Magellan Petroleum Announces Production and Exploration Activities for the Quarter Ended September 30, 2008

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HARTFORD, Conn., Oct. 27 /PRNewswire-FirstCall/ -- Magellan Petroleum Corporation (Nasdaq: MPET; ASX: MGN) ("Magellan") announced its production and exploration activities for the quarter ended September 30, 2008.

OIL & GAS SALES

Natural Gas

The Company's share of natural gas sales during the quarter ended September 30, 2008 decreased by 6 percent from the September 2007 quarter, as detailed below:

    Field (Magellan Share)  Million Cubic Feet
                              Total      Daily    Terajoules Variance
    Mereenie                  1,211         13       1,417     - 3%
    Palm Valley                 371          4         422     -11%
    Total Gas                 1,582         17       1,839      -6%

Crude Oil and Condensate

The Company's share of crude oil and condensate sales during the quarter ended September 30, 2008 decreased by 33 percent from the September 2007 quarter, as detailed below: 

    Fields (Magellan Share)             Barrels
                                      Total   Daily    Kilolitres     Variance
    Mereenie                         27,082     294        4,306           -7%
    Nockatunga                       19,743     215        3,139          -51%
    Kiana                               758       8          120          -49%
    Aldinga                             605       7           96          -23%
    Total Crude Oil and Condensate   48,188     524        7,661          -33%

PRODUCTION AND DEVELOPMENT ACTIVITIES

AUSTRALIAN PRODUCTION

Palm Valley Gas Field (PL 3) - Amadeus Basin NT (52.023% Interest)

The Palm Valley gas field which is operated by Magellan produced an average of approximately 7.7 million cubic feet per day (MMcf/D) of natural gas for sale during the September quarter. The Palm Valley Joint Venture's objective is to maximise gas production from the existing facilities while maintaining a safe and efficient operation, conducted in accordance with good oil field practice.

Mereenie Oil and Gas Field (PL 4 & 5) - Amadeus Basin NT (35% Interest)

The Mereenie oil and gas field which is operated by Santos Ltd produced an average of approximately 37.5 MMcf/D of natural gas and 857 barrels of oil and condensate per day for sale during the September quarter. No major projects were undertaken on the Mereenie field during the quarter.

Nockatunga Oil Fields (PLs 33, 50 & 51, ATP 276P) - Cooper Basin Qld (40.936% Interest)

The Nockatunga oil fields which are operated by Santos Ltd produced an average of approximately 593 barrels of oil per day (BOPD) for sale during the September quarter.

Kiana Oil Field (PPL 212) - Cooper Basin SA (30% Interest)

Production from the Kiana-1 well averaged 30 BOPD during the September quarter. The well is currently producing only from the upper Patchawarra Formation zone.

Aldinga Oil Field (PPL 210) - Cooper Basin SA (50% Interest)

Production from the Aldinga-1 well is continuing at around 12 BOPD. There are no current plans to develop the field further.

CANADIAN PRODUCTION

Kotaneelee Gas Field, YT (2.67% interest)

Magellan has a 2.67% carried interest in the Kotaneelee gas field in the Yukon Territory of Canada. Devon Canada Corporation is operator of this partially developed field which is connected to a major pipeline system.

EXPLORATION ACTIVITIES

AUSTRALIAN EXPLORATION

Exploration evaluation of ATP 267P (Magellan 40.936%), PEL 94 (Magellan 35% interest), PEL 95 (Magellan 50% interest), PEL 107 (Magellan 20% interest) and PEL 110 (Magellan 37.5% interest) is ongoing.

In ATP 613P in the Maryborough Basin of Queensland, evaluation of the coal seam gas potential of the seams in the Burrum Coal Measures in the Burrum Syncline Farmin area (Magellan 10%) is continuing.

UNITED KINGDOM EXPLORATION

In the Weald Basin, Magellan (40% interest) will participate in the Markwells Wood-1 exploration well in PEDL 126 in 2009. Northern Petroleum, operator of the PEDL 126 Joint Venture, received planning approval in May to drill the well from a site to the north of Forestside in West Sussex. Site construction for Markwells Wood-1 is anticipated to commence in the fourth quarter of 2008, with drilling to take place shortly thereafter.

The Markwells Wood-1 well will target a prospect that is interpreted to be an eastward extension of the currently producing Horndean oil field. Analysis of data from, and between, the Horndean and Singleton oil fields which lie some 15 km apart indicates they are in essence the same interconnected oil accumulation. Markwells Wood is the first of two locations within the license where structures have been mapped above the interpreted common oil-water contact.

Magellan holds interests (ranging from 22.5% to 50%) in seven other exploration licenses in the Weald-Wessex Basin (PEDLs 098, 125, 152, 153, 154, 155 and 240), which are also operated by Northern Petroleum. Elsewhere in the Weald Basin, PEDLs 135, 136, 137, 242 and 246 are held and operated by Magellan with a 100% interest. Well sites have been selected and applications for local council planning consents for the drilling of two prospects, one in PEDL 135 and one in PEDL 137, in 2009 are in preparation. Magellan also operates recently granted PEDLs 231, 232, 234 and 243 with a 50% interest.

EXPENDITURES

Expenditures incurred on exploration, appraisal and development activities during the September 2008 quarter, totalled US$539,000. All figures are unaudited.

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.

SOURCE Magellan Petroleum Corporation

Released October 27, 2008