Update re Placing and Issue of Equity

NEITHER THIS ANNOUNCEMENT NOR ANY PART OF IT CONSTITUTES AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE OR ACQUIRE ANY NEW COMMON SHARES IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (SAVE IN CERTAIN LIMITED CIRCUMSTANCES), AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL. 

24 February 2012

MADAGASCAR OIL LIMITED

("Madagascar Oil" or the "Company")

Update re Placing and Issue of Equity

As announced on 22 February 2012, the Company has raised gross proceeds of approximately US$26.5 million (based on the prevailing USD/GBP exchange rate) (the "Placing") through a fully subscribed placing of 59,900,000 new common shares of par value US$0.001 ("Common Shares"). The extent of the Placing was increased to meet strong demand and as a result exceeded the Company's existing share authorities. The Company therefore wishes to confirm that 57,700,000 Common Shares (the "First Tranche Placing Shares") have been issued within its existing share authorities and it is expected that admission of the First Tranche Placing Shares to trading on AIM will become effective at 8.00 a.m. on Monday, 27 February 2012 and that 2,200,000 Common Shares (the "Second Tranche Placing Shares") will be issued subject to, and conditional upon, shareholder approval at a special general meeting to be convened by no later than 31 March 2012. It is expected that trading in the Second Tranche Placing Shares on AIM will commence shortly following receipt of such shareholder approval.

The terms and conditions of the Placing annexed to the announcement made by the Company on 22 February 2012 shall be deemed amended (in accordance with their terms) such that:

 "Admission" shall mean: admission of the First Tranche Placing Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules; and

"Placing Shares" shall mean: the First Tranche Placing Shares and the Second Tranche Placing Shares.

In addition, the Company has issued the following Common Shares (the "Additional Shares") within its pre-existing share authorities, which it is expected will commence trading on AIM at 8.00 a.m. on 1 March 2012:

(a) 1,720,000 Common Shares pursuant to the Company's former restricted stock plan; and

(b) 3,310 Common Shares in connection with the conversion of convertible promissory notes.

Details of the restricted stock plan and the convertible promissory notes are set out in the Company's admission document which is available for download via the Company's website at www.madagascaroil.com.

The First Tranche Placing Shares and the Additional Shares will represent approximately 23.6 per cent. of Madagascar Oil's enlarged issued share capital. The First Tranche Placing Shares and the Additional Shares will be fully paid and will rank pari passu in all respects with the Company's existing Common Shares. Following the issue of the First Tranche Placing Shares and the Additional Shares, the Company's issued share capital will consist of 251,788,467 Common Shares with voting rights. Madagascar Oil does not hold any Common Shares in treasury.

The aforementioned figure of 251,788,467 Common Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, Madagascar Oil under the Financial Service Authority's Disclosure and Transparency Rules (the relevant provisions of which have been incorporated into the Company's bye-laws).

A further announcement will be made in due course.

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