Exhibit 99.1
Magellan Petroleum Announces Additional Mereenie Gas Sales
HARTFORD, Conn., March 22, 2006 Magellan Petroleum Corporation (Nasdaq: MPET) said that its
55-percent-held subsidiary, Magellan Petroleum Australia Limited, made the following release to the
Australian Stock Exchange on March 22, 2006:
22 March 2006
Announcement to ASX
Additional Mereenie Gas Sales
Magellan Petroleum Australia Limited is pleased to announce that the Mereenie Producers, Magellan
and Santos, have today entered into a Heads of Agreement with a subsidiary of the Northern
Territorys Power and Water Corporation on the principal terms for the sale of additional gas from
the Mereenie oil and gas field.
The parties have agreed to do all things necessary to negotiate and enter into a full gas sales
agreement which is consistent with the following principal terms, as soon as possible:
(a) |
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Power and Water Corporation has agreed to purchase a minimum additional quantity of 5.2
petajoules (PJ) of gas over the period from 1 March 2006 to 31 December 2008. |
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(b) |
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In addition to the minimum quantity of 5.2 PJ, and during the same period, Power and Water
Corporation has agreed to purchase from the Mereenie Producers all of its additional gas
requirements above that already contracted from the Mereenie and nearby Palm Valley gas
fields. |
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(c) |
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Power and Water Corporation has also agreed to purchase from the Mereenie Producers all of
its additional gas requirements for a two year period beyond 31 December 2008, if and to the
extent that it is not taking its requirements from the Blacktip gas field. |
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As advised in the Supplementary Targets Statement dated 3 January 2006, Power and Water
Corporation has signed a heads of agreement with Eni Australia Limited to work exclusively
together to conclude the necessary commercial terms to develop a gas sale agreement, for the
supply of gas from the Blacktip field, to meet the Northern Territorys long term gas
requirements from 2009. However, that heads of agreement only contemplates exclusive
negotiations, and therefore there is no certainty that a final, binding agreement will be
concluded with Eni Australia Limited. |
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Deliveries of additional gas between 1 March 2006 and the execution of the full gas sales agreement
will be governed by the terms of the Heads of Agreement (including as to price) but, until
execution of the full gas sales agreement, there is no binding obligation to purchase or supply the
quantities of gas nominated.
The Mereenie oil and gas field in which Magellan has a 35% interest is located approximately 250
kilometres west of Alice Springs in the Amadeus Basin of the Northern Territory. It is the only
producing oil field in the Northern Territory and together with the nearby Palm Valley gas field
currently provides gas to meet the whole of the Northern Territorys domestic gas market. The
Mereenie field is currently producing at around 900 barrels of oil and condensate and 40 million
cubic feet of gas per day.
Forward Looking Statements
Statements in this release which are not historical in nature are intended to be, and are hereby
identified as, forward-looking statements for purposes of the Private Securities Litigation Reform
Act of 1995. These statements about Magellan and MPAL may relate to their businesses and
prospects, revenues, expenses, operating cash flows, and other matters that involve a number of
uncertainties that may cause actual results to differ materially from expectations. Among these
risks and uncertainties are pricing and production levels from the properties in which Magellan and
MPAL have interests, the extent of the recoverable reserves at those properties, the future outcome
of the negotiations for gas sales contracts for the remaining uncontracted reserves at both the
Mereenie and Palm Valley gas fields in the Amadeus Basin, including the likelihood of success of
other potential suppliers of gas to the current customers of Mereenie and Palm Valley production.
In addition, MPAL has a large number of exploration permits and faces the risk that any wells
drilled may fail to encounter hydrocarbons in commercially recoverable quantities. Any
forward-looking information provided in this release should be considered with these factors in
mind. Magellan assumes no obligation to update any forward-looking statements contained in this
release, whether as a result of new information, future events or otherwise.
For further information, please contact Daniel Samela at (860) 293-2006.
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