Amendment to the PSC and Renewal of Mining Title

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE

UNITED STATES, AUSTRALIA, CANADA OR JAPAN

7 August 2014

MADAGASCAR OIL LIMITED

("Madagascar Oil" or the "Company")

Amendment to the PSC and Renewal of Mining Title granted to OMNIS pertaining to Block 3104

Madagascar Oil is pleased to announce that the Company's wholly-owned subsidiary, Madagascar Oil S.A. ("Madagascar Oil SA"), has received notification of two decrees (the "Decrees") dated 4 August 2014, signed by the President of the Republic, the Prime Minister and the Minister at the Presidency in charge of Strategic Resources approving (1) an amendment to the Production Sharing Contract ("PSC") pertaining to the Exploration and Exploitation of Hydrocarbons in the Tsimiroro Contractual Area (Block 3104) (the "PSC Amendment") and (2) renewing the Mining Title of Exploration of Hydrocarbons (the "Exploration Mining Title") granted to OMNIS (L'Office des Mines Nationales et des Industries Strategiques) pertaining to the Tsimiroro Contractual Area (Block 3104) (the "Mining Title Decree").

The Decrees and the PSC Amendment are intended to clarify the duration of the PSC's Exploration Period and the Exploration Mining Title following the declaration of commerciality made by Madagascar Oil SA under the terms of the PSC (as announced by the Company on 8 May 2014).

The PSC Amendment extends the exploration period under the PSC from 18 August 2014 until the date that OMNIS obtains a 25-year Exploitation Mining Title pursuant to Article 4.6 of the PSC. The Mining Title Decree renews the Exploration Mining Title from 3 August 2014 until the date of notification of the presidential decree granting the Exploitation Mining Title which is expected to be granted upon approval of the development plan relating to Block 3104 (the "Development Plan"). Madagascar Oil SA has until 4 November 2014 to submit a Development Plan.

The Decrees were jointly presented by the Minister at the Presidency in charge of Strategic Resources and the OMNIS General Manager and certified copies of the Decrees were issued on 6 August 2014 by the Secretary General of the Government.

 The Company remains on track for submission of the Development Plan in Q3 2014.

Stewart Ahmed, Chief Operating Officer & Madagascar Oil S.A. General Manager commented:

"We are very pleased to have obtained approval for the amendment to the PSC which we believe clarifies the steps required to pass from the current Exploration Period into the 25-Year Exploitation Period.

"Madagascar Oil is very grateful to the Government of Madagascar and OMNIS for their ongoing support. We continue to work on the Tsimiroro Development Plan which we are on track to submit to OMNIS ahead of the 4 November 2014 deadline. We are having ongoing constructive discussions with OMNIS on the structure and approach to our Development Plan and welcome the opportunity to obtain early feedback on our proposals on the way forward on this exciting project."

Competent Person's Statement:

The information contained in this announcement has been reviewed and approved by Stewart Ahmed, Chief Operating Officer of the Company, who has over 29 years of relevant experience in the oil industry. Mr. Ahmed is a member of the Society of Petroleum Engineers (SPE).