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	•	The acquisition of the Minority Shares would create a simpler, unified capital structure in which equity investors would participate at a single level. The Magellan Directors believe that unifying public share holdings in a single security would lead to greater liquidity for investors due to a larger combined public float and by listing some shares of our common stock on the Australian Stock Exchange (“ASX”).
	•	The unified capital structure would facilitate the investment and transfer of funds between Magellan and MPAL and its subsidiaries, which would lead to more efficient uses of consolidated financial resources.

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	•	The Magellan Board believes that the unified capital structure will facilitate the alignment of corporate strategies and should increase the ability of Magellan to raise equity capital or debt financing for future strategic initiatives or exploration activities on potentially more favorable terms.
	•	Transformation of MPAL into a wholly-owned subsidiary should create opportunities for significant cost reductions and organizational efficiencies. Delisting MPAL’s shares from the ASX will permit Magellan to reduce costs related to ASX listing fees, regulatory filings and compliance, and Australian auditing requirements.
	•	The unified capital structure would, in the opinion of the Magellan Board of Directors, provide more opportunities to maximize overall shareholder value.

	•	maintain the current MPAL Board of Directors and seek to retain key members of the MPAL executive management team, whose performance will continue to be reviewed in line with current procedures. Additional members of the executive management team will be added, as appropriate.
	•	continue the monitoring and review process which is currently in place in regard to MPAL’s employees and the usage of consultancy services.
	•	maintain the headquarters of MPAL, as a wholly owned subsidiary of Magellan, in Brisbane, Australia and maintain our own headquarters in Hartford, Connecticut.
	•	consistent with our enhanced ownership position, review all of MPAL’s important business policies and practices, including corporate governance, exploration and development efforts, capital expenditures, existing and planned joint ventures, acquisition prospects, and investments policies, with the aim to maximize overall shareholder return.
	•	review strategic options in light of the new ownership structure, in cooperation with the MPAL Board, its executive management, and taking into account the strategic review undertaken by MPAL’s Business Development Committee;
	•	maintain MPAL’s existing cash resources which we believe are currently sufficient to continue its business without a major effort to raise additional capital; and
	•	undertake all other actions consistent with Magellan’s role and the interests of the combined companies and our shareholders.

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	Sincerely,
	Walter McCann
	Chairman of the Board of Directors, Magellan Petroleum Corporation

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	(1) To elect one director of the Company;
	(2) To ratify the appointment of independent auditors of the Company for the fiscal year ending June 30, 2006;
	(3) To approve the issuance of up to 15,715,000 shares of Magellan’s common stock, par value $0.01 per share, in connection with our proposed acquisition of all the outstanding ordinary shares of Magellan Petroleum Australia Limited (“MPAL”), our 55.13% owned Australian subsidiary, not currently owned by us (the “Minority Shares”), referred to herein as the Exchange Offer; and
	(4) To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

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	By Order of the Board of Directors,
	Edward B. Whittemore
	Secretary

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			Page
Section			Number
SUMMARY				1
	Questions and Answers About the Annual Meeting			6
	Questions and Answers About the Exchange Offer			9
	Magellan Selected Historical Financial Data			14
	Exchange Rate Information			15
	Selected Pro Forma Condensed Combined Financial Information			16
	Comparative Historical and Pro Forma Per Share Data			17
	Market Price and Dividend Information			18
RISK FACTORS				20
	Risks Related to the Exchange Offer			20
	Risks Related to Magellan’s and MPAL’s Operations			23
	Risks Related to the Oil and Gas Industry			26
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS				29
GENERAL VOTING INFORMATION				30
	General; Revocation			30
	Votes Required for Approval			30
	Solicitation of Proxies			31
PROPOSALS TO BE CONSIDERED AND VOTED UPON BY AT THE ANNUAL MEETING				31
PROPOSAL ONE: ELECTION OF ONE DIRECTOR				31
	Corporate Governance			33
	Committees			34
	Report of the Audit Committee Addressing Specific Matters			35
	Additional Information Concerning Directors and Executive Officers			36
	Certain Relationships and Related Party Transactions			38
	Security Ownership of Magellan Management and Shareholders			39
	Equity Compensation Plan Information			39
	Performance Graph			40
	Comparison of Five-Year Cumulative Total Return			40
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS				41
PROPOSAL THREE: APPROVAL OF ISSUANCE OF STOCK IN THE EXCHANGE OFFER				42
	Required Vote and Recommendation of Board of Directors			42
	Nasdaq Approval Requirements and Nasdaq, BSE and ASX Listings			43
	Impact of Issuance on Existing Shareholders			43
	Registration under the Securities Act of 1933; Resales of Magellan Shares			43

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			Page
Section			Number
THE EXCHANGE OFFER				44
	Background of the Exchange Offer			44
	Magellan’s Reasons for the Exchange Offer			47
	Magellan’s Intentions			47
	Recommendation of Magellan’s Board of Directors			48
	Opinion of Magellan’s Financial Advisors			48
	Recommendation of MPAL’s Board of Directors			49
	Terms of the Exchange Offer			50
	Conditions to the Exchange Offer			54
	Compulsory Acquisition Proceedings			57
	Accounting Treatment of the Exchange Offer			57
	Material Australian Tax Considerations			57
	Material U.S. Tax Considerations			61
	Certain Legal Matters and Regulatory Approvals			64
ADDITIONAL INFORMATION REGARDING MAGELLAN AND MPAL				67
	Description of the Business			67
	Financial Statements			76
	Management’s Discussion and Analysis of Financial Condition and Results of Operations			76
	Quantitative and Qualitative Disclosure About Market Risk			85
	Security Ownership of MPAL Management and Shareholders			86
COMPARISON OF MAGELLAN AND MPAL SHAREHOLDER RIGHTS				87
INTERESTS OF THE COMMON MAGELLAN/ MPAL DIRECTORS				112
LEGAL MATTERS				112
EXPERTS				113
WHERE YOU CAN FIND MORE INFORMATION ABOUT MAGELLAN				113
INCORPORATION BY REFERENCE				114
WHERE YOU CAN FIND MORE INFORMATION ABOUT MPAL				114
SHAREHOLDER PROPOSALS				115
OTHER MATTERS				117
FINANCIAL STATEMENTS
UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS				F-2
AUDITED MAGELLAN FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2005				F-8

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		Page
Section		Number
APPENDICES
APPENDIX A — DEFINITIONS OF TERMS APPLICABLE TO THE EXCHANGE OFFER			A–1
APPENDIX B — OPINION OF TM CAPITAL CORP. AND BARON PARTNERS LIMITED AS MAGELLAN’S FINANCIAL ADVISORS			B–1

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	•	Risks related to the Exchange Offer;
	•	Risks related to Magellan’s and MPAL’s operations; and
	•	Risks related to the oil and gas industry.

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	•	worldwide and domestic supplies of oil and gas;
	•	changes in the supply and demand for such fuels;
	•	political conditions in oil, natural gas, and other fuel-producing and fuel-consuming areas;
	•	the extent of Australian domestic oil and gas production and importation of such fuels and substitute fuels in Australian and other relevant markets;
	•	weather conditions, including effects on prices and supplies in worldwide energy markets because of recent hurricanes in the United States;
	•	the competitive position of each such fuel as a source of energy as compared to other energy sources; and
	•	the effect of governmental regulation on the production, transportation, and sale of oil, natural gas, and other fuels.

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	•	unexpected drilling conditions;
	•	title problems;
	•	pressure or irregularities in formations;
	•	equipment failures or accidents;
	•	adverse weather conditions;
	•	compliance with environmental and other governmental requirements; and
	•	increases in the cost of, or shortages or delays in the availability of, drilling rigs and equipment.

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	•	injury or loss of life;
	•	severe damage to or destruction of property, natural resources and equipment;
	•	pollution or other environmental damage;
	•	clean-up responsibilities;
	•	regulatory investigations and penalties;
	•	and suspension of operations.

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“Any matter to be voted upon at any meeting of stockholders must be approved, not only by a majority of the shares voted at such meeting (or such greater number of shares as would otherwise be required by law or this Certificate of Incorporation), but also by a majority of the stockholders present in person or by proxy and entitled to vote thereon; provided, however, except and only in the case of the election of directors, if no candidate for one or more directorships receives both such majorities, and any vacancies remain to be filled, each person who receives the majority in number of the stockholders present in person or by proxy and voting thereon shall be elected to fill such vacancies by virtue of having received such majority. When shares are held by members or stockholders of another company, association or similar entity and such persons act in concert, or when shares are held by or for a group of stockholders whose members act in concert by virtue of any contract, agreement or understanding, such persons shall be deemed to be one stockholder for the purposes of this Article.”

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		Director
Name		Since				Other Offices Held with Company		Age and Business Experience*
Nominee for director with a term expiring at the 2008 Annual Meeting:
Timothy L. Largay			1996			Director; Nominating Committee Chairman, member of the Compensation Committee, Assistant Secretary		Mr. Timothy L. Largay has been a partner in the law firm of Murtha Cullina LLP, Hartford, Connecticut since 1974. Mr. Largay has been a director of MPAL since August 2001. He is also Assistant Secretary of Canada Southern Petroleum Ltd., Calgary, Alberta, Canada. Murtha Cullina has been retained by the Company for more than five years and is being retained during the current year. Age 62.
Directors continuing in office with terms expiring at the 2006 Annual Meeting:
Donald V. Basso			2000			Director, member of the Audit Committee		Mr. Donald V. Basso was elected a director of the Company in 2000. Mr. Basso served as a consultant and Exploration Manager for Canada Southern Petroleum Ltd. from October 1997 to May 2000. He also served as a consultant to Ranger Oil & Gas Ltd. during 1997. From 1987 to 1997, Mr. Basso served as Exploration Manager for Guard Resources Ltd. Mr. Basso has over 40 years experience in the oil and gas business in the United States, Canada and the Middle East. Age 67.
Director continuing in office with a term expiring at the 2007 Annual Meeting:
Ronald P. Pettirossi			1997			Director, Chairman of the Audit Committee, member of the Nominating and Compensation Committees		Mr. Ronald P. Pettirossi has been President of ER Ltd., a consulting company since 1995. Mr. Pettirossi is a former audit partner of Ernst & Young LLP, who worked with public and privately held companies for 31 years. Age 62.

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		Director
Name		Since				Other Offices Held with Company		Age and Business Experience*
Walter McCann			1983			Director, Chairman of the Board, Chairman of the Compensation Committee, member of the Audit and Nominating Committees		Mr. Walter McCann, a former Business School Dean, was the President of Richmond College, The American International University, located in London, England from January 1993 until his retirement in July 2002. Mr. McCann has been a director of MPAL since 1997. From 1985 to 1992, he was President of Athens College in Athens, Greece. He is a retired member of the Bars of Massachusetts and the District of Columbia. Age 68.

*	All of the named companies are engaged in oil, gas or mineral exploration and/or development, except where noted.

	Director Independence

	Standards Of Conduct And Business Ethics

	Communications with Directors

	Magellan Petroleum Corporation
	10 Columbus Boulevard
	Hartford, CT 06106
	Attention: Corporate Secretary
	telephone: (860) 293-2006
	facsimile: (860) 293-2349
	electronic mail: info@magpet.com

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	All communications will be forwarded to the Board, Mr. McCann, or another Board member, as applicable. The Corporate Secretary has been authorized by the Board of Directors to screen frivolous or unlawful communications or commercial advertisements.

	Director Attendance at Annual Meetings

	The Board Nomination Process

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	•	The Audit Committee reviewed and discussed the audited financial statements with senior management and the Company’s independent auditors. The review included a discussion of the quality, not just the acceptability, of the Company’s accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the forward looking statements.
	•	The Audit Committee also discussed with its independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 (“Communications With Audit Committees”).
	•	The Audit Committee received the written disclosures and the letter from its independent auditors required by Independence Standards Board Standard No. 1 (“Independence Discussions With Audit Committees”), and discussed with the independent auditors its independence from the Company and considered the compatibility of the auditors’ nonaudit services to the Company, if any, with the auditors’ independence.

	Audit Committee Members:
	Donald V. Basso
	Walter McCann
	Ronald P. Pettirossi (Chairman)

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	Executive Compensation

											Long Term
											Compensation
			Annual								Awards
			Compensation								Securities
											Underlying				All Other
			Fiscal				Salary				Options/SARs				Compensation
Name and Principal Position			Year				($)				(#)				($)
Daniel J. Samela				2005				175,000				—				26,250	(1)
	President, Chief Executive Officer			2004				41,667				30,000				6,250	(1)
	and Chief Financial Officer			2003				—				—				—
T. Gwynn Davies				2005				188,857				—				72,301	(2)
	General Manager — MPAL			2004				177,144				—				65,436	(2)
	(Effective Oct. 30, 2001)			2003				138,000				—				51,000	(2)

(1)	Payment to a SEP-IRA pension plan.
(2)	Payment to pension plan similar to an individual retirement plan.

	Compensation of Directors

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	Stock Options

Potential Realized

Individual Grants

Value at Assumed

Annual Rates of

% of Total

Stock Price

Options/SARs

Exercise

Appreciation for

Granted to

or Base

Option Terms

Options/SARs

Employees in

Price

Expiration

Name

Granted (#)

Fiscal Year

($/Sh)

Date

5% ($)

10% ($)

Daniel J. Samela

0

0

0

—

0

0

T. Gwynn Davies

0

0

0

—

0

0

Number of

Number of Unexercised

Value of Unexercised

Securities

Options/SARs

In-the-Money Options/SARs

Underlying

Value

at 2005 Year-End (#)

at 2005 Year-End ($)

Options/SARs

Realized

Name

Granted (#)

($)

Exercisable

Unexercisable

Exercisable

Unexercisable

Daniel J. Samela

—

—

10,000

20,000

24,000

48,000

T. Gwynn Davies

—

—

—

—

—

—

	Employment Agreement

	Compensation Committee Interlocks and Insider Participation

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	Compensation Committee Report

	Timothy L. Largay
	Ronald P. Pettirossi
	Walter McCann (Chairman)

	Tax Deductibility of Compensation

	Compliance with Section 16(a) of the Securities Exchange Act of 1934

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Amount and Nature

of Beneficial

Ownership*

Percent of

Name of Individual or Group

Shares

Options

Class

Donald Basso

11,000

100,000

**

T. Gwynn Davies

—

—

**

Timothy L. Largay

6,000

100,000

**

Walter McCann

59,368

100,000

**

Ronald P. Pettirossi

6,500

100,000

**

Daniel J. Samela

—

10,000

**

Directors and Executive Officers as a Group (a total of 6)

82,868

410,000

**

*	Unless otherwise indicated, each person listed has the sole power to vote and dispose of the shares listed.

**	The percent of class owned is less than 1%.

Number of

Weighted

Number of Securities

Securities to be

Average Exercise

Remaining Available

Issued upon

Price of

for Issuance Under

Exercise of

Outstanding

Equity Compensation

Outstanding

Options,

Plans (Excluding

Options, Warrants

Warrants and

Securities Reflected

and Rights

Rights

in Column (a))

Plan Category

(a) (#)

(b) ($)

(c) (#)

Equity compensation plans approved by security holders

430,000

$

1.59

395,000

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			Dollar Value of $100 Investment at June 30,
			2000					2001					2002					2003					2004					2005
Magellan Petroleum				100.00					83.51					68.68					93.65					102.24					187.31
Hemscott Group Index				100.00					106.88					103.04					122.33					173.57					268.75
Nasdaq Market Index				100.00					55.38					37.56					41.77					53.12					53.07

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Audit-Related Fees		$	0
Tax Fees		$	0
All Other Fees		$	0

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	Approval Requirements

	1) the common stock has, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of such stock or of securities convertible into or exercisable for common stock; or
	2) the number of shares of common stock to be issued is, or will be upon issuance, equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the common stock or of securities convertible into or exercisable for common stock.

