Exhibit 99.1
MAGELLAN PETROLEUM CORPORATION
ANNOUNCES $10 MILLION EQUITY
INVESTMENT BY STRATEGIC INVESTOR
PORTLAND,
Maine, February 10, 2009 Magellan Petroleum Corporation (NASDAQ: MPET) (ASX:
MGN) announced that the Company has entered into a definitive securities purchase agreement with
Young Energy Prize S.A., (YEP) a Luxembourg corporation, providing for a $10 million equity investment in
the Company. YEP is a relatively new European firm targeting investments in the exploitation of
underdeveloped oil and gas fields and in energy small-cap equity issues which have become
undervalued in these challenging times. YEP may make its investment in part through
YEP 1 SIF-SICAV (YEP 1), a specialized investment fund based in Luxembourg. Closing under the purchase agreement is
subject to receipt of shareholder approval of the investment and an amendment to the Companys
certification of incorporation, as well as other customary closing conditions. The Company expects
the closing to occur within 90 days.
Magellans President and Chief Executive Officer, William H. Hastings said, We are excited
that YEP has shown confidence in and has made this first step toward Magellans future growth plan,
especially in these challenging times. We expect to use these proceeds to further develop the
Companys assets in Australia and to help with initial funding of our international business
development activities.
Walter McCann, Magellans Chairman of the Board, stated, YEPs strategic investment is a
milestone in an ongoing evaluation process. The Companys management and directors, in consultation
with its advisors, reviewed Magellans strategic options. As part of this process, the Company
hired Bill Hastings as its new President and CEO in December 2008. This equity investment is a
next step in realization of the Companys strategic vision. We continue to look at other means of
capital expansion necessary to achieve our long-term business strategy. Beyond additional capital
this transaction will bring two additional directors to Magellans Board. They have extensive
financial, capital market and technical expertise in the oil and gas industry. We share a common
vision and support a practical strategy to achieve it. This transaction is a game-changer for
Magellan.
Nikolay V. Bogachev is Chairman & CEO of YEP. Of the transaction, he said YEP looks forward
to working with Bill Hastings and Magellan in an effort to monetize the Companys existing
portfolio while focusing on growth through the capture of new, larger business development
opportunities. J. Thomas Wilson, First Vice President and an Advisory Board Member of YEP 1 said
We look forward to a long-term relationship with Magellan and its other shareholders. Magellan
provides an excellent development vehicle which will allow the Company, with new management, to
build an asset base in this relatively low-cost environment targeted at the inevitable future
demand growth in China and in Europe.
Investment Terms
Under the terms of the securities purchase agreement, YEP will acquire a total of 8,695,652
shares of the Companys Common Stock (the Shares) at a price of $1.15 per share, approximately
89% above the closing price of the Companys Common Stock calculated as of
the close of trading on February 9, 2009. When issued at the closing, the shares will represent
approximately 17.3% of the Companys total outstanding shares on a pro forma basis. In addition,
the Company has agreed at closing to issue a five-year warrant to YEP entitling YEP to purchase an
additional 4,347,826 shares of the Companys Common Stock through warrant exercise at a per share
price of $1.20 (the Warrant Shares).
YEP will designate two additional members to join the Companys Board of Directors, effective
upon the closing of the transaction. In order to make these additions to the Board, the Board will
take action pursuant to the Bylaws to increase the size of the Board to seven (7) members and to elect, as of the closing
date of the YEP investment, YEPs designees to the Board. The Bylaw amendments will not become
effective unless the transactions contemplated by the securities purchase agreement are
consummated.
YEPs designees are Nikolay V. Bogachev and J. Thomas Wilson. Nikolay V. Bogachev serves as
Chairman of the Board and Chief Executive Officer of YEP, which he founded in 2007. He has been
actively involved in the restructuring and financing of companies in the energy sector. He
developed the Khantiy Mantsisk Oil Company (KMOC) which was purchased by Marathon Oil Company. He
was the developer of Tambeyskoye, a major gas field located in Northwest Siberia, which was
purchased by Gazprom-affiliated companies. He has partnered with major oil companies (Repsol YPF,
Shell and Petro-Canada) and has broad experience in the Middle East and Africa.
