Magellan Announces Heads of Agreement and Exclusivity Agreement

PORTLAND, Maine, July 13 /PRNewswire-FirstCall/ -- Magellan Petroleum
Corporation (Nasdaq: MPET) (ASX: MGN) announced that its wholly owned
subsidiary, Magellan Petroleum Australia Limited ("MPAL"), has signed a Heads
of Agreement and Exclusivity Agreement with a major methanol producer to study
the feasibility of building and operating a methanol plant in the Darwin area,
Northern Territory, Australia.

Under the Agreements, MPAL will undertake to identify natural gas reserves
suitable to supply the proposed plant. Magellan would also have exclusive
rights to supply natural gas to the plant from a broad exclusivity area that
the Parties have established to encompass both onshore and offshore areas in
the Northern Territory and Western Australia. Although there is no assurance
that the parties will reach a final accord, the Agreements establish timelines
to allow good faith completion of preliminary feasibility studies by both
Parties and a definitive Gas Supply Agreement.

About Magellan

Magellan's common stock is quoted on the NASDAQ Capital Market (symbol: MPET)
and on the Australian Stock Exchange in the form of CDI's (symbol: MGN). The
Company is engaged in the sale of energy arising from exploration and
development of oil and gas reserves. Currently, MPAL's oil and gas production
assets are located in the Amadeus Basin of the Northern Territory in
Australia, where MPAL operates the Palm Valley gas field and maintains an
interest in the Mereenie oil & gas field as well as the unconnected Dingo gas
field. Other reserves and prospects are located elsewhere in Australia and in
the United Kingdom.

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, both
MPET and MPAL have existing or may acquire new exploration permits and face
the risk that any wells drilled on those existing or new permits 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

William H. Hastings, President and Chief Executive Officer of Magellan,
+1-207-776-5616, or Daniel J. Samela, Chief Financial Officer of Magellan,
+1-860-293-2006