	Nasdaq, BSE and ASX Listings

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	•	an effective registration statement under the U.S. Securities Act of 1933, as amended, covering the resale of those shares;
	•	an exemption under paragraph (d) of Rule 145 under the U.S. Securities Act of 1933, as amended; or
	•	any other applicable exemption under the U.S. Securities Act of 1933, as amended.

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	•	The Exchange Offer would enable Magellan and MPAL to create a simpler, unified capital structure in which equity investors would participate at a single level. The Magellan Directors also believe that unifying public shareholdings in a single security could lead to greater liquidity for investors due to the larger combined public float and by listing some shares of Magellan’s common stock on the ASX.
	•	The unified capital structure that would result from the Exchange Offer would facilitate the investment and transfer of funds between Magellan and MPAL and its subsidiaries, thereby facilitating more efficient uses of consolidated financial resources. The Magellan Directors recognized that this factor could be particularly important if Magellan or MPAL sold assets for cash.
	•	The Magellan Board of Directors believes that the unified capital structure will simplify and facilitate the alignment of corporate strategies and should increase the ability of Magellan to raise equity capital or debt financing on potentially more favorable terms for future strategic initiatives or exploration activities.
	•	The elimination of public shareholders at the MPAL level should create opportunities for cost reductions and organizational efficiencies through, among other things, the combination of MPAL’s and Magellan’s separate corporate functions into a better integrated organization. In addition, the delisting of MPAL’s shares from the ASX will permit Magellan to reduce costs related to ASX listing fees, regulatory filings and compliance, and Australian auditing requirements.
	•	The opinion of its financial advisors, TM Capital and Baron Partners, that the consideration to be received by MPAL shareholders other than Magellan pursuant to the Exchange Offer was fair to the shareholders of Magellan from a financial point of view. See “Opinion of Magellan’s Financial Advisors” below.

	•	Compulsory Acquisition: If the Exchange Offer is successful, we will proceed with the compulsory acquisition of the remaining MPAL Minority Shares in accordance with the provisions of the Corporations Act.
	•	Removal from Official List: We intend to request ASX to remove MPAL from the Official List of the ASX following successful completion of the Exchange Offer.
	•	Business: We expect MPAL to continue as an oil and gas exploration and production company in substantially the same manner as it is presently operated.
	•	Board of Directors and Executive Management: We will maintain the current board of directors. We will also seek to retain key members of the MPAL executive management team, whose performance will continue to be reviewed in line with current procedures. Additional members of the executive management team will be added, as appropriate.
	•	Employees and Consultants: We intend to continue the monitoring and review process which is currently in place in regard to MPAL’s employees and the usage of consultancy services.
	•	Headquarters: MPAL, as a wholly-owned subsidiary of Magellan, will continue to be headquartered in Brisbane, Australia. Magellan’s headquarters will continue to be based in Hartford, Connecticut, USA.

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	•	MPAL Business Policies and Practices: Consistent with our enhanced ownership position, we intend to review all of MPAL’s important business policies and practices, including corporate governance, exploration and development efforts, capital expenditures, existing and planned joint ventures, acquisition prospects, and investments policies, with the aim to maximize overall shareholder return.
	•	Strategic Initiatives: We intend to continue to review strategic options in light of the new ownership structure, in cooperation with the MPAL Board, its executive management, and taking into account the strategic review undertaken by MPAL’s Business Development Committee.
	•	Cash Resources: We believe that MPAL’s existing cash resources are currently sufficient to continue its business without a major effort to raise additional capital.
	•	Other Actions: We intend to undertake all other actions consistent with our role and interests of the combined companies and the shareholders.

	•	reviewed the revised terms of the Exchange Offer;
	•	reviewed publicly available information relating to both Magellan and MPAL, including Magellan’s Annual Reports on Form 10-K for the four fiscal years ended June 30, 2005, and MPAL’s Annual Reports to Shareholders for the four fiscal years ended June 30, 2005;
	•	reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets and prospects of Magellan and MPAL, furnished to TM Capital and Baron Partners by the management of Magellan;

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	•	discussed with management of Magellan the historical and current operations, financial condition and future prospects for Magellan and MPAL and reviewed certain internal financial information, business plans and forecasts prepared by their respective managements;
	•	reviewed certain information with regard to the estimates of oil and gas reserves in the Mereenie, Palm Valley, Nockatunga, Aldinga and Kotaneelee fields;
	•	reviewed the historical prices and trading volumes of the common stock of both Magellan and MPAL;
	•	reviewed certain financial and market data for both Magellan and MPAL and compared such information with similar information for certain publicly-traded companies which TM Capital and Baron Partners deemed comparable;
	•	reviewed the financial terms of certain mergers and acquisitions of businesses which TM Capital and Baron Partners deemed comparable;
	•	reviewed certain financial statements combining Magellan and MPAL on a pro forma basis; and
	•	performed such other analyses and investigations and considered such other factors as TM Capital and Baron Partners deemed appropriate.

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	General; Form of Consideration

	•	in the United States, you will receive your share consideration in the form of Magellan Shares (traded primarily on the Nasdaq Capital Market);
	•	in Australia, you will be offered your share consideration in the form of either Magellan Shares or Magellan CDIs (to be traded in the ASX). One (1) Magellan CDI will be issued for each Magellan Share which you otherwise would be entitled to receive by accepting this Offer. If you do not choose the form of your share consideration on your Acceptance Form, you are deemed to have chosen to receive your share consideration in the form of Magellan CDIs; and
	•	in any other jurisdiction, you will not receive or be entitled to receive Magellan Shares or Magellan Shares in the form of Magellan CDIs. Instead, you will receive a cash amount in Australian dollars. See the section “Foreign Shareholders” below for further information.

	Foreign Shareholders

	•	arrange for the allotment to a nominee approved by ASIC (Nominee) of the number of Magellan Shares in the form of Magellan CDIs to be issued in accordance with the Offer to which you and all other Foreign Shareholders otherwise will have been entitled;
	•	cause those Magellan Shares in the form of Magellan CDIs so allotted to be offered for sale within 21 days of the end of the Offer Period in such a manner, at such a price and on such other terms and conditions as are determined by the Nominee;

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	•	cause the Nominee to pay to you the amount set forth below plus Aus. $0.10 in cash (together the “Offer Payment Amount”) ascertained in accordance with the following formula:

	Net Proceeds of Sale X NCS/ TCS = Offer Payment Amount

	“Net Proceeds of Sale” means the amount (if any) remaining after deducting from the proceeds of the sale of the Magellan Shares in the form of Magellan CDIs to which the Foreign Shareholders would otherwise be entitled under this Offer the expenses of the sale of the Magellan Shares in the form of Magellan CDIs allotted to the Nominee therefor.
	“NCS” means the number of Magellan Shares in the form of Magellan CDIs to which you would otherwise be entitled under this Offer.
	“TCS” means total number of Magellan Shares in the form of Magellan CDIs allotted to the Nominee therefor in respect of Magellan Shares in the form of Magellan CDIs held by Foreign Shareholders.

	Offer Period

	Who May Accept

	•	to the other person, relating to the transferred shares; and
	•	to you, relating to your MPAL Shares other than the transferred shares (if any).

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	How To Accept This Offer

	•	you may complete and sign the Acceptance Form in accordance with the instructions on the Acceptance Form and return it so that the envelope in which it is sent is received by Magellan in accordance with the Acceptance Form before the end of the Offer Period; and
	•	if your MPAL Shares are held in a CHESS Holding (as an alternative to completing the Acceptance Form) you may either: (a) instruct your Controlling Participant to initiate acceptance of the Offer in accordance with the sponsorship agreement between you and the Controlling Participant, to initiate acceptance in accordance with Rule 14.14 of the ASTC Settlement Rules before the end of the Offer Period; or (b) if you are a General Settlement Participant, initiate acceptance of the Offer in accordance with Rule 14.14 of the ASTC Settlement Rules before the end of the Offer Period.

	Effect Of Acceptance

	1) agreed to transfer your MPAL Shares to Magellan (subject to the Offer and the contract resulting from your acceptance of it becoming unconditional);
	2) represented and warranted to Magellan that your MPAL Shares will at the time of acceptance of the Offer and at the time of their transfer to Magellan be fully paid up and that Magellan will acquire good title to and beneficial ownership of your MPAL Shares free from all Encumbrances and other adverse third party interests of any kind;
	3) agreed to accept Magellan Shares or Magellan CDIs to which you become entitled by acceptance of the Offer, subject to the terms of the Offer, Magellan’s restated certificate of incorporation and bylaws and the provisions relating to holding of Magellan Shares in the form of Magellan CDIs and authorised appropriate entries to be placed in the relevant registrar of holders (including CHESS Depositary Nominees Pty Limited, a subsidiary of the ASX (“CDN”) being entered in the depository register and Magellan Register in relation to those Magellan Shares);
	4) on the Offer or the contract resulting from your acceptance of the Offer becoming unconditional, irrevocably appointed Magellan and each of its directors, secretaries and officers severally from time to time as your attorney to do all things which you could lawfully do in relation to your MPAL Shares or in exercise of any right derived from the holding of such MPAL Shares, including: (i) attending and voting at any general meeting of MPAL Shareholders; (ii) notifying MPAL that your address in the records of MPAL for all purposes including the dispatch of notices of meeting, annual reports and dividends should be altered to an address nominated by Magellan; and (iii) doing all things incidental and ancillary to any of the above.
	You should be aware that this appointment terminates on the registration of Magellan as the registered holder of your MPAL Shares. Magellan must indemnify you and keep you indemnified in respect of all costs, expenses and obligations which might otherwise be incurred or undertaken as a result of the exercise by an attorney of any powers as described above;
	5) agreed that in exercising the powers conferred by the power of attorney, the attorney may act in the interests of Magellan as the intended registered holder and beneficial holder of those MPAL Shares;

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	6) after the Offer has been declared free of all Conditions, agreed not to attend or vote in person at any general meeting of MPAL or to exercise or purport to exercise any of the powers conferred on an attorney;
	7) represented and warranted to Magellan that the making of the Offer to you and your acceptance of the Offer is lawful under any Foreign Law which applies to you, to the making of the Offer or to your acceptance of the Offer;
	8) agreed to indemnify Magellan and MPAL fully in respect of any claim, demand, action, suit or proceeding made or brought against MPAL and any loss, expense, damage or liability whatsoever suffered or incurred by Magellan, in each case as a result of any representation or warranty made by you not being true; and
	9) irrevocably authorised and directed MPAL to pay to Magellan or to account to Magellan for all dividends and other distributions and entitlements which are declared, paid or made or which arise or accrue after the Announcement Date in respect of the MPAL Shares which Magellan acquires pursuant to the Offer, subject to, if your acceptance of this Offer is validly withdrawn pursuant to section 650E of the Corporations Act or the contract resulting from that acceptance becomes void, Magellan accounting to you for any such dividends, distributions and entitlements received by it.

	Provision of Consideration

	a) if you give the necessary transfer documents with your acceptance under the Offer — no later than 1 month after this Offer is accepted or this Offer (or the contract resulting from its acceptance) becomes unconditional, whichever is the later, but in any event not later than 21 days after the end of the Offer Period;
	b) if you have given the necessary transfer documents after delivery of your acceptance but during the Offer Period — not later than 1 month after delivery of the necessary transfer documents; or
	c) if you have given the necessary transfer documents after delivery of your acceptance but after expiry of the Offer Period — not later than 21 days after the Magellan receives the necessary transfer documents.

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	Withdrawal of the Offer

	Variation

	Miscellaneous

	•	U.S. Registration Statement: that the registration statement (of which this prospectus/proxy statement forms a part) has been declared effective by the SEC and Magellan has received confirmation that all Magellan shares issued pursuant to the Exchange Offer will be registered and freely tradeable on issue;
	•	Magellan shareholder approval: all resolutions necessary to approve, effect and implement or authorise the implementation of the Offer and the acquisition of the MPAL Shares are passed by the requisite majority of Magellan shareholders at a general meeting of Magellan shareholders to be held during February 2006;

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	•	Other regulatory approvals: all other necessary approvals for the proposed transaction are granted, given, made or obtained on an unconditional basis and, at the end of the Offer Period, remain in full force and effect in all respects and are not subject to any notice, intention or indication of intention to revoke, suspend, restrict, modify or not renew those approvals;
	•	90% minimum acceptance: the number of MPAL Shares in which Magellan and its Associates have a Relevant Interest at the expiry of the Offer Period is not less than 90% of the MPAL Shares then on issue and Magellan satisfies any other requirements to effect compulsory acquisition of all outstanding MPAL shares;
	•	Quotation: both: an application for admission of the Magellan Shares in the form of Magellan CDIs to be issued under this Offer to quotation on ASX is made within 7 days after commencement of the Offer Period; and permission for admission of the Magellan Shares in the form of Magellan CDIs to be issued under this Offer to quotation on ASX is granted no later than 7 days after the expiry of the Offer Period;
	•	No acquisition or disposal of material asset: except for any proposed transaction publicly announced by MPAL before the Announcement Date none of the following events occurs during the period from the Announcement Date to the end of the Offer Period:

	•	MPAL or any controlled entity of MPAL acquires, offers to acquire or agrees to acquire one or more companies, businesses or assets (or any interest in one or more companies, businesses or assets) for an amount in aggregate greater than Aus.D.$500,000 or makes an announcement in relation to such an acquisition, offer or agreement; or
	•	MPAL or a controlled entity of MPAL enters into, offers to enter into or agrees to enter into any agreement, joint venture, partnership or commitment which would require expenditure, or the foregoing of revenue by MPAL and/or its controlled entities of an amount which is, in aggregate, more than Aus.D.$500,000, other than in the ordinary course of business or makes an announcement in relation to such an entry, offer or agreement;

	•	S&P ASX 200 Index: before the end of the Offer Period, the S&P ASX 200 Index does not fall below 4,000 on any trading day;
	•	No change in control: no person has, or is entitled to have any right to: terminate or alter any contractual relations between any person and any MPAL Group Entity; or require the sale of any Securities in an MPAL Group Entity, as a result of the acquisition of MPAL Shares by Magellan;
	•	No material adverse change: during the period commencing on the Announcement Date and ending on the expiry of the Offer Period, no change occurs or is announced that would reasonably be expected to affect the capital structure, business, financial or trading position, future profitability, condition of assets or liabilities of MPAL or a controlled entity of MPAL in a manner which would be material in the context of MPAL’s operations as a whole;
	•	No litigation: during the period commencing on the Announcement Date and ending on the expiry of the Offer Period, no litigation or arbitration proceedings have been or are instituted or threatened against MPAL or a controlled entity of MPAL which are material in the context of MPAL’s operations as a whole;
	•	No regulatory intervention: during the period commencing on the Announcement Date and ending on the expiry of the Offer Period, no Governmental Agency or any other person takes any action to: prohibit, prevent or inhibit the acquisition of, or trading in, MPAL Shares; impose conditions on the Offer which impose unduly onerous obligations upon Magellan or would materially affect the business or capital structure of MPAL; require the divestiture by Magellan of Securities or assets of any MPAL Group Entity, other than an application to or a decision or order of ASIC or the Takeovers Panel for the purpose of or in the exercise of the powers and discretions conferred on it by the Corporations Act;

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	•	No prescribed occurrences: none of the following happens during the period commencing on the Announcement Date and ending on the expiry of the Offer Period (each being a separate condition):

	•	the shares of MPAL or any of the controlled entities of MPAL are converted into a larger or smaller number of shares;
	•	MPAL or a controlled entity of MPAL resolves to reduce its share capital in any way;
	•	MPAL or a controlled entity of MPAL:

	•	enters into a buy-back agreement; or
	•	resolves to approve the terms of a buy-back agreement under sections 257C or 257D of the Corporations Act;

	•	MPAL or a controlled entity of MPAL makes an issue of or grants an option to subscribe for any Securities or agrees to make such an allotment or grant such an option;
	•	MPAL or a controlled entity of MPAL issues or agrees to issue convertible notes;
	•	MPAL or a controlled entity of MPAL disposes or agrees to dispose of the whole or a substantial part of its business or property;
	•	MPAL or a controlled entity of MPAL grants or agrees to grant an Encumbrance over the whole or a substantial part of its business or property; or
	•	an Insolvency Event occurs with respect to MPAL or a controlled entity of MPAL; and

	•	No selective disclosure of information: at all times during the period from the Announcement Date to the end of the Offer Period, MPAL promptly (and in any event within 2 Business Days) provides to Magellan a copy of all information that is not generally available (within the meaning of the Corporations Act) relating to MPAL or any controlled entity of MPAL or any of their respective businesses or operations that has been provided by MPAL or any of their respective officers, employees, advisors or agents to any person (other than Magellan) for the purposes of soliciting, encouraging or facilitating a proposal or offer by that person, or by any other person, in relation to a transaction under which:

	•	any person (together with its Associates) may acquire Voting Power of 10% or more in MPAL or any controlled entity of MPAL (whether by way of takeover bid, compromise or arrangement under Part 5.1 of the Corporations Act or otherwise);
	•	any person may acquire, directly or indirectly (including by way of joint venture, dual listed company structure or otherwise), any interest in all or a substantial part of the business or assets of MPAL or any controlled entity of MPAL; or
	•	that person may otherwise acquire control or merge or amalgamate with MPAL or any controlled entity of MPAL.

