Posting of Open Offer Circular

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION.

This announcement does not constitute a prospectus or offering memorandum or an offer in respect of any securities and is not intended to provide the basis for any decision in respect of Madagascar Oil Limited or other evaluation of any securities of Madagascar Oil Limited or any other entity and should not be considered as a recommendation that any investor should subscribe for or purchase any such securities.

20 October 2014

MADAGASCAR OIL LIMITED

("Madagascar Oil" or the "Company")

Posting of Open Offer Circular

Madagascar Oil is pleased to announce that, further to its announcement of 24 September 2014, it has today posted a circular (the "Circular") to Qualifying Shareholders regarding an Open Offer of up to approximately US$6.1 million (approximately £3.8 million). The Circular is also available on the Company's website at www.madagascaroil.com.

All capitalised terms in this announcement have the same meanings as those given to them in the Circular, unless the context otherwise requires.

The Open Offer is being made to Qualifying Shareholders on the register as at the Record Date of 17 October 2014, for up to 37,180,806 Open Offer Shares at 10.25p per Open Offer Share (being the same price as the Issue Price for the Placing, announced on 24 September 2014) on the basis of:

2 Open Offer Shares for every 35 Existing Common Shares

Whilst it was announced on 24 September 2014 that up to 37,962,350 Open Offer Shares in aggregate would be available for subscription under the Open Offer on the basis of 1 Open Offer Share for every 14 Common Shares held by Qualifying Shareholders, owing to a number of factors, including fluctuations in exchange rates between the date of announcement and the date of the Circular and the issue of the Placing Shares, the ratio has been adjusted to 2 Open Offer Shares for every 35 Existing Common Shares held by Qualifying Shareholders at the Record Date.

As announced on 24 September 2014, the Issue Price represented a discount of approximately 8.9% to the then prevailing middle market closing price per Common Share of 11.25p on 23 September 2014. The Issue Price now represents a premium of approximately 22.4% to the middle market closing price per Existing Common Share of 8.375p on 17 October 2014, being the business day before the posting of the Circular.

Qualifying Shareholders are also being given the opportunity, provided that they take up their Open Offer Entitlements in full, to apply for additional Open Offer Shares through an Excess Application Facility.

In order to maximise the Common Shares available under the Open Offer, and to minimise dilution to those Qualifying Shareholders that were unable to participate in the Placing, each of the Participating Major Shareholders has provided an Irrevocable Undertaking not to take up their respective Open Offer Entitlements as a condition of their participation in the Placing. These Open Offer Entitlements, amounting to 58.7% of shares available under the Open Offer, will be made available under the Excess Application Facility on the basis of 3 Open Offer Shares for every 37 Existing Common Shares held by Qualifying Shareholders (excluding the Participating Major Shareholders).

Applications up to each Qualifying Shareholder's Guaranteed Excess Entitlement which satisfy the relevant terms and conditions will be met in full. Applications under the Excess Application Facility for any Excess Shares beyond a Qualifying Shareholder's Guaranteed Excess Entitlement shall be determined by the Directors in their absolute discretion.

Full details of the Open Offer, including terms and conditions and details on how to accept the Open Offer are set out in the Circular posted to Qualifying Shareholders today and available on the Company's website.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Each of the dates in the above timetable is subject to change at the absolute discretion of the Company. If any of the details should change, where appropriate, the revised times and/or dates will be notified to Shareholders by means of an announcement through a Regulatory Information Service.

Contact Information: Madagascar Oil Limited