Madagascar Oil Provides Half Yearly Operational & Financial Highlights

Madagascar Oil today announced its unaudited Interim Results for the six month period from 1 January 2011 to 30 June 2011.

Highlights

Tsimiroro (Block 3104):

• The Company continues to focus primarily on development of its Tsimiroro steam flood pilot which is anticipated to come online with first production in the second half of 2012
• In June 2011, the Company and the Government approved the 2011-2012 work programme for the Company's Tsimiroro Block. Facilities construction is underway for the steam flood pilot and drilling of the 28 pilot wells is expected to proceed in Q4 2011
• The validity of the Tsimiroro PSC, including the right for MOIL to exercise its option for a two year extension to the PSC in August 2012, has been acknowledged by the Government
• Netherland, Sewell & Associates Inc. has revised its prior Contingent Original Oil-in-Place ("OOIP") best case estimate of 965 million barrels to take into account the updated new data acquired from the 24 wells drilled in 2010. Netherland, Sewell & Associates ("NSAI") has now increased the best estimate for Contingent Original Oil-in-Place by 75% to approximately 1.7 billion barrels
• The Company plans to drill ten additional wells in 2011 for the purpose of further upgrading the oil resource

Bemolanga (Block 3102):

• In June 2011, MOIL and partner Total E&P proposed a revised programme to eliminate the pilot mining requirement from the PSC and the Government granted a one year extension of the current PSC exploration phase, with provision for a further two years to pursue conventional oil and gas exploration potential
• The shift in work programme focus to the pursuit of conventional hydrocarbon potential on the Bemolanga Block is beginning in the second half of 2011 with initiation of an 8,000 km Airborne Gravity Gradiometer survey

Exploration (Blocks 3105, 3106, 3107):

• Discussions with the Government of Madagascar regarding the approval of the 2011-2012 work programmes for the exploration blocks and resolution of outstanding issues on these blocks have been delayed but are expected to resume
• The Company will maintain the force majeure status on the exploration blocks to preserve its existing rights under these blocks and will resume its exploratory work when the Government of Madagascar is able to address the necessary PSC timing and budget approvals

Corporate / Financial

• Trading in Madagascar Oil's shares resumed on 27 June 2011
• As at 31 August 2011, MOIL has unrestricted cash balances of $56 million to execute the Tsimiroro steam flood pilot and the additional work required to develop drillable prospects on the three exploration blocks. The exploratory work being conducted on the Bemolanga Block is expected to be covered by the $10 million gross carry remaining under the agreement with Total E&P

Commenting on today's announcement, Laurie Hunter, chairman and chief executive officer, said: "Following the resolution of the dispute with the Government of Madagascar regarding Block 3104 (Tsimiroro) and the Government's agreement to revise the terms of our joint venture with Total E&P on Block 3102 (Bemolanga), we are pleased to be pressing forward on both these significant projects. The approval by the Government of our 2011-2012 work programme at Tsimiroro affirms its support of the Company's presence and contributions to the country.

"With 18 of the 24 wells drilled on Tsimiroro in 2010 discovering oil, our independent reservoir engineers, Netherland, Sewell & Associates, have upgraded our Contingent Original Oil-in-Place estimate to a total of approximately 1.7 billion barrels. By applying the 70% steam flood recovery factor estimated by NSAI in its 2010 Competent Person's Report to the new Best Estimate Contingent OOIP volume, the recoverable Contingent Resource volume would exceed 1.1 billion barrels.

"Tsimiroro remains our primary focus, so we do not believe that the curtailment of activity on the exploration blocks will adversely affect our near-term business. However, we are hopeful that once the country's political issues are resolved, key Government officials will move to address approval of our continuing exploration programme."

For a detailed report on financial results please visit here.