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	Tax Consequences for MPAL

	Australian Income Tax Considerations for Holders of MPAL Shares

	•	it applies only to the receipt of Magellan CDIs, and not to the receipt of the Aus. $0.10 cash consideration per MPAL Share;
	•	it applies only to Australian resident individual and company taxpayers. It does not cover the tax treatment for any other classes of taxpayers including individuals who are non-residents of Australia for

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		tax purposes, banks, insurance organizations, superannuation funds, trusts, tax exempt organizations or employees of MPAL who acquired their MPAL shares in respect of their employment (such as through any employee share or option plans);
	•	it applies only where MPAL shareholders hold their MPAL shares on capital account. It does not apply where the MPAL shares are held on revenue account (e.g., shares held by MPAL shareholders who trade in securities or hold MPAL shares as trading stock);
	•	it does not consider the taxation implications of matters relating to the funding of the acquisition of the MPAL Shares and associated tax deductions, including any matters that may arise due to Magellan’s dividend policy; and
	•	it is based on Australian tax law currently in effect. It does not consider or anticipate any changes in the law (including changes to legislation, judicial authority or administrative practice).

	Acceptance of the Offer and Disposal of MPAL Shares

	Capital Gain or Loss

	Where Roll-Over Relief is Unavailable or Not Chosen

	•	a capital gain should arise to the extent that the capital proceeds from the disposal of MPAL shares (being the market value on the issue of the Magellan CDIs) exceeds the cost base of the MPAL shares (or, in some cases, the indexed cost base); or
	•	a capital loss should be realized to the extent the capital proceeds received by an MPAL shareholder are less than the reduced cost base of the MPAL shares.

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	MPAL Shares Acquired at or before 11:45 am (Eastern Standard Time) on September 21, 1999

	MPAL Shares Acquired After 11:45 am (Eastern Standard Time) on September 21, 1999

	MPAL Shares Acquired Before September 20, 1985 (Pre-CGT MPAL Shares)

	Scrip for Scrip Roll-Over Relief

	•	an MPAL shareholder receives Magellan Shares or Magellan CDIs in consideration for the disposal of some or all of their MPAL shares under the Exchange Offer;
	•	as a result of the Exchange Offer, Magellan becomes the owner of at least 80% of the MPAL shares;

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	•	the Exchange Offer is to be made to all MPAL shareholders and is on the same terms for all MPAL shareholders and the Magellan Shares or Magellan CDIs provide the same kind of rights and obligations as those attached to the MPAL shares;
	•	the MPAL shareholder acquired their MPAL shares on or after September 20, 1985 and, but for the roll-over, a capital gain would arise from the exchange;
	•	the relevant MPAL shareholder is an Australian resident; and
	•	the relevant MPAL shareholder chooses that the roll-over applies.

	Dividends in Relation to Magellan CDIs

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	Future Disposal of Magellan CDIs

	Magellan Shares or Magellan CDIs Acquired Where Roll-Over Election was Made

	Magellan CDIs Acquired Where Roll-Over Relief Does Not Apply

	Conversion of Magellan CDIs to Magellan Shares

	Stamp Duty

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	Tax Consequences for Magellan

	Federal Income Tax Consequences

	•	a financial institution, insurance company, or regulated investment company;
	•	a tax-exempt organization, retirement plan, or mutual fund;
	•	a dealer, broker, or trader in securities;
	•	an entity treated as a partnership for U.S. federal income tax purposes;
	•	a shareholder that owns its MPAL shares indirectly through an entity treated as a partnership for U.S. federal income tax purposes, or a trust or estate;
	•	a U.S. person who owns, or is considered as owning, 10% or more of MPAL’s shares at any time during the five (5) year period ending on the date of the sale or exchange of such shares;
	•	a shareholder that holds its MPAL shares as part of a hedge, appreciated financial position, straddle or conversion transaction;
	•	a shareholder whose functional currency is not the U.S. dollar; or
	•	an individual shareholder that is an expatriate of the United States.

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	•	a citizen or resident of the United States;
	•	a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in the United States or under United States laws or the laws of any state or political subdivision thereof;
	•	an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
	•	a trust (i) if, in general, a court within the U.S. is able to exercise primary jurisdiction over its administration and one or more United States persons have authority to control all of its substantial decisions or (ii) that has a valid election in effect under applicable Treasury Regulations, to be treated as a U.S. person.

	•	a U.S. holder that participates in the Exchange Offer will generally recognize capital gain or loss equal to the difference between (i) the sum of the fair market value of the Magellan common stock and cash received and (ii) the U.S. holder’s tax basis in the MPAL shares exchanged therefore;
	•	The capital gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period with respect to its MPAL shares exchanged exceeds one year as of the closing of the Exchange Offer;
	•	The adjusted tax basis for a U.S. holder in any Magellan common stock received in the Exchange Offer will equal the fair market value of such Magellan common stock determined as of the closing of the Exchange Offer; and
	•	The holding period of any Magellan common stock received in the Exchange Offer will begin the day after the closing of the Exchange Offer.

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	Government Approvals

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	Shareholder Approval

	Licenses and Permits

	ASX Listing Approval Process

	Listing Standards

	•	Magellan must have either: (a) 500 shareholders each holding a minimum investment of $2,000; or (b) 400 shareholders each holding a minimum investment of $2,000 provided that at least 25% of those shares are held by non-related parties. The shares to be listed must have a minimum value of 20 cents.
	•	Magellan must have either: (a) profit before tax for the past 3 years of at least $1 million, $400,000 of which comes from the preceding 12 month period. Magellan’s main business activity must be the same as it was for the previous 3 years and must have audited financial accounts for the last 3 financial years; or
	•	Net tangible assets of at least $2 million. Less than half of its total tangible assets must be cash or readily convertible to cash. If this is not the case, Magellan must have commitments to spend at least half of its cash and assets; and
	•	Magellan must have at least $1.5 million in working capital which must be available after allowing for the first full financial year’s budgeted administration costs and cost of acquiring plant, equipment and mining tenements.

	ASX Listing Rules and Waivers

	•	Continuous and periodic disclosure obligations in relation to price sensitive and financial reporting on a quarterly and annual basis respectively including specific disclosure in relation to mining entities;
	•	Subject to certain exceptions, any issue of securities within a 12 month period beyond 15% of the issued capital of a listed company requires shareholder approval;
	•	The constitutions of listed companies must contain provisions prohibiting the disposal of certain of its securities during a specified period of between 12 and 24 months in certain circumstances. This includes shares which have been issued to a seller of an interest in a mining exploration area or similar interest or tenement;

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	•	Subject to certain exceptions, an issue of securities to a related party of the listed entity is prohibited unless shareholder approval is obtained; and
	•	Shareholder approval is required for a disposal of a listed entity’s major asset or there is a proposed change to the nature or scale of its activities.

	•	use a Bidder’s Statement rather than a prospectus or a product disclosure statement for the offering of Magellan shares in consideration for MPAL Minority Shares on condition that the Bidder’s Statement includes all material that is required for a prospectus for an offer of those Securities under Sections 710 to 713 of the Corporations Act and otherwise complies with the information requirements of Appendix 1A of the Listing Rules;
	•	apply for quotation only of the Magellan CDIs to be issued as consideration for MPAL Minority Shares rather than all Magellan shares; and
	•	accept nominations for election of directors no less than 60 days and no more than 90 days prior to the date of the meeting on condition that Magellan releases the terms of the waiver to the market and the terms of the waiver are set out in a separate document provided with the annual report to all Magellan CDI holders.

	The 12th Article

	The 13th Article

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Magellan owns 55.125% of MPAL. Magellan owns 2.67% of the Kotaneelee Field, Canada. MPAL owns 52% of the Palm Valley Field, Australia. MPAL owns 35% of the Mereenie Field, Australia. MPAL owns 40.94% of the Nockatunga Field, Australia. Origin Energy Limited owns 11% of MPAL. SANTOS owns 48% of the Palm Valley Field, Australia. SANTOS owns 65% of the Mereenie Field, Australia. SANTOS owns 59.06% of the Nockatunga Field, Australia.

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(a)	General Development of Business.

	Mereenie Oil and Gas Field

	Palm Valley Gas Field

	Gas Supply Contracts

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Period		Bcf
Less than one year			6.21
Between 1-5 years			23.06
Greater than 5 years			.80
Total			30.07

	Nockatunga Oil Fields

	Dingo Gas Field

	Browse Basin

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	Maryborough Basin

	Cooper/ Eromanga Basin

	Kiana-1

	PEP 38222 & PEP 38225

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	PEP 38746, PEP 38748, PEP 38765 & PEP 38766

	PEDL 098 & PEDL 099

	PEDL 112 & PEDL 113

	PEDL 125 & PEDL 126

	PEDL 135, PEDL 136 & PEDL 137

	PEDL 151, PEDL 152, PEDL 153, PEDL 154 & PEDL 155

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(b)	Financial Information About Industry Segments.

(c)(1)	Narrative Description of the Business.

(i)	Principal Products.

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	(ii)              Status of Product or Segment.

	(iii)               Raw Materials.

	(iv)              Patents, Licenses, Franchises and Concessions Held.

Permit		Expiration Date		Location
Petroleum Lease No. 4 and No. 5 (Mereenie) (Amadeus Basin)		November 2023		Northern Territory, Australia
Petroleum Lease No. 3 (Palm Valley)(Amadeus Basin)		November 2024		Northern Territory, Australia
Retention License 2 (Dingo) (Amadeus Basin)		October 2008		Northern Territory, Australia
Petroleum Lease No. 33 (Nockatunga) (Cooper Basin)		April 2007		Queensland, Australia
Petroleum Lease No. 50 and No. 51 (Nockatunga) (Cooper Basin)		June 2011		Queensland, Australia
ATP 613P (Maryborough Basin)		March 2007		Queensland, Australia
ATP 674P (Maryborough Basin)		Application pending		Queensland, Australia
ATP 733P (Maryborough Basin)		Application pending		Queensland, Australia
ATP 267P (Nockatunga) (Cooper Basin)		November 2007		Queensland, Australia
ATP 732P (Cooper Basin)		Application pending		Queensland, Australia
WA-306-P (Browse Basin)		July 2006		Offshore Western Australia
WA-307-P (Browse Basin)		August 2006		Offshore Western Australia
PEL 94 (Cooper Basin)		November 2006		South Australia
PEL 95 (Cooper Basin)		October 2006		South Australia
PEL 110 (Cooper Basin)		February 2008		South Australia
PEP 38746 (Taranaki Basin)		August 2007		New Zealand
PEP 38748 (Taranaki Basin)		August 2007		New Zealand
PEP 38765 (Taranaki Basin)		February 2009		New Zealand
PEP 38766 (Taranaki Basin)		February 2009		New Zealand
PEP 38225 (Great South Basin)		November 2009		New Zealand
PEDL 098 (Weald-Wessex Basins)		September 2006		United Kingdom
PEDL 099 (Weald-Wessex Basins)		September 2006		United Kingdom
PEDL 112 (Weald-Wessex Basins)		January 2008		United Kingdom
PEDL 113 (Weald Basin)		January 2008		United Kingdom
PEDL 125 (Weald-Wessex Basins)		July 2009		United Kingdom
PEDL 126 (Weald-Wessex Basins)		July 2009		United Kingdom
PEDL 135 (Weald Basin)		September 2010		United Kingdom
PEDL 136 (Weald Basin)		September 2010		United Kingdom

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Permit		Expiration Date		Location
PEDL 137 (Weald Basin)		September 2010		United Kingdom
PEDL 151 (Weald-Wessex Basins)		September 2010		United Kingdom
PEDL 152 (Weald-Wessex Basin)		September 2010		United Kingdom
PEDL 153 (Weald Basin)		September 2010		United Kingdom
PEDL 154 (Weald Basin)		September 2010		United Kingdom
PEDL 155 (Weald-Wessex Basins)		September 2010		United Kingdom

(v)	Seasonality of Business.

(vi)	Working Capital Items.

(vii)	Customers.

	Natural Gas Production

	Oil Production

(viii)	Backlog.

(ix)	Renegotiation of Profits or Termination of Contracts or Subcontracts at the Election of the Government.

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(x)	Competitive Conditions in the Business.

(xi)	Research and Development.

(xii)	Environmental Regulation.

(xiii)	Number of Persons Employed by Company.

(d)(2)	Financial Information Relating to Foreign and Domestic Operations.

(3)	Risks Attendant to Foreign Operations.

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(4)	Data Which are Not Indicative of Current or Future Operations.

	Forward Looking Statements

	Executive Summary

	Critical Accounting Policies

	Oil and Gas Properties

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	Asset Retirement Obligations

	Revenue Recognition

	Liquidity and Capital Resources

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	Consolidated

	As to Magellan (Unconsolidated)

	As to MPAL

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	Off Balance Sheet Arrangements

	Contractual Obligations

			Payments Due by Period
							Less Than												More Than
Contractual Obligations			Total				1 Year				1-3 Years				3-5 Years				5 Years
Long-Term Debt Obligations				—				—				—				—				—
Capital Lease Obligations				—				—				—				—				—
Operating Lease Obligations				752,000				183,000				388,000				181,000				—
Purchase Obligations(1)				3,380,000				3,380,000				—				—				—
Asset Retirement Obligations				5,729,000				38,000				—				3,773,000				1,918,000
	Total		$	9,861,000			$	3,601,000			$	388,000			$	3,954,000			$	1,918,000

(1)

Represents firm commitments for exploration and capital expenditures. The Company is committed to these expenditures, however some may be farmed out to third parties. Exploration contingent expenditures of $30,083,000 which are not legally binding have been excluded from the table above and based on exploration decisions would be due as follows: $14,685,000 (less than 1 year), $4,327,000 (1-3 years), $11,071,000 (3-5 years).

