Madagascar Oil Raises $85M for Exploration, Opens New Head Office

Madagascar Oil Limited has closed on a 24-month Equity-Linked Development Capital Facility in the amount of $85 million with Credit Suisse, who acted as lead manager on the financing. Proceeds from the facility will be used for the company's ongoing exploration and appraisal operations in Madagascar. Jefferies International served as the company's financial advisor on the transaction.

The company also announced that it will be opening a new corporate head office in Houston, Texas, where it will have access to the talent, operational and commercial expertise and favorable business climate of the world's oil and gas capital.

Securing this development capital facility and opening the Houston office are important milestones for Madagascar Oil,'' said CEO Alex Archila. "The additional funding will ensure that the company can move forward and on schedule with development plans for its massive Bemolanga and Tsimiroro fields. As we move ahead with this work, Houston, with its solid infrastructure, cutting-edge technologies and inviting business climate, was the natural choice for the company's corporate head office. The city's pool of talent and expertise in onshore oil and gas is unmatched and many of our technical advisors, equipment suppliers and potential partners are located there.''

According to Archila, coring and other appraisal work is proceeding at Bemolanga, which is one of the largest undeveloped bitumen reserves in the world with 16.6 billion barrels of oil in place (OIP) of which 9.8 billion barrels are probable and possible recoverable reserves according to an independent appraisal by DeGolyer & MacNaughton.

In addition, a pilot steam injection project is underway at the Tsimiroro heavy oil field, which holds a medium range estimate of 1.0 billion barrels OIP with 611 million barrels recoverable, according to an independent appraisal conducted by Netherland Sewell. The pilot facilities, including a drilling rig, three 60,000 barrel storage tanks, four steam generators, heavy cranes and other operational equipment have arrived into Madagascar's port of Maintirano and shortly will be transported to the Tsimiroro field once post-rainy season road repair work is completed. The pilot steam injection project is expected to result in the first production of heavy oil during the third quarter of 2007.

Headquartered in Houston and domiciled in Bermuda, Madagascar Oil Limited is an oil and gas exploration and production company focusing on development of onshore heavy-oil resources and exploration of onshore conventional oil and gas prospects in Madagascar. Through its subsidiaries, Madagascar Oil SA and Majunga Oil SARL, the company holds interests in seven production-sharing contracts, including the large Tsimiroro heavy-oil and vast Bemolanga ultra-heavy oil fields, which contain more than 10 billion barrels of recoverable OIP according to independent appraisals.

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