Update on Partner Process/discussions with Lenders

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2 February 2016

MADAGASCAR OIL LIMITED

("Madagascar Oil" or the "Company")

Update on Partner Process and discussions with Lenders

The Company notes both the recent rise in the price of its ordinary shares, particularly over the course of today, and the speculation on the bulletin boards with regard to the Partner Process (the "Partner Process"), being the previously announced process to identify potential strategic partner(s) to work with the Company on the development and funding of the world class Tsimiroro field.

The Company can confirm that the Partner Process is continuing, but it has yet to yield any actionable proposals. There are a number of discussions ongoing, but it will take time to confirm whether any of these discussions can be converted into an executable deal and there is no guarantee that any of them will be consummated this quarter, as previously announced, if at all.

The Company can also confirm that it remains in discussions with its Lenders, being entities associated with the Company's four major shareholders (Outrider Master Fund, LP, BMK Resources Ltd, SEP African Ventures Limited and The John Paul Dejoria Family Trust LLC), who provided the Bridge Financing Facility (as announced on 29 September 2015) with regard to the release of all, some or none of the second tranche of US$8.0 million of that Facility. There can be no certainty as to the outcome of these discussions.

Further announcements will be made as and when appropriate.

Terms used in this announcement have the same meaning as in the Company's announcement of 29 September 2015.

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