	Recent Accounting Pronouncements

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	Results of Operations

	2005 vs. 2004

	Revenues

			Twelve Months Ended June 30,
			2005 Sales								2004 Sales
							Average Price								Average Price
			Bbls				A.$ per bbl				Bbls				A.$ per bbl
Australia:
	Mereenie Field			116,920				64.15				110,955				43.44
	Cooper Basin			4,002				62.65				6,522				37.29
	Nockatunga Project			30,567				57.28				34,105				38.73
Total				151,489				62.74				151,582				42.12

			Twelve Months Ended June 30,
			2005 Sales								2004 Sales
							A.$ Average Price								A.$ Average Price
			Bcf				per mcf				Bcf				per mcf
Australia: Palm Valley				2.017				2.14				2.376				2.25
Australia: Mereenie				3.724				2.97				3.287				2.86
	Total			5.741				2.67				5.663				2.61

	Costs and Expenses

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	Interest Income

	Income taxes

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	2004 vs. 2003

	Revenues

			Twelve Months Ended June 30,
			2004 Sales								2003 Sales
							Average Price								Average Price
			Bbls				A.$ per bbl				Bbls				A.$ per bbl
Australia:
	Mereenie Field			110,955				43.44				124,553				42.87
	Cooper Basin			6,522				37.29				800				34.41
	Nockatunga Project			34,105				38.73				—				—
Total				151,582				42.12				125,353				42.82

			Twelve Months Ended June 30,
			2004 Sales								2003 Sales
							A.$ Average Price								A.$ Average Price
			Bcf				per mcf				Bcf				per mcf
Australia: Palm Valley				2.376				2.25				2.604				2.43
Australia: Mereenie				3.287				2.86				3.218				2.82
	Total			5.663				2.61				5.822				2.65

	Costs and Expenses

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	Interest Income

	Income Taxes

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		Amount and
		Nature of
		Beneficial
		Ownership
										Percent of
Name of Individual or Group		Shares				Options				Class
Rodney F. Cormie, director			1,843				0				**
Mervyn V. Cowie, Joint Venture Coordinator			0				0				**
Larry N. Franks, Operations Manager			0				0				**
T. Gwynn Davies, General Manager			0				0				**
John P. Kelly, director			0				0				**
Timothy L. Largay, director			0				0				**
Walter McCann, director			0				0				**
Bruce McInnes, Secretary			0				0				**
Robert Mollah, director			0				0				**
Joseph P. Morphea, Finance Manager			0				0				**
Ronald P. Pettirossi, director			0				0				**
Norbury Rogers, director			0				0				**
Directors and Executive Officers as a Group (a total of 12 persons)			1,843				0				**

**	= less than 1%.

Name		Share Ownership				Percent of Class
Magellan Petroleum Corporation			25,739,028				55.13%
Sagasco Amadeus Pty Ltd			4,395,182	*			9.41%
452 Capital Pty Limited			3,341,244	**			7.16%
Paradice Cooper Investors Pty Ltd			2,054,330	**			4.40%
National Nominees Limited			1,918,241	*			4.11%

*	As of November 30, 2005, as per MPAL’s Target Statement.

**	Estimated based on public filings following issue of MPAL’s annual report.

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
Shareholder Voting Rights		Each MPAL Share (subject to any specific terms of issue) confers a right to vote at all general meetings. On a show of hands, each MPAL Shareholder present in person, or by proxy, representative or attorney, has 1 vote. If a poll is held, MPAL Shareholders present in person or by their proxy, representative or attorney will have 1 vote for each fully paid MPAL Share held (and the equivalent fraction for partly paid shares). The constitution provides that a poll may be demanded by the chairman of the general meeting, at least 5 voting members, or by members holding either not less than 10% of the total voting rights of all members having the right to vote at the meeting or holding shares conferring a right to vote at the		All voting rights are vested in the holders of Common Stock, each share voting equally with every other share. A 1968 Amendment to the Magellan Restated Certificate of Incorporation by the addition of the 12th Article, provides that in matters to be voted on at meetings of shareholders, the vote of a majority of those present in person or by proxy will be required in addition to a majority of the shares represented. The 12th Article provides that when shares are held by members or shareholders of another company, association or similar entity and such persons act in concert, or when shares are held by or for a group of shareholders whose members act in concert by virtue of any contract, agreement or

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		meeting on which an aggregate sum has been paid equal to not less than 10% of the total sum paid on all MPAL Shares conferring that right. However, the Corporations Act also allows shareholders with at least 5% of the votes that may be cast on the resolution on a poll to demand a poll. Unless the Corporations Act or the constitution requires a special resolution, resolutions are passed by a simple majority of votes cast on the resolution. Under the Corporations Act, a special resolution may be passed by the company if not less than 28 days’ notice of a general meeting is given, specifying the intention to propose the special resolution and stating the resolution. A special resolution must be passed by at least 75% of the votes cast by shareholders entitled to vote. The Corporations Act requires certain matters to be resolved by a company by special resolution, including: • the change of name of the company; • a selective reduction of capital or selective buy-back; • the conversion of the company from one type or form to another; and • a decision to wind-up the company voluntarily. The Corporations Act requires voting by separate classes of MPAL Shares only with respect to a variation of class rights.		understanding, such persons shall be deemed to be 1 shareholder for the purposes of the 12th Article. Magellan has the power to determine whether shareholders are acting in concert, depending on the circumstances and the evidence, if any, that shareholders were in fact so acting and should therefore be treated as 1 shareholder. Section 6 of Article II of the Magellan By-Laws provides that at all meetings of the shareholders, subject to the provisions of the Magellan Restated Certificate of Incorporation and Section 8 of Article II of the Magellan By- Laws, each shareholder having the right to vote at such meeting is entitled to one vote for each share standing registered in his name on the date for such a meeting. Section 8 of Article II provides that all elections will be by ballot and any matter to be voted on at the shareholders’ meeting must be approved, not only by a majority of the shares voted at such meeting (or such greater number of shares as would otherwise be required by law or the Magellan Restated Certificate of Incorporation), but also by a majority of the shareholders present in person or by proxy. In the case of the election of Directors, if no candidate receives both such majorities then each person who receives the majority in number of the shareholders present in person or by proxy will be entitled to fill such vacancies by virtue of having received such majority. When shares are held by members or shareholders of

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
				another company, association or similar entity and such persons act in concert, or when the shares are held by a group of shareholders whose members act in concert by virtue of any contract, agreement or understanding, such persons will be deemed to be one shareholder for the purposes of Section 8 of Article II.
Restrictions on issues of securities		Under the MPAL Constitution, the MPAL directors may allot or otherwise dispose of shares with preferred, deferred or other rights subject to such restrictions as to dividends, voting, return of capital, payment of calls or otherwise to such persons and on such terms and conditions as they think fit. ASX Listing Rule 7.1 requires MPAL Shareholder approval if MPAL wishes to issue 15% or more of its capital in any 12 month period, unless an exception applies. Exceptions include issues under offers to all ordinary shareholders in proportion to their respective holdings, issues under takeover bids or schemes of arrangements and issues under dividend reinvestment plans. The MPAL Constitution provides that the MPAL directors must not, without the prior approval of MPAL Shareholders, issue shares or grant options which would (on exercise of the option) result in the transfer of a controlling interest in MPAL, or result in 50% or more of the votes exercisable on a poll, being registered in the name of the transferee except if an offer of shares or options has been made to all ordinary shareholders in proportion to their respective shareholding. Under the MPAL Constitution, an MPAL director		Under the Magellan Restated Certificate of Incorporation, the Directors have the power to issue additional Magellan Shares. Nasdaq Marketplace Rules require shareholder approval prior to the issuance of additional Magellan Shares in the following circumstances: (a) when the issue or potential issue will result in a change of control of Magellan; (b) in connection with the acquisition of the stock or assets of another company if:   (i) any director, officer or substantial shareholder of Magellan has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company or assets to be acquired or in the consideration to be paid in the transaction or series of related transactions and the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common shares or voting power of 5% or more; or

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
		and his or her Associates cannot participate in the issue of MPAL Shares or grant options unless MPAL has first by special resolution approved the number of shares or options to be issued to the director or associate or except in cases permitted by the ASX Listing Rules. This does not apply to pro rata issues or issues to executive directors. ASX Listing Rules 10.11 and 10.14 allow the issue of shares or options to directors with the approval of shareholders by ordinary resolution.		(ii) where, due to the present or potential issue of Magellan Shares, or securities convertible into or exercisable for Magellan Shares, other than a public offering for cash:      (A) the Magellan Shares have or will have upon issuance voting power equal to or in excess of 20% of the voting power outstanding before the issuance of stock or securities convertible into or exercisable for Magellan Shares; or      (B) the number of Magellan Shares to be issued is or will be equal to or in excess of 20% of the number of Magellan Shares outstanding before the issuance of the stock or securities; or      (c) in connection with a transaction other than a public offering involving:        (i) the sale, issue or potential issue by Magellan of Magellan Shares (or securities convertible into or exercisable for Magellan Shares) at a price less than the greater of book or market value which together with sales by officers, directors or substantial shareholders of Magellan equals 20% or more of Magellan Shares or 20% or more

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
				of the voting power outstanding before the issuance; or (ii) the sale, issuance or potential issuance by Magellan of Magellan Shares (or securities convertible into or exercisable Magellan Shares) equal to 20% or more of the Magellan Shares or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the shares.
Amending constituent documents		Under the Corporations Act, a company may by special resolution (75% of shareholders who vote) amend or repeal its constitution or any provision of its constitution. The Corporations Act requires voting by separate classes of shares only if the amendment to the constitution varies class rights.		Under the Delaware General Corporation Law and the Magellan Restated Certificate of Incorporation, a proposed amendment to the Restated Certificate of Incorporation, including but not limited to an amendment to change the number or type of shares of authorised capital stock, requires: • the approval of the board of directors; • the affirmative vote of a majority of the outstanding shares entitled to vote on the matter; and • the affirmative vote of a majority of the outstanding shares of each class entitled to vote thereon as a class. If an amendment would change the aggregate number of authorised shares of a particular class or series of shares, change the par value of the shares of such class or series or alter the powers, preferences or special rights of the shares of such class

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
				or series so as to affect them adversely, a majority of the outstanding shares of that class or series, voting as a class, also must vote to authorise the amendment. The 12th Article of the Magellan Restated Certificate of Incorporation provides that in matters to be voted on at meetings of shareholders, the vote of a majority of those present in person or by proxy will be required in addition to a majority of the shares represented. The 12th Article provides that when shares are held by members or shareholders of another company, association or similar entity and such persons act in concert, or when shares are held by or for a group of shareholders whose members act in concert by virtue of any contract, agreement or understanding, such persons shall be deemed to be one shareholder for the purposes of the 12th Article. Under the Delaware General Corporation Law, a proposed amendment to a Delaware corporation’s Certificate of Incorporation requires an affirmative vote of a majority of all shares entitled to vote thereon. If any such amendment would adversely affect the rights of any shareholders of a particular class or series of shares, the vote of the majority of all outstanding shares of that class or series, voting as a class is also necessary to authorise the amendment. Under the Delaware General Corporation Law, the power to adopt, alter and repeal a Delaware corporation’s By-Laws is vested in the shareholders, except to the extent that the Certificate of Incorporation also vests such

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
				powers in the Board of Directors. The Magellan Restated Certificate of Incorporation grants these powers to the Board of Directors. This grant of authority does not limit the power of the shareholders to adopt, amend or repeal the Magellan By-Laws. The Magellan By-Laws may be altered, amended or repealed by a vote of a majority of the directors at any regular or special meeting of the Board or by the shareholders at a meeting called for that purpose by the favourable vote of 662/3% of the voting power of all outstanding voting shares generally entitled to vote at such meeting and 662/3% of the shareholders present in person or by proxy and entitled to vote at such meeting.
Quorum of Shareholders		Under the MPAL Constitution, 3 MPAL Shareholders present in person or by proxy, attorney or representative authorised pursuant to the Corporations Act comprise a quorum at a general meeting. However, if a quorum is not present within 15 minutes of the time appointed for the meeting, the meeting stands adjourned and at the adjourned meeting, the quorum is 2 members present in person or by proxy, attorney or representative authorised pursuant to the Corporations Act.		Under the Magellan By-Laws, the holders for the time being of 331/3% of the total number of shares issued and outstanding and entitled to be voted at any meeting, present in person or by proxy, constitutes a quorum for the transaction of business, unless the representation of a larger number is required by law.
Shareholder Action by Written Consent		MPAL, as a public company, is not permitted to pass resolutions on the basis of a written consent from MPAL Shareholders.		Under the Delaware General Corporation Law, any action required or permitted to be taken at a Magellan shareholders’ meeting may be taken without a meeting, without prior notice and without a vote if a written consent, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
				votes that would be necessary to authorise or take such action at a meeting at which all shares entitled to vote upon such action were present and voted in accordance with the requirements of the 12th Article of the Magellan Restated Certificate of Incorporation.
Mergers and Other Transactions		The Corporations Act prohibits an acquisition of a relevant interest in shares in a company if, after the acquisition: • any person’s voting power in the company would increase beyond 20%; or • any person’s voting power in a company that is above 20% and below 90%, increases. There are a number of permitted methods to exceed the 20% level, including: • an off-market takeover bid made to all shareholders which may be for all or a nominated portion of their shareholding; • an unconditional on-market take over bid on the ASX; • acquisitions of not more than 3% of voting shares every six months, by a person who already holds at least 19% of voting power; • acquisitions approved by ordinary resolution of shareholders who are unassociated with the parties to the transaction; and • acquisitions under a scheme of arrangement approved by the court.		Under the Delaware General Corporation Law, a merger, consolidation, or sale of all or substantially all of a corporation’s assets must be approved by the board of directors and by at least a majority of the outstanding shares of the corporation entitled to vote thereon. The Magellan Restated Certificate of Incorporation also requires such approval to be given by a majority vote of the shareholders present in person or by proxy and entitled to vote thereon.

