welcome One Stone into our shareholder base as a financial and strategic partner. We firmly believe that this transaction represents the most appropriate path to increasing net asset value per share." 

Bob Israel, Managing Member of One Stone, stated, " One Stone's focus is on identifying "underdeveloped assets" in the natural resources sector.  We believe that the asset portfolio held by Magellan is an excellent opportunity to combine One Stone's capital with high potential, underdeveloped assets.  In particular, the Poplar CO 2-EOR project fits perfectly with our strategy.  We have great confidence in the management and look forward to working with the Board of Directors of Magellan to increase the value of the Company for all shareholders."

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of such securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior the registration or qualification under the securities laws of any such jurisdiction.

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