Mr. Wilson is First Vice President of YEP and a Member of the YEP 1 Investment Advisory Board.
He is a veteran in the energy sector with a strong geology and business development background.
Most recently, Mr. Wilson worked actively, assisting Mr. Bogachev, in building value for KMOC
in Moscow. This work was done in partnership with Enterprise Oil (now Shell) and Marathon Oil.
Mr. Wilson was also actively involved with developing Tambeyneftegas, possibly the first Russian
LNG liquefaction project, ultimately sold to Gazprom. Earlier, he was a principal in development
of new projects for Andeman International in Denver, led new international strategy and
development for Apache Corporation there, and was a Project Manager for Shell Oil.
Under the securities purchase agreement, the Company has agreed to seek shareholder approval
of certain revisions to its Restated Certificate of Incorporation, in order to improve the
corporate governance structure of the Company. Magellan intends to file its proxy materials with
the U.S. Securities and Exchange Commission (SEC) in the near future. The proxy statement will
be mailed to the shareholders of Magellan when it is finalized. Shareholders of Magellan are
advised to read the proxy statement when it becomes available, because it will contain important
information. Such proxy statement (when available) and other relevant documents may also be
obtained, free of charge, on the SECs website (http://www.sec.gov) or by request from the
contacts listed below.
Canaccord Adams, Inc. of Boston, Massachusetts, served as the Companys financial adviser.
The Company will file with the SEC a current report on Form 8-K which will include as exhibits
copies of the securities purchase agreement, the registration rights agreement and the form of
warrant agreement.
This press release is for informational purposes only and shall not constitute an offer to
sell or a solicitation of an offer to buy any securities of Magellan. The Shares being sold in the
private placement
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and the Warrant Shares have not been registered under the Securities Act of 1933, as amended, or
state securities laws, and may not be offered or sold in the United States without being registered
with the U.S. Securities and Exchange Commission (SEC) or through an applicable exemption from
SEC registration requirements. The Shares and Warrant Shares are being offered and sold only to
YEP. Magellan has agreed to file a registration statement with the SEC covering the resale of the
Shares issued in the private placement and the Warrant Shares issuable upon the exercise of the
warrants.
About Magellan
Magellan was established in 1957, and was incorporated in the State of Delaware in 1967.
Magellans common stock is quoted on the NASDAQ Capital Market (symbol: MPET) and on the Australian
Stock Exchange in the form of CDIs (symbol: MGN). The Company is engaged in the sale of oil and
gas resulting from the exploration for and development of oil and gas reserves. Magellans most
significant asset is its 100% equity ownership interest in Magellan Petroleum Australia Limited
(MPAL). Magellan also has a direct 2.67% carried interest in the Kotaneelee Gas Field in the
Yukon Territory of Canada. Magellan has approximately 5,950 record shareholders.
About MPAL
MPAL was established in 1964, and is headquartered in Brisbane, Australia. The company is
engaged in the sale of oil and gas resulting from the exploration for and development of oil and
gas reserves. The companys oil and gas production assets are principally located in the Amadeus
Basin of the Northern Territory in Australia, where MPAL operates the Palm Valley gas field. Other
reserves and prospects are located elsewhere in Australia, and also in New Zealand and the United
Kingdom.
About YEP
YEP was founded in 2007 by recognized entrepreneur Nikolay V. Bogachev, who has had
partnerships with Enterprise Oil (now Shell), Marathon Oil, and other major oil companies in
developing earlier investments. YEP is building a portfolio of energy investments worldwide with
current efforts within the Western United States, in West Africa, and now, in Australia. YEP 1
SIF-SICAV is a Specialized Investment Fund in Luxembourg a regulated vehicle under the
supervision of the Commission de Surveillance du Secteur Financier (CSSF) there. YEP 1 SIF-SICAV
is managed through an Advisory Board, composed of Investors and independent experts.
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For further information, please contact:
William H. Hastings, President and CEO of Magellan, (207) 776-5616
Daniel J. Samela, Chief Financial Officer of Magellan, at (860) 293-2006
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
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differ materially from expectations. Among these risks and uncertainties are the likelihood and
timing of the closing of the YEP investment transactions, 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.
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