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
Dissenters’ Rights		There are no directly equivalent rights under the Corporations Act. If Magellan is entitled to proceed to compulsory acquisition under the Corporations Act, it must lodge a compulsory acquisition notice with ASIC and despatch those notices to those MPAL Shareholders who did not accept the Offer. Anyone who holds MPAL Shares covered in a compulsory acquisition notice may apply to the court to stop the acquisition. Within 1 month after the compulsory acquisition notice is lodged with ASIC, the holder of MPAL Shares may ask Magellan for a written statement of the names and addresses of everyone else Magellan has given the notice to. Magellan must give this notice within 7 days after the request. The application for the stop order must be made before the later of 1 month after the holder is given the compulsory acquisition notice or the end of 14 days after the holder is given the notice of everyone else’s names and addresses. In such a case, the court will only prevent a compulsory acquisition if it is satisfied that the consideration does not constitute fair value for the MPAL Shares.		Under the Delaware General Corporation Law, shareholders of a corporation who have neither voted in favor of a merger or consolidation nor consented to it have the right to demand and receive payment of the fair value of their shares in the event of a merger or consolidation of the corporation. However, except as the Delaware General Corporation Law provides otherwise, shareholders do not have appraisal rights if, among other things, their shares, as of the record date, were either: • listed on a national securities exchange or designated as a national market security on an inter-dealer quotation system by the National Association of Securities Dealers, Inc. or • held of record by more than 2,000 shareholders. Notwithstanding the exception described above, appraisal rights are available to shareholders if the holders thereof are required by the terms of the agreement of merger or consolidation to accept as consideration for such shares anything except: • shares of the company surviving or resulting from the merger or consolidation; • shares of any other company which, at the record date fixed to determine shareholders entitled to vote on the merger or consolidation, were either listed on a national securities exchange or designated as a national market security on an inter-dealer quotation system by the National Association of Securities Dealers, Inc. or held

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
				of record by more than 2,000 shareholders; • cash in lieu of fractional shares of the corporations described in the above two clauses; or • any combination of shares and cash in lieu of fractional shares of the corporations described in the above three clauses.
Business Combinations with Interested Shareholders		There are no directly equivalent rights under the Corporations Act.		With some exceptions, Section 203 of the Delaware General Corporation Law prohibits a Delaware corporation from engaging in a business combination with an interested shareholder for three years following the time such person becomes an interested shareholder. In general, an interested shareholder is a person or entity owning 15% or more of the corporation’s outstanding voting shares. The definition also includes any affiliate of such person or entity. The three-year moratorium which Section 203 imposes on business combinations does not apply if: • prior to the date at which the shareholder became an interested shareholder, the corporation’s board of directors approved either the business combination or the transaction which resulted in the person becoming an interested shareholder; • the interested shareholder owned at least 85% of the corporation’s voting shares upon consummation of the transaction which made him or her an interested shareholder; or • on or after the date a shareholder becomes an interested shareholder, the board

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
				of directors approves the business combination, which is also approved at a shareholder meeting by two-thirds of the outstanding voting shares not owned by the interested shareholder. A Delaware corporation may elect to opt out of, and not be governed by, Section 203 through a provision in its original certificate of incorporation or an amendment to its certificate of incorporation or by-laws, if the amendment is approved by the vote of a majority of the shares entitled to vote. With a limited exception, such an amendment would not become effective until 12 months following its adoption. Magellan has not opted out of the application of Section 203 to Magellan. The 13th Article of the Magellan Restated Certificate of Incorporation provides that a “Business Combination” with a “Related Person” (including a merger, issue of shares worth more than US$5 million or the sale of any assets worth US$5 million or more) requires the approval of shareholders holding at least 662/3% of the vote in power and 662/3% of shareholders present in person or by proxy and who are entitled to vote under resolution. There are several exceptions to this higher voting requirement in the 13th Article including if the Business Combination has been approved by a majority of the Directors, the Business Combination is solely between Magellan and a subsidiary (and such a combination would not have the effect of reclassifying or recapitalising Magellan to increase the voting power of a Related Person) or the Business

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
				Combination will be consummated within 3 years after the date the Related Person became a Related Person and certain conditions were met.
Pre-emptive Rights		Under Australian law, shareholders of a company do not have any pre-emptive rights unless they are provided for in a shareholders agreement or a company’s constitution. MPAL shareholders do not have any pre- emptive rights under MPAL’s Constitution.		Under the Delaware General Corporation Law, shareholders of a Delaware corporation do not possess pre-emptive rights unless the corporation’s certificate of incorporation specifically grants such rights or unless they are given such rights under contract. The Magellan Restated Certificate of Incorporation does not grant general pre-emptive rights to the Magellan Shareholders.
Dividends		Under the Corporations Act, a dividend may only be paid out of the profits of a company. MPAL Shares will participate fully in all dividends in proportion to the amounts paid or credited as paid on the shares. MPAL Shareholders registered as at a record date are entitled to receive dividends as declared by it. MPAL may establish dividend reinvestment plans for cash dividends paid by it.		Under the Delaware General Corporation Law, a Delaware corporation’s board of directors may authorise the payment of dividends to the corporation’s shareholders (on an equal per share basis) either: • out of surplus; or • if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. However, a Delaware corporation may not make a distribution out of net profits unless and until its capital is greater than the amount of capital represented by the issued and outstanding shares of all classes having a preference upon the distribution of assets. In addition, the Delaware General Corporation Law generally provides that a Delaware corporation may redeem or repurchase its shares only if such redemption or repurchase would not impair the corporation’s capital.

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
Annual Shareholders’ Meetings		Under the Corporations Act, MPAL must hold a meeting of members once in each calendar year and within 5 months of the end of its financial year. The business of an annual general meeting is to receive and consider the statement of financial position, the statement of financial performance and the reports of the directors and the auditor, to elect directors in place of those retiring, to appoint the auditor and fix their remuneration (if required) and to transact any other business in accordance with the MPAL Constitution. A resolution that MPAL’s remuneration report be adopted must also be put to the vote. Such a resolution is advisory only and does not bind MPAL or its Directors. At least 28 days’ notice must be given of a meeting of a listed company’s shareholders. Each shareholder is entitled to individual written notice of each general meeting and has a right to be present and to speak at that meeting. The chair of an annual general meeting must allow a reasonable opportunity for the shareholders as a whole at the meeting to ask questions about or make comments on the management of the company. The auditor or their representative is required to be present, and the shareholders must also be allowed a reasonable opportunity to ask questions relevant to the conduct of the audit and the preparation and content of the auditor’s report. Shareholders have a right to submit written questions to the auditor related to the audit and the company’s financial statements before the annual general meeting.		Magellan will hold an annual meeting in each year at such place and on such date and at such time as our board of directors designates by resolution, for the purpose of electing directors and transacting such other business as may properly be brought before the meeting. The Magellan By-Laws provide: • that the annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on such date as the board of directors shall each year fix; and • that the day, place and hour of each annual meeting is specified in the notice of annual meeting. Written notice of an annual shareholders’ meeting stating the time, place and purposes of the meeting must be given personally or by mail, not less than 10 days nor more than 60 days before the date on which the meeting is to be held, to each shareholder entitled to vote at the meeting.

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
Special Shareholders’ Meetings		The Corporations Act and the MPAL Constitution allows a director of MPAL to call a shareholders meeting. Directors must call and arrange to hold a general meeting on the request of either members holding at least 5% of the votes that may be cast at the meeting, or at least 100 members entitled to vote at the meeting. The directors must call the meeting within 21 days after the request is given to the company, and the meeting must be held not later than 2 months after the request is given to the company. If the directors fail to call the requisitioned meeting within 21 days, members holding at least 50% of the votes held by all requisitionists may call and arrange to hold the meeting. The meeting must be held not later than 3 months after the initial request is given to the company. Under the Corporations Act, members holding at least 5% of the votes that can be cast at a general meeting may also call, and arrange to hold, a general meeting, but this must be done at their own expense.		The Delaware General Corporation Law provides that a special shareholders’ meeting, other than those required by a provision of the Delaware General Corporation Law, may be called by the corporation’s board of directors or by such person or persons as the certificate of incorporation or the by-laws may authorise. The Magellan By-Laws provide that the only persons who may call a special meeting (other than those required by statute) are the following: • the Chairman of the Board of Directors; • the President; or • the Board of Directors pursuant to a resolution approved by a majority of the members of the Board then in office. Written notice of a special shareholders’ meeting stating the time, place and purposes of the meeting, must be given personally or by mail, not less than 10 days nor more than 60 days before the date on which the meeting is to be held, to each shareholder entitled to vote at that meeting.
Record Date		Under the Corporations Act and the Corporations Regulations, the time for determining which MPAL Shareholders are entitled to receive a notice of meeting is not more than 48 hours before the meeting.		Magellan’s Board may fix a record date which shall not be more than 60 days nor less than 10 days before the date of any meeting of shareholders, nor more than 60 days prior to the time for such action such as determining entitlements to a dividend, conversion or exchange of shares. If no record date is fixed by Magellan’s board, the record date for determining shareholders entitled to notice of a meeting shall be at the close of business on the day next preceding the day

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				on which the notice is given and for determining shareholders entitled to receive dividends, conversion or exchange of shares, the record date shall be the close of business on the day on which the board of directors adopts the resolution giving effect to that action.
Proxy lodgement		Under the Corporations Act, for an appointment of a proxy for a meeting of a Company’s shareholders to be effective, the proxy’s appointment must be signed and sent to the Company so as to be received at least 48 hours before the meeting.		The Magellan By-Laws provide that at any meeting of Magellan Shareholders, every Magellan Shareholder entitled to vote thereon may vote in person or by proxy authorised by an instrument or by a transmission permitted by law filed with Magellan (or its transfer agent) in accordance with the procedures established from time to time for any shareholders’ meeting. Proxies must be received by Magellan (or its transfer agent) a reasonable amount of time prior to the date of the meeting. Under Delaware law, a proxy may be revoked at any time before it is voted by: • so notifying Magellan in writing; • signing and dating a new and different proxy card of a later date; or • voting shares in person or by a duly appointed agent at the meeting.
Shareholder requisitioned resolutions		Under the Corporations Act, shareholders with at least 5% of the votes that may be cast at a general meeting or at least 100 shareholders who are entitled to vote at the general meeting may give a company notice of a resolution that they propose to move at a general meeting or request that the directors of the Company call and arrange to hold a general meeting. A company		Magellan Shareholders may only bring business before an annual meeting. To be properly brought before an annual meeting, business must be specified in the notice of meeting given by or at the direction of the board, properly brought before the meeting by or at the direction of the board or otherwise properly brought before the meeting by a Magellan Shareholder. In order

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
		which has received such a notice must distribute that notice to all its shareholders or call and arrange the meeting.		for a Magellan Shareholder to bring a business before an annual meeting, the Magellan Shareholder must have given notice not less than 60 days nor more than 90 days prior to the meeting. However, if less than 70 days notice or prior public disclosure (when disclosure of the date of the meeting is first made in a press release) of the date of the meeting is given or made to Magellan Shareholders, notice by the Magellan Shareholder to be timely must be received no later than the close of business on the 10th day following the date on which such notice of the date of the annual meeting was mailed or such public disclosure was made.
Board of Directors		The Corporations Act requires that MPAL have at least 3 directors (excluding alternate directors) at least 2 of which reside in Australia. The MPAL Constitution specifies that there will be not less than 4 or more than 8 directors. MPAL may in general meeting vary the number of its directors provided that the variation falls within the above requirements of the Corporations Act. Each director other than a managing director cannot retain office for more than 3 years or beyond the 3rd annual general meeting following his/her election (whichever is the longer period) without submitting him/herself for re-election. At each annual general meeting, one third of the directors (other than the managing director) will retire from office and will be eligible for re-election.		The Delaware General Corporation Law permits a Delaware corporation’s certificate of incorporation or by-laws to contain provisions governing the number and terms of directors. Directors may be elected at the annual shareholders’ meeting, or at a different shareholders’ meeting if the corporation’s by- laws so provide. Shareholders also may elect directors by written consent in lieu of a shareholders’ meeting. The Magellan By-Laws provide that the number of directors is fixed at four members, but such number may be altered from time to time by an amendment of the by laws. Directors are divided into three classes. Each director is elected for a term of office to expire at the third succeeding annual meeting of shareholders after their election, or in each case thereafter when their respective successors are elected and have qualified or upon their earlier death, resignation or

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				removal. Directors need not be shareholders. No decrease in the number of directors constituting the board of directors will shorten the term of any incumbent director. All directors elected at a meeting must be by written ballot. The Magellan By-Laws and the 12th Article of the Restated Certificate of Incorporation provide that election of directors is by majority of shares voted and a majority in number of shareholders present. However, if no board candidate receives such majorities, the person who receives a majority in number of shareholder votes is elected.
Removal of Directors		Any director of MPAL may resign at any time by giving written notice to MPAL. The Corporations Act provides that directors may be removed by a vote of the majority of shareholders present and voting at a meeting of which special notice has been given. The directors cannot remove a director from office or require a director to vacate their office.		The Delaware General Corporation Law provides that a director or directors may be removed with or without cause by the holders of a majority of the shares then entitled to vote at an election of directors, except that in the case of a corporation whose board is classified, the shareholders may effect such removal only for cause. The Magellan By-Laws provide that any director, or the entire board of directors, may be removed from office at any time, but only for cause and only by the affirmative vote of at least a majority of the votes cast at a shareholders’ meeting called to consider such removal and a majority of the shareholders present in person or by proxy and entitled to vote thereon. The term “cause” is not defined in the Magellan By-Laws or in the Delaware General Corporation Law.
Board Vacancies		The MPAL Directors have the power at any time and from time		Under the Delaware General Corporation Law, vacancies on

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
		to time to appoint any person as a director either to fill a casual vacancy or as an addition to the board but so that the total number of directors does not at any time exceed the set limit. A director appointed as a casual vacancy or an addition to the board only holds office until the next general meeting where he/she will eligible for re-election. Directors of MPAL may be appointed at the annual general meeting of MPAL Shareholders, or at any other general meeting requisitioned by shareholders. A person must give MPAL a signed consent to act as a director before being appointed. Except in the case of existing directors retiring automatically under the constitution, any person not recommended for appointment by the board is only eligible for appointment where the signed consent is received at least 28 days (including at least 20 business days) before the general meeting.		the board of directors and newly created directorships resulting from an increase in the authorised number of directors may be filled by: • a majority of the directors then in office, although less than a quorum; or • by the sole remaining director. The Magellan By-Laws provide that newly created directorships resulting from an increase in the authorised number of directors or any vacancies in the board of directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall only be filled by or in the manner directed by a majority vote of the directors then in office, and directors so chosen will hold office for a term expiring at the Annual Meeting of Shareholders at which the term of the class to which they have been elected expires. The Magellan By-Laws also provide that no decrease in the number of directors constituting the board of directors shall shorten the term of any incumbent director.
Indemnification of Directors and Officers		The Corporations Act provides that a company and its related bodies must not exempt or indemnify the company’s officers or auditor from liability owed to the company or a related body. The company must also not indemnify its officers or auditor from liability for fines and compensation orders, and liability owed to anyone arising out of conduct which was not in good faith. In these circumstances the person is also not allowed an indemnity for related legal costs. The company can otherwise		Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify its directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
		indemnify for costs incurred defending or resisting criminal proceedings in which the person is not found guilty and proceedings brought by ASIC or a liquidator where the grounds for the court order are not established. Legal costs are allowed in proceedings for relief granted by the court. The company must not pay an insurance premium for liabilities of its officers or auditor where the liabilities arise out of a wilful breach of duty against the company, or an improper use of position or company information. Section 1318 of the Corporations Act allows the court to grant relief to any officer or auditor of a company in a civil proceeding for negligence, default, breach of duty or breach of trust, if it appears to the court that the person is or may be liable but has acted honestly and, having regard to all the circumstances of the case, including those connected with the appointment, that person ought fairly to be excused. The court may relieve the person from liability either wholly or partly, on such terms as the court deems fit. Under the MPAL Constitution, MPAL will indemnify every officer or auditor of the company to the maximum extent permitted by law against any liability incurred by the officer, auditor or employee because of any act or thing done or omitted to be done by that person in that capacity or in any way in the discharge of that person’s duties. This does not apply in respect of any liability to MPAL or any liability arising out of conduct involving a lack of good faith. Every officer, auditor or employee of MPAL will be indemnified by MPAL against any liability for costs and expenses incurred in defending proceedings		agent to such corporation, if such person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and not unlawful. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise. The Magellan Restated Certificate of Incorporation and the Magellan By-Laws provide for indemnification by Magellan of its directors, officers and employees to the fullest extent permitted by the Delaware General Corporation Law for litigation expense s. The Magellan Restated Certificate of Incorporation and the Magellan By-Laws also provide for the prepayment of expenses to persons entitled to indemnification (subject to certain conditions).

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
		in which judgements given in favour of that person or in which he/she is acquitted or in connection with an application in which the court grants relief to a person under the Corporations Act.
Limitation of Personal Liability of Directors		Under Australian common law, directors are required to comply with certain fiduciary obligations to the company. There fiduciary duties include the duty to act in good faith in the interests of the company, the duty to act with a proper purpose, the duty not to fetter their discretion, the duty to exercise care, skill and diligence, the duty to avoid conflicts of interest, the duty not to use their position to their advantage, and to account to the company for any subsequent gain, and the duty not to misappropriate company property for their own or third party benefit. In addition to these common law duties, directors of Australian companies are required to comply with a number of statutory duties imposed by the Corporations Act, which are, in part, similar to the fiduciary duties of directors. The Corporations Act prohibits a company from exempting a person from a liability to the company as an officer of the company (eg for breach of fiduciary or statutory duty).		The fiduciary duties owed by directors of a Delaware corporation are the common law duties of due care and loyalty. The fiduciary duty of due care requires that directors use that amount of care which ordinarily careful and prudent persons would use in similar circumstances, and consider all material information reasonably available in making business decisions, and that deficiencies in the directors’ process are actionable only if the directors’ actions are grossly negligent. In the duty of care context with respect to corporate fiduciaries, gross negligence has been defined as reckless indifference to or a deliberate disregard of the whole body of shareholders’ or actions which are without the bounds of reason. The fiduciary duty of loyalty mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In addition to these common law duties, directors of a Delaware corporation are subject to the duties and requirements of the Delaware General Corporation Law. The Delaware General Corporation Law provides that a Delaware corporation’s certificate of incorporation may include a provision limiting a director’s personal liability, to the corporation or its shareholders, for monetary damages for breach of

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
				the director’s fiduciary duty. However, no such provision can eliminate or limit liability for: • any breach of the director’s duty of loyalty to the corporation or its shareholders; • acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; • violation of certain provisions of the Delaware General Corporation Law; • any transaction from which the director derived an improper personal benefit; or • any act or omission prior to the adoption of such a provision in the certificate of incorporation. The Magellan Restated Certificate of Incorporation contains a provision eliminating its directors’ personal liability for monetary damages to the fullest extent permitted under the Delaware General Corporation Law.
Derivative Actions By Shareholders		Under Australian law, a shareholder of a company no longer has the right to bring a common law action on behalf of the company. The shareholder must instead bring a statutory derivative action under the Corporations Act. Under the Corporations Act, a statutory derivative action may be instituted by a shareholder, former shareholder or a person entitled to be registered as a shareholder of a company. It can also be brought by an officer or former officer. In all cases, leave of the court is required. This will be granted if it		Under Delaware common law, a shareholder may bring a derivative action on behalf of the corporation where those in control of the corporation have refused to assert a claim belonging to the corporation (and to the shareholders collectively). Under Delaware law, a shareholder who wishes to bring a derivative suit must meet certain eligibility and standing requirements, including a requirement that the plaintiff have been a shareholder of the corporation at the time of the act of which he complains and that he maintain his status as a

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
		is probable that the company will not itself bring the proceedings or properly take responsibility for them, the applicant is acting in good faith, the granting of leave is in the best interest of the company and there is a serious question to be tried. 14 days’ written notice must usually be given to the company before making the application. The proceedings can be instituted even if the company has ratified or approved of the conduct, although the court will take the ratification into account when making orders. Bringing a statutory derivative action will not prevent a shareholder bringing, or intervening in, proceedings on their own behalf in respect of a personal right.		shareholder throughout the course of the litigation. In addition, a derivative plaintiff must make a demand on the directors of the corporation to assert the corporate claim, unless that demand would be futile. Settlement or dismissal of a derivative action requires the approval of the Court and notice to shareholders of the proposed dismissal.
Oppression		Under the Corporations Act, any shareholder can bring an action in cases of conduct which is either contrary to the interests of the shareholders as a whole, oppressive to, unfairly prejudicial to or unfairly discriminatory against any shareholder in their capacity as shareholder or themselves in their capacity other than as a shareholder. Former shareholders can also bring an action if it relates to the circumstances in which they ceased to be a shareholder. The court may make orders that it considers appropriate, including orders regulating the future conduct of the company’s affairs or for the purchase of any shares by any shareholder. The court can also order the modification or repeal of the company’s existing constitution.		There are no equivalent rights applicable to the Magellan shares under Delaware law.
Directors with Conflicting Interest		The Corporations Act prohibits a public company from giving directors and other related parties		Under the Delaware General Corporation Law, certain contracts or transactions in which

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
		a financial benefit unless it obtains the approval of the shareholders or the financial benefit is exempt. Exempt financial benefits include indemnities, insurance premiums and payment for legal costs which are not otherwise prohibited by the Corporations Act, and benefits given an arm’s length terms. The Corporations Act generally requires a director of a company who has a material personal interest in a matter that relates to the affairs of the company to give the other directors notice of the interest. Such a director must not be present at a meeting where that matter is being considered or vote on the matter unless the other directors or ASIC approve, or the matter is not one which requires disclosure under the Corporations Act. Such a director does not form part of the quorum at the directors meeting for that part of the business. Directors, in entering into transactions involving the company, are subject to their common law and statutory duties to avoid conflicts of interest. The ASX Listing Rules also require shareholder approval of certain transactions with directors (including some issuances of securities to directors).		one or more of a corporation’s directors or officers have an interest are neither void nor voidable solely on that basis, or solely because such directors or officers participate in the meeting in which the transaction is authorised, or solely because any such director’s or officer’s votes are counted for such purpose, provided certain conditions are met. These conditions include obtaining the required approval and fulfilling the requirements of good faith and full disclosure. Under the Delaware General Corporation Law, either: • the shareholders or the board of directors must approve any such contract or transaction after full disclosure of the material facts as to the director’s or officer’s interest; or • the contract or transaction must have been fair to the company at the time it was approved. If board approval is sought, the contract or transaction must be approved by a majority of disinterested directors, even though the disinterested directors may be less than a quorum.
Right to Inspect Corporate Books and Records		Under the Corporations Act, every shareholder of a company at the shareholder’s request and on payment of any fee (up to a prescribed amount) must be sent a copy of the constitution within 7 days. The constitution of a public company (and any modification to it) is also lodged with ASIC and may be obtained by any member of the public on payment of a prescribed fee. MPAL’s certificate of registration		The Magellan Restated Certificate of Incorporation as amended on 12 February 1988 and 22 December 2000 is on file with the Secretary of State of Delaware and has also been filed with the SEC as an exhibit to the Magellan Form S-8 registration statement dated 14 January 1999. The Delaware General Corporation Law provides that for every shareholder meeting, a complete list of the shareholders

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
		is issued by ASIC. ASIC keeps a copy of the registration and is obliged to give a person, upon request, a copy of the certificate. Under the Corporations Act, each shareholder is entitled to receive a copy of MPAL’s last annual financial report, director’s report and auditor’s report or a concise report for that financial year by the later of 7 days after the request is received and either 4 months after the end of the financial year or 21 days before the next annual general meeting (whichever is earlier). Under the MPAL Constitution, a shareholder has no right to inspect any of the books of MPAL except as conferred by law or authorised by the directors or the resolution of MPAL in general meeting and is not entitled to require or receive any information concerning the business, trading or customers of MPAL or any trade secret or secret process of or used by MPAL. Under the Corporations Act, a shareholder must obtain a court order to obtain access to the corporate books and records. The Corporations Act allows shareholders to inspect a company’s general meeting minute books.		entitled to vote at the meeting must be made and be open to the examination of any shareholder during ordinary business hours for at least 10 days prior to the meeting at the corporation’s principal place of business. Delaware law provides that the shareholder list may also be made available on a reasonably accessible electronic network, provided that the information required to gain access to the list is provided with the notice of the meeting. The list must be produced at the meeting and be subject at all times during the meeting to the inspection of any shareholder present.
Right to Inspect the Register of Shareholders		Under the Corporations Act, the register of shareholders of a company is usually kept at the registered office or principal place of business in Australia and must be available for inspection at all times when the registered office is open to the public. The MPAL Constitution states that subject to the Corporations Act, the ASX Listing Rules and the SCH Business Rules, MPAL may close the register at such times as it determines. Shareholders may		Delaware law provides that any shareholder must, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s shares ledger, shareholder list and its other books records and to make copies or extracts therefrom. If the corporation refuses to permit the shareholder’s inspection or does not reply to the shareholder’s written demand within five

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
		inspect the register free of charge and any other person may inspect on payment of any fee (up to a prescribed amount) required by MPAL. MPAL must give a person a copy of the register (or any part of the register) within 7 days if the person asks for a copy and pays the requested fee (up to a prescribed amount). This also applies in respect of MPAL’s register of optionholders. In addition, MPAL must keep a register of charges which may be inspected by shareholders on payment of a fee.		business days, the shareholder may seek remedy in the Delaware Court of Chancery.
Auditors		Under the Corporations Act, all public companies must prepare a financial report and a directors report for each financial year. A listed public company must prepare a financial report and directors report for each half year period. While the annual report must be audited, the half year report may be audit reviewed.		Under the U.S. Securities Exchange Act of 1934, U.S. public companies are required to deliver audited financial statements in connection with certain of their periodic public reports. These financial statements are audited by the company’s independent auditors. The company’s relationship with the independent auditors is managed by the audit committee of the company’s board of directors in accordance with the pre-approval and independence requirements and the standards for audit committee conduct set forth in the rules and regulations of the SEC and Nasdaq.
Winding Up		In the winding up, each MPAL Share confers on its holder the right to receive payment in proportion to the amount paid up on a MPAL Share. MPAL may also be wound up voluntarily or otherwise appoint a liquidator with the sanction of a special resolution and to distribute MPAL’s assets among the shareholders.		Under the Delaware General Corporation Law, a Delaware corporation may be dissolved by a vote of the Board of Directors and a vote of a majority of the outstanding shares. The Delaware General Corporation Law contains specific provisions regarding methods of winding up the affairs of dissolved corporations and distributing assets among creditors and shareholders. These methods are calculated to enable the shareholders and directors of the

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		Rights of holders of MPAL Shares		Rights of holders of Magellan Shares
				corporation to limit their post- dissolution exposure to claims of creditors, while at the same time establishing procedures that fairly balance and address the legitimate claims of creditors against the assets of the dissolved corporation. In general, valid corporate debts are to be paid or provided for before a liquidating distribution to shareholders of the corporation is made. The liability of any shareholder for claims against the dissolved corporation may not exceed the amount distributed to such shareholder in dissolution.

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	•	Our annual report on Form 10-K for the fiscal year ended June 30, 2005, filed with the SEC on September 28, 2005;
	•	Our current report on Form 8-K filed with the SEC on October 18, 2005;
	•	Our quarterly report on Form 10-Q filed with the SEC on November 14, 2005;
	•	Our current report on Form 8-K filed with the SEC on November 30, 2005;
	•	Our current report on Form 8-K filed with the SEC on December 28, 2005; and
	•	Our current report on Form 8-K filed with the SEC on January 24, 2006.

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“At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the corporation, not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the date on which such notice of the date of the annual meeting was mailed or such public disclosure was made. For purposes of this Section 2.1, public disclosure shall be deemed to have been made to stockholders when disclosure of the date of the meeting is first made in a press release reported by the Dow Jones News Services, Associated Press, Reuters Information Services, Inc. or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended.

	(a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting;
	(b) the name and address, as they appear on the corporation’s books, of the stockholder intending to propose such business;
	(c) the class and number of shares of the corporation which are beneficially owned by the stockholder;
	(d) a representation that the stockholder is a holder of record of capital stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to present such business;
	(e) any material interest of the stockholder in such business.”

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	“Only persons who are nominated in accordance with the procedures set forth in these By-Laws shall be eligible for election as directors. Nominations of persons for election to the board of directors of the corporation may be made at a meeting of stockholders (a) by or at the direction of the board of directors or (b) by any stockholder of the corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 2.2. Nominations by stockholders shall be made pursuant to timely notice in writing to the Secretary of the corporation. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy days’ (70) notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. For purposes of this Section 2.2, public disclosure shall be deemed to have been made to stockholders when disclosure of the date of the meeting is first made in a press release reported by the Dow Jones News Services, Associated Press, Reuters Information Services, Inc. or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended.
	Each such notice shall set forth:

	(a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated;
	(b) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice;
	(c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; and
	(d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the board of directors.
	To be effective, each notice of intent to make a nomination given hereunder shall be accompanied by the written consent of each nominee to being named in a proxy statement and to serve as a director of the corporation if elected.
	No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in these By-Laws. The presiding officer of the meeting shall, if the facts warrant, determine and declare to the meeting that nomination was not made in accordance with the procedures prescribed by these By-Laws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.”

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	By Order of the Board of Directors,
	Edward B. Whittemore
	Secretary

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UNAUDITED PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		F-2
AUDITED MAGELLAN FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2005		F-8

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			For the Year Ended June 30, 2005
							Pro Forma
							Adjustments to
							Reflect
			Historical				Exchange Offer				Pro Forma
Total revenues			$	21,870,786				—			$	21,870,786
Costs and expenses				21,898,111				1,927,136	(7)			23,825,247
Operating loss				(27,325	)			(1,927,136	)			(1,954,461	)
Interest income				1,141,802				—				1,141,802
Income (loss) before income taxes and minority interests				1,114,477				(1,927,136	)			(812,659	)
Income tax benefit				82,152				578,141	(8)			660,293
Income (loss) before minority interests				1,196,629				(1,348,995	)			(152,366	)
Minority interests				(1,109,669	)			1,109,669	(1)			—
Net income (loss)			$	86,960			$	(239,326	)		$	(152,366	)
Average number of shares outstanding
	Basic			25,783,243				15,714,687	(2)			41,497,930
	Diluted			25,783,243				15,714,687	(2)			41,497,930
Net income (loss) per share (basic and diluted)			$	0.00							$	0.00

			For the Three Months Ended September 30, 2005
							Pro Forma
							Adjustments to
							Reflect
			Historical				Exchange Offer				Pro Forma
Total revenues			$	6,249,786				—			$	6,249,786
Costs and expenses				6,174,735				508,708	(7)			6,683,443
Operating income (loss)				75,051				(508,708	)			(433,657	)
Interest income				340,109				—				340,109
Income (loss) before income taxes				415,160				(508,708	)			(93,548	)
and minority interests
Income tax (provision) benefit				(190,347	)			152,612	(8)			(37,735	)
Income (loss) before minority interests				224,813				(356,096	)			(131,283	)
Minority interests				(252,868	)			252,868	(1)			—
Net loss			$	(28,055	)		$	(103,228	)		$	(131,283	)
Average number of shares outstanding
	Basic			25,783,243				15,714,687	(2)			41,497,930
	Diluted			25,783,243				15,714,687	(2)			41,497,930
Net loss per share (basic and diluted)			$	0.00							$	0.00

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					As of June 30, 2005
									Pro Forma
									Adjustments to
									Reflect Exchange
					Historical				Offer				Pro Forma
ASSETS
Current assets:
	Cash and cash equivalents and marketable securities				$	24,949,916			$	(2,720,631	)(9)		$	22,229,285
	Accounts receivable					5,075,096								5,075,096
	Inventories					591,997								591,997
	Other assets					526,703								526,703
	Total current assets					31,143,712				(2,720,631	)			28,423,081
Deferred income taxes						1,014,907								1,014,907
Property and equipment:
	Oil and gas properties					80,765,911				7,931,814	(3)			88,697,725
	Land, buildings and equipment					4,173,889								4,173,889
						84,939,800				7,931,814				92,871,614
	Less accumulated depletion, depreciation and amortization					(60,674,306	)							(60,674,306	)
	Net property and equipment					24,265,494				7,931,814				32,197,308
Goodwill										8,735,661	(4)			8,735,661
			Total assets		$	56,424,113			$	13,946,844			$	70,370,957
LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable				$	3,602,085							$	3,602,085
	Accrued liabilities and income taxes payable					1,333,883								1,333,883
			Total current liabilities			4,935,968								4,935,968
		Deferred income taxes								2,379,544	(10)			2,379,544
		Long term liabilities				5,729,180								5,729,180
	Minority interests					18,583,046				(18,583,046	)(5)
	Commitments
		Stockholders’ equity
		Common stock, par value $.01 per share				257,832				157,147	(6)			414,979
		Capital in excess of par value				44,402,182				29,993,199	(6)			74,395,381
	Accumulated deficit and other comprehensive loss					(17,484,095	)							(17,484,095	)
	Total stockholders’ equity					27,175,919				30,150,346				57,326,265
		Total liabilities, minority interests and stockholders’ equity			$	56,424,113			$	13,946,844			$	70,370,957
	Shares of common stock outstanding					25,783,243				15,714,687	(2)			41,497,930

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					As of September 30, 2005
									Pro Forma
									Adjustments to
									Reflect Exchange
					Historical				Offer				Pro Forma
ASSETS
Current assets:
	Cash and cash equivalents and marketable securities				$	26,219,399			$	(2,720,631	)(9)		$	23,498,768
	Accounts receivable					5,119,717								5,119,717
	Inventories					443,338								443,338
	Other assets					629,031								629,031
	Total current assets					32,411,485				(2,720,631	)			29,690,854
Deferred income taxes						1,494,907								1,494,907
Property and equipment:
	Oil and gas properties					81,337,246				8,553,757	(3)			89,891,003
	Land, buildings and equipment					3,377,006								3,377,006
						84,714,252				8,553,757				93,268,009
	Less accumulated depletion, depreciation and amortization					(61,118,981	)							(61,118,981	)
	Net property and equipment					23,595,271				8,553,757				32,149,028
Goodwill										8,080,572	(4)			8,080,572
			Total assets		$	57,501,663			$	13,913,699			$	71,415,362
LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable				$	4,353,831							$	4,353,831
	Accrued liabilities and income taxes payable					1,427,756								1,427,756
			Total current liabilities			5,781,587								5,781,587
		Deferred income taxes								2,566,127	(10)			2,566,127
		Long term liabilities				5,832,721								5,832,721
	Minority interests					18,802,774				(18,802,774	)(5)
	Commitments
		Stockholders’ equity Common stock, par value $.01 per share				257,832				157,147	(6)			414,979
		Capital in excess of par value				44,404,660				29,993,199	(6)			74,397,859
	Accumulated deficit and other comprehensive loss					(17,577,911	)							(17,577,911	)
	Total stockholders’ equity					27,084,581				30,150,346				57,234,927
		Total liabilities, minority interests and stockholders’ equity			$	57,501,663			$	13,913,699			$	71,415,362
	Shares of common stock outstanding					25,783,243				15,714,687	(2)			41,497,930

F-5

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Table of Contents

		June 30,				September 30,
		2005				2005
Magellan shares to be issued in Exchange Offer			15,714,687				15,714,687
Assumed value of Magellan common stock		$	1.93			$	1.93
Exchange value		$	30,329,346			$	30,329,346
Cash consideration		$	1,570,631			$	1,570,631
Estimated capitalized expenses			971,000	(9)			971,000	(9)
Total acquisition cost			32,870,977				32,870,977
Value of net assets being acquired			16,203,502				16,236,647
Excess of purchase price over net assets acquired		$	16,667,475			$	16,634,330
Estimated value of oil and gas properties		$	31,312,000			$	31,312,000
Net book value of oil and gas properties			23,380,186				22,758,243
Excess of purchase price over net assets acquired allocated to oil and gas properties			7,931,814	(3)			8,553,757	(3)
Excess of purchase price over net assets acquired allocated to goodwill			8,735,661	(4)			8,080,572	(4)
Total excess of purchase price over net assets acquired		$	16,667,475			$	16,634,330

F-6

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Table of Contents

Shares of MPAL not owned by Magellan			20,952,916
Exchange ratio			.75
Magellan shares issued pursuant to the Exchange Offer			15,714,687

F-7

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Table of Contents

	/s/ Deloitte & Touche LLP

F-8

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Table of Contents

	/s/ Ernst & Young LLP

F-9

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Table of Contents

				June 30,
				2005				2004
ASSETS
Current assets:
	Cash and cash equivalents			$	21,733,375			$	20,406,620
	Accounts receivable — Trade				4,210,174				2,931,609
	Accounts receivable — Working Interest Partners				864,922				1,044,619
	Marketable securities				3,216,541				2,584,296
	Inventories				591,997				595,948
	Other assets				526,703				318,141
		Total current assets			31,143,712				27,881,233
Marketable securities									592,138
Deferred income taxes					1,014,907				—
Property and equipment:
	Oil and gas properties (successful efforts method)				80,765,911				69,970,134
	Land, buildings and equipment				2,552,980				2,264,004
	Field equipment				1,620,909				1,482,639
					84,939,800				73,716,777
	Less accumulated depletion, depreciation and amortization				(60,674,306	)			(49,295,770	)
		Net property and equipment			24,265,494				24,421,007
	Total assets			$	56,424,113			$	52,894,378
LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable			$	3,602,085			$	4,367,305
	Accrued liabilities				1,308,004				1,550,045
	Income taxes payable				25,879				267,645
		Total current liabilities			4,935,968				6,184,995
Long term liabilities:
	Deferred income taxes				—				403,261
	Asset retirement obligations				5,729,180				4,852,416
		Total long term liabilities			5,729,180				5,255,677
Minority interests					18,583,046				16,533,491
Commitments (Note 11)					—				—
Stockholders’ equity:
	Common stock, par value $.01 per share:
		Authorized 200,000,000 shares outstanding; 25,783,243			257,832				257,832
	Capital in excess of par value				44,402,182				44,402,182
	Total capital				44,660,014				44,660,014
	Accumulated deficit				(15,161,462	)			(15,248,422	)
	Accumulated other comprehensive loss				(2,322,633	)			(4,491,377	)
Total stockholders’ equity					27,175,919				24,920,215
Total liabilities, minority interests and stockholders’ equity				$	56,424,113			$	52,894,378

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Table of Contents

			Years Ended June 30,
			2005				2004				2003
Revenues:
	Oil sales		$	7,574,022			$	4,922,585			$	3,329,243
	Gas sales			12,478,293				12,870,065				10,182,104
	Other production related revenues			1,818,471				1,631,613				1,224,729
	Total revenues			21,870,786				19,424,263				14,736,076
Costs and expenses:
	Production costs			6,144,339				5,416,465				4,461,365
	Exploratory and dry hole costs			4,157,344				3,225,066				2,920,104
	Salaries and employee benefits			2,726,341				3,812,012				1,958,371
	Depletion, depreciation and amortization			6,994,253				6,341,998				3,718,660
	Auditing, accounting and legal services			441,642				413,754				404,215
	Accretion expense			406,960				356,981				242,854
	Shareholder communications			227,032				179,840				171,385
	Other administrative expenses			800,200				659,751				369,942
	Total costs and expenses			21,898,111				20,405,867				14,246,896
Operating income (loss)				(27,325	)			(981,604	)			489,180
Interest income				1,141,802				1,099,440				859,865
Income before income taxes, minority interests and cumulative effect of accounting change				1,114,477				117,836				1,349,045
Income tax benefit				82,152				778,085				773,548
Income before minority interests and cumulative effect of accounting change				1,196,629				895,921				2,122,593
Minority interests				(1,109,669	)			(545,860	)			(1,232,200	)
Income before cumulative effect of accounting change				86,960				350,061				890,393
Cumulative effect of accounting change — net				—				—				(737,941	)
Net income			$	86,960			$	350,061			$	152,452
Average number of shares:
	Basic			25,783,243				25,644,566				24,560,068
	Diluted			25,783,243				25,682,160				24,560,068
Per share (basic and diluted)
	Income before cumulative effect of accounting change		$	—			$	.01			$	.04
	Cumulative effect of accounting change — net			—				—				(.03	)
Net income			$	—			$	.01			$	.01

F-11

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Table of Contents

																		Accumulated
										Capital in								Other								Total
		Number of				Common				Excess of Par				Accumulated				Comprehensive								Comprehensive
		Shares				Stock				Value				Deficit				Loss				Total				Income
June 30, 2002			24,607,376			$	246,074			$	43,085,841			$	(15,750,935	)		$	(8,964,524	)		$	18,616,456
Net income			—				—				—				152,452				—				152,452			$	152,452
Foreign currency translation adjustments			—				—				—				—				3,507,783				3,507,783				3,507,783
Reclassification adjustment on available-for-sale securities			—				—				—				—				50,214				50,214				50,214
Total comprehensive income			—				—				—				—				—				—			$	3,710,449
Repurchases of common stock			(180,000	)			(1,800	)			(178,100	)			—				—				(179,900	)
June 30, 2003			24,427,376			$	244,274			$	42,907,741			$	(15,598,483	)		$	(5,406,527	)		$	22,147,005
Net income			—				—				—				350,061				—				350,061				350,061
Foreign currency translation adjustments			—				—				—				—				915,150				915,150				915,150
Total comprehensive income			—				—				—				—				—				—				1,265,211
Stock exchange			1,300,000				13,000				1,495,000												1,508,000
Issuance of common stock			55,867				558				(559	)			—				—				(1	)
June 30, 2004			25,783,243			$	257,832			$	44,402,182			$	(15,248,422	)		$	(4,491,377	)		$	24,920,215
Net income			—				—				—				86,960				—				86,960				86,960
Foreign currency translation adjustments			—				—				—				—				2,168,744				2,168,744				2,168,744
Total comprehensive income			—				—				—				—				—				—				2,255,704
June 30, 2005			25,783,243			$	257,832			$	44,402,182			$	(15,161,462	)		$	(2,322,633	)		$	27,175,919

F-12

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Table of Contents

				Years Ended June 30,
				2005				2004				2003
Operating Activities:
	Net income			$	86,960			$	350,061			$	152,452
	Adjustments to reconcile net income to net cash provided by operating activities:
		Cumulative effect of accounting change							—				2,025,690
		Depletion, depreciation and amortization			6,994,253				6,341,998				3,718,660
		Accretion expense			406,960				356,981				242,854
		Deferred income taxes			(1,454,544	)			(1,445,241	)			(1,494,621	)
		Minority interests			1,109,669				545,860				552,158
		Exploration and dry hole costs			3,200,816				2,897,766				1,961,421
	Increase (decrease) in operating assets and liabilities:
		Accounts receivable			(978,727	)			1,456,833				(951,967	)
		Other assets			(208,563	)			905,146				(214,946	)
		Inventories			57,207				(142,397	)			(69,275	)
		Accounts payable and accrued liabilities			(191,341	)			(715,548	)			1,368,413
		Income taxes payable			(246,495	)			166,477				(123,087	)
		Settlement of asset retirement obligation			—				—				(58,901	)
Net cash provided by operating activities					8,776,195				10,717,936				7,108,851
Investing Activities:
	Additions to property and equipment				(5,154,554	)			(6,040,157	)			(2,438,829	)
	Oil and gas exploration activities				(3,200,816	)			(2,897,766	)			(1,961,421	)
	Sale of available-for-sale securities				—				—				93,334
	Marketable securities matured				5,599,328				5,760,239				2,071,687
	Marketable securities purchased				(5,639,435	)			(6,750,171	)			(2,564,501	)
Net cash used in investing activities					(8,395,477	)			(9,927,855	)			(4,799,730	)
Financing Activities:
	Dividends to MPAL minority shareholders				(821,732	)			(744,971	)			(628,209	)
	Repurchases of common stock				—				—				(179,900	)
Net cash used in financing activities					(821,732	)			(744,971	)			(808,109	)
Effect of exchange rate changes on cash and cash equivalents					1,767,769				320,046				2,755,601
Net increase in cash and cash equivalents					1,326,755				365,156				4,256,613
Cash and cash equivalents at beginning of year					20,406,620				20,041,464				15,784,851
Cash and cash equivalents at end of year				$	21,733,375			$	20,406,620			$	20,041,464
Cash Payments:
	Income taxes				13,000				12,000				173,000
	Interest				—				—				—

F-13

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Table of Contents

1.	Summary of Significant Accounting Policies

	Principles of Consolidation

	Revenue Recognition

	Oil and Gas Properties

F-14

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Table of Contents

	Use of Estimates

	Land, Buildings and Equipment and Field Equipment

	Accounts Receivable

	Inventories

	Foreign Currency Translations

F-15

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Table of Contents

	Accrued Liabilities

	Accounting for Income Taxes

	Financial Instruments

	Cash and Cash Equivalents

		June 30,
		2005				2004
Cash		$	309,283			$	1,648,074
U.S. government obligations			—				398,852
Australian money market accounts and short-term commercial paper			21,424,092				18,359,694
		$	21,733,375			$	20,406,620

F-16

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Table of Contents

	Marketable Securities

June 30, 2005		Par Value				Maturity Date				Amortized Cost				Fair Value
Short-term securities
U.S. government agency note		$	300,000				Jul. 21, 2005			$	295,437			$	299,460
U.S. government agency note			575,000				Aug. 23, 2005				565,532				572,240
U.S. government agency note			210,000				Sep. 16, 2005				206,920				208,488
U.S. government agency note			100,000				Sep. 16, 2005				98,380				99,280
U.S. government agency note			200,000				Oct. 24, 2005				196,611				197,840
State of Connecticut bond			200,000				Nov. 15, 2005				200,585				199,852
Lewiston, Maine Pension bond			390,000				Dec. 15, 2005				390,000				392,336
U.S. government agency note			310,000				Jan. 10, 2006				302,863				304,141
U.S. government agency note			300,000				Feb. 24, 2006				291,980				292,950
U.S. government agency note			300,000				Mar. 28, 2006				300,000				298,500
U.S. government agency note			230,000				Apr. 28, 2006				223,035				223,008
U.S. government agency note			150,000				May 02, 2006				145,198				145,350
Total short-term		$	3,265,000							$	3,216,541			$	3,233,445

June 30, 2004		Par Value				Maturity Date				Amortized Cost				Fair Value
Short-term securities
U.S. government agency note		$	800,000				Jul. 7, 2004			$	796,896			$	799,840
U.S. government agency note			300,000				Aug. 24, 2004				298,785				299,430
U.S. government agency note			500,000				Sep. 15, 2004				497,813				498,600
U.S. government agency note			400,000				Oct. 7, 2004				398,104				398,360
State of Connecticut bond			200,000				Nov. 15, 2004				200,514				200,582
U.S. government agency note			100,000				Nov. 23, 2004				99,378				99,360
Lewiston, Maine Pension bond			290,000				Dec. 15, 2004				292,806				293,213
Total short-term		$	2,590,000							$	2,584,296			$	2,589,385
Long-term securities
State of Connecticut bond		$	200,000				Nov. 15, 2005			$	202,138			$	201,378
Lewiston, Maine Pension bond			390,000				Dec. 15, 2005				390,000				401,532
Total long-term		$	590,000							$	592,138			$	602,910

	Earnings per Share

F-17

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Table of Contents

	Stock Options

	Accumulated Other Comprehensive Loss

		2005				2004
Foreign currency translation adjustments		$	(2,322,633	)		$	(4,491,377	)

	Sales Taxes

	Reclassifications

F-18

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Table of Contents

2.	Oil and Gas Properties

Location		2005				2004
Mereenie and Palm Valley (Australia)		$	77,376,081			$	66,945,763
Nockatunga (Australia)			2,487,986				2,258,338
Aldinga (Australia)			779,871				604,747
Kotaneelee (Canada)			108,777				148,765
Other			13,196				12,521
		$	80,765,911			$	69,970,134

Location		2005				2004
Mereenie and Palm Valley (Australia)		$	56,083,919			$	45,644,688
Nockatunga (Australia)			464,523				218,594
Aldinga (Australia)			728,506				428,863
Kotaneelee (Canada)			53,492				30,059
		$	57,330,440			$	46,322,204

	Depletion, Depreciation and Amortization

		2005				2004				2003
Mereenie and Palm Valley (Australia)			25.6				20.9				17.6
Nockatunga (Australia)			12.1				9.5				—
Aldinga (Australia)			78.1				70.2				2.6
Kotaneelee (Canada)			8.3				25.0				25.0

	Nockatunga Acquisition

	Exploratory and Dry Hole Costs

		2005				2004				2003
U.S./ Belize		$	—			$	—			$	(38	)
Australia/ New Zealand			4,157				3,225				2,958
Total		$	4,157			$	3,225			$	2,920

F-19

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Table of Contents

3.	Asset Retirement Obligations

		2005				2004
Balance at beginning of year		$	4,852,000			$	3,858,000
Liabilities incurred			85,000				489,000
Liabilities settled			—				—
Accretion expense			407,000				357,000
Revisions to estimate			(40,000	)			—
Exchange effect			425,000				148,000
Balance at end of year		$	5,729,000			$	4,852,000

4.	Capital and Stock Options

F-20

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Table of Contents

			Expiration				Number of
Options Outstanding			Dates				Shares				Exercise Prices($)
June 30, 2002								871,000			1.28-1.57
	Granted			Jan. 2008				50,000			.85
June 30, 2003								921,000			.85-1.57
	Expired							(126,000	)		1.57
	Cancelled							(25,000	)		.85
	Exercised							(175,000	)		.85-1.28
June 30, 2004								595,000			(1.28 weighted average price)
	Granted			Jul. 2014				30,000			1.45
	Expired							(595,000	)		1.28
June 30, 2005								30,000			1.45

Expiration

Exercise

Dates

Total

Vested

Prices ($)

Granted 2004

Jul. 2014

30,000

10,000

1.45

						Earnings Per
						Share
		Net Income				Basic				Diluted
Net income as reported — June 30, 2003		$	152,000			$	.01			$	.01
Stock option expense (determined under fair value method)			(22,000	)			—				—
Pro forma net income — June 30, 2003		$	130,000			$	.01			$	.01
Net income as reported — June 30, 2004		$	350,000			$	.01			$	.01
Stock option expense (determined under fair value method)			—				—				—
Pro forma net income — June 30, 2004		$	350,000			$	.01			$	.01
Net income as reported — June 30, 2005		$	87,000			$	—			$	—
Stock option expense (determined under fair value method)			(18,000	)			—				—
Pro forma net income — June 30, 2005		$	69,000			$	—				—

F-21

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Table of Contents

5.	Income Taxes

		Years Ended June 30,
		2005				2004				2003
United States		$	(1,004	)		$	(548	)		$	(329	)
Foreign			2,118				666				1,678
Total		$	1,114			$	118			$	1,349

		Years Ended June 30,
		2005				2004				2003
Tax provision computed at statutory rate (30%)		$	(334	)		$	(35	)		$	(405	)
Magellan’s parent company (income) losses			(301	)			165				(98	)
Non-taxable revenue from Australian government sources			301				267				194
MPAL non-deductible foreign losses (New Zealand)			(513	)			(337	)			(197	)
MPAL write off of foreign advances (New Zealand)			1,000				—				—
Reversal of prior year reserve on MPAL Deferred Tax Assets(a)			—				1,266				1,399
Magellan income tax provision(b)			(71	)			(492	)			(130	)
Other			—				(56	)			11
Consolidated income tax (provision) benefit		$	82			$	778			$	774
Current income tax provision		$	(1,375	)		$	(667	)		$	(130	)
Deferred income tax benefit			1,457				1,445				904
Consolidated income tax (provision) benefit		$	82			$	778			$	774
Effective tax rate			7	%			—				(57	)%

(a)		Tax benefits relate primarily to additional tax benefits taken in connection with financing prior year exploration activities in Australia. These benefits were reserved in prior years and as a result of the benefits becoming recoverable during the current year, such reserves were reversed.
(b)		Magellan’s income tax provisions represent the 25% Canadian withholding tax on its Kotaneelee gas field carried interest net proceeds.

			June 30,				June 30,
			2005				2004
Deferred tax liabilities
	Acquisition and development costs		$	(981,000	)		$	(2,068,000	)
Deferred tax assets
	Asset retirement obligations			1,996,000				1,665,000
	Net operating losses			2,749,000				2,633,000
	Foreign tax credits			223,000				223,000
	Interest			214,000				214,000
Total deferred tax assets				5,182,000				4,735,000
Valuation allowance				(3,186,000	)			(3,070,000	)
Net deferred tax (liabilities)/asset			$	1,015,000			$	(403,000	)

F-22

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Table of Contents

	Australia

	United States

6.	Related Party and Other Transactions

7.	Leases

8.	Pension Plan

F-23

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Table of Contents

			2005				2004
Change in Benefit Obligation
Benefit obligation at beginning of year			$	2,145,394			$	1,980,930
	Service cost			—				148,075
	Interest cost			—				94,212
	Actuarial gains and losses			—				(46,378	)
	Benefits paid			(2,145,394	)			(447,277	)
	Settlement and curtailment			—				414,694
	Expenses paid			—				(71,763	)
	Foreign currency effect			—				72,901
Benefit obligation at end of year			$	—			$	2,145,394
Change in Plan Assets
Fair value of plan assets at beginning of year				1,858,681			$	1,911,692
	Actual return on plan assets			286,713				226,341
	Contributions by employer			—				164,368
	Benefits paid			(2,145,394	)			(447,277	)
	Foreign currency effect			—				75,320
	Other (expenses)			—				(71,763	)
Fair value of plan assets at end of year			$	—			$	1,858,681
Reconciliation of Funded Status
Funded Status				—			$	(286,713	)
	Unamortized transition asset			—				—
	Unamortized loss			—				—
(Accrued) Prepaid benefit costs			$	—			$	(286,713	)

		2004				2003
Settlement and curtailment		$	1,237,425			$	—
Service cost			148,075				144,216
Interest cost			94,212				96,803
Expected return on plan assets			(94,104	)			(97,205	)
Net amortization and deferred items			26,835				15,299
Net pension cost		$	1,412,443			$	159,113
Plan contributions by MPAL		$	228,958			$	156,247

		2004				2003
Assumed discount rate			5.0	%			5.5	%
Rate of increase in future compensation levels			3.5	%			3.5	%
Expected long term rate of return on plan assets			5.0	%			5.0	%
Australian exchange rate		$	0.70			$	.67

F-24

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Table of Contents

9.	Segment Information

				Years Ended June 30,
				2005				2004				2003
Revenues:
	Magellan				1,256			$	2,469			$	1,228
	MPAL				21,590				17,866				14,194
	Elimination of intersegment dividend				(975	)			(911	)			(686	)
	Total consolidated revenues			$	21,871			$	19,424			$	14,736
Interest income:
	Magellan			$	89			$	160			$	85
	MPAL				1,053				939				775
	Total consolidated			$	1,142			$	1,099			$	860
Net income (loss) before cumulative effect of accounting change:
	Magellan			$	(101	)		$	969			$	229
	Equity in earnings of MPAL, net of related costs(1)				1,163				292				1,347
	Elimination of intersegment dividend				(975	)			(911	)			(686	)
	Consolidated net income before cumulative effect of accounting change:			$	87			$	350			$	890
Net income:
	Magellan			$	(101	)		$	969			$	229
	Equity in earnings of MPAL, net of related costs(1)				1,163				292				609
	Elimination of intersegment dividend				(975	)			(911	)			(686	)
	Consolidated net income			$	87			$	350			$	152
Assets:
	Magellan			$	25,523			$	25,339
	MPAL				50,659				47,884
	Equity elimination				(19,758	)			(20,329	)
	Total consolidated assets			$	56,424			$	52,894
Other significant items:
	Depletion, depreciation and amortization:
		Magellan		$	27			$	30			$	—
		MPAL			6,967				6,312				3,719
		Total consolidated		$	6,994			$	6,342			$	3,719

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			Years Ended June 30,
			2005				2004				2003
Exploratory and dry hole costs:
	Magellan		$	—			$	—			$	—
	MPAL			4,157				3,225				2,920
	Total consolidated		$	4,157			$	3,225			$	2,920
Income tax expense (benefit):
	Magellan		$	71			$	492			$	130
	MPAL			(153	)			(1,270	)			(904	)
	Total consolidated		$	(82	)		$	(778	)		$	(774	)

(1)	Equity in earnings of MPAL for 2005 and 2004 of $1,363,000 and $670,000, respectively is reported net of $195,000 and $378,000 for 2005 and 2004, respectively of oil and gas property depletion related to Magellan book value of oil and gas property and resulting from its step acquisition reporting of Magellan’s investment in MPAL.

10.	Geographic Information

			Years Ended June 30,
			2005				2004				2003
Revenue:
	Australia		$	21,590			$	17,866			$	14,194
	United States			—				—				—
	Canada			281				1,558				542
			$	21,871			$	19,424			$	14,736
Operating income (loss):
	Australia		$	2,912			$	(103	)		$	1,732
	New Zealand			(1,441	)			(909	)			(628	)
	United States-Canada			258				1,525				569
				1,729				513				1,673
	Corporate overhead and interest, net of other income (expense)			(615	)			(395	)			(324	)
	Consolidated operating income before income taxes, minority interests and cumulative effect of accounting change		$	1,114			$	118			$	1,349
Net income (loss):
	Australia		$	1,831			$	718			$	835
	New Zealand			(668	)			(425	)			(246	)
	United States			(1,076	)			57				(437	)
			$	87			$	350			$	152

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			Years Ended June 30,
			2005				2004				2003
Identifiable assets:
	Australia		$	52,264			$	48,652
	Corporate assets			4,160				4,242
			$	56,424			$	52,894

11.	Commitments

	Gas Supply Contracts

Period		Bcf
Less than one year			6.21
Between 1-5 years			23.06
Greater than 5 years			.80
Total			30.07

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Gas sales		$	1,135,000
Interest income			102,000
Canadian withholding taxes and legal expenses			(386,000	)
Total		$	851,000

12.	Selected Quarterly Financial Data (Unaudited)

		Qtr 1				Qtr 2				Qtr 3				Qtr 4
2005
Total revenues		$	4,577			$	5,454			$	5,996			$	5,844
Costs and expenses			(5,137	)			(5,500	)			(5,599	)			(5,662	)
Interest income			356				377				104				305
Income tax (provision) benefit(a)			(5	)			(153	)			(102	)			342
Minority interests			(86	)			(254	)			(294	)			(476	)
Net income (loss)			(295	)			(76	)			105				353
Per share (basic & diluted)			(.01	)			—				—				.01
Average number of shares outstanding			25,783				25,783				25,783				25,783
2004
Total revenues		$	5,397			$	4,598			$	4,839			$	4,590
Costs and expenses			(3,900	)			(5,634	)			(4,599	)			(6,273	)
Interest income			335				243				271				251
Income tax (provision) benefit(b)			(411	)			61				(115	)			1,243
Minority interests			(354	)			226				(254	)			(164	)
Net income (loss)			1,067				(506	)			142				(353	)
Per share (basic & diluted)			.04				(.02	)			.01				(.01	)
Average number of shares outstanding			25,092				25,727				25,894				25,820

(a)		During the fourth quarter of 2005, MPAL’s financing subsidiary determined that its loans to the New Zealand subsidiary were no longer collectible and this resulted in a permanent benefit in Australia of $1,000. This amount was offset by tax benefits from New Zealand losses that are not deductible in Australia of $513.
(b)		During the fourth quarter of 2004, MPAL determined that prior deferred tax benefits that had been reserved of $1,266 were recoverable, resulting in lower income tax expense for the fourth quarter of 2004.

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13.	Supplementary Oil and Gas Disclosure (Unaudited)

	Estimated Net Quantities of Proved and Proved Developed Oil and Gas Reserves:

										Oil
		Natural Gas (Bcf)								(1,000 Bbls)
Proved Reserves:		Australia*				Canada				Australia
June 30, 2002			40.780				.534				520
Extensions and discoveries			—				—				35
Revision of previous estimates			2.497				—				125
Production			(5.893	)			(.107	)			(126	)
June 30, 2003			37.384				.427				554
Extensions and discoveries			—				—				—
Revision of previous estimates			(.631	)			(.180	)			(110	)
Purchase of reserves			—				—				322
Production			(5.728	)			(.077	)			(150	)
June 30, 2004			31.025				.170				616
Extensions and discoveries			—				.012				—
Revision of previous estimates			(.024	)			—				22
Purchase of reserves			—				—				—
Production			(5.717	)			(.061	)			(151	)
June 30, 2005			25.284				.121				487
Proved Developed Reserves:
June 30, 2002			29.102				.534				520
June 30, 2003			28.855				.427				554
June 30, 2004			22.346				.170				616
June 30, 2005			25.284				.121				487

*	The amount of proved reserves applicable to the Palm Valley and Mereenie fields only reflects the amount of gas committed to specific contracts and are net of royalties. Approximately 44.9% of reserves are attributable to minority interests at June 30, 2005 (44.9% for 2004 and 47.6% for 2003).

	Costs of Oil and Gas Activities (In thousands):

		Australia/New Zealand
		Exploration				Development				Acquisition
Fiscal Year		Costs				Costs				Costs
2005		$	4,028			$	9,292			$	—
2004			3,741				3,926				2,086
2003			4,484				2,753				3

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	Capitalized Costs Subject to Depletion, Depreciation and Amortization (DD&A) (In thousands):

		June 30,
Australia/New Zealand		2005				2004
Costs subject to DD&A		$	80,766			$	69,970
Costs not subject to DD&A			—				—
Less accumulated DD&A			(57,330	)			(46,322	)
Net capitalized costs		$	23,436			$	23,648

	Discounted Future Net Cash Flows:

		Australia
		2005				2004				2003
Future cash inflows		$	81,688			$	82,449			$	78,192
Future production costs			(18,443	)			(19,361	)			(20,844	)
Future development costs			(13,434	)			(16,599	)			(15,681	)
Future income tax expense			(10,342	)			(9,369	)			(5,292	)
Future net cash flows			39,469				37,120				36,375
10% annual discount for estimating timing of cash flows			(8,157	)			(7,639	)			(10,675	)
Standardized measures of discounted future net cash flows		$	31,312			$	29,481			$	25,700

		Canada
		2005				2004				2003
Future cash inflows		$	606			$	754			$	1,460
Future production costs			(60	)			(125	)			(213	)
Future development costs			—				—				—
Future income tax expense			(136	)			(157	)			(312	)
Future net cash flows			410				472				935
10% annual discount for estimating timing of cash flows			(89	)			(72	)			(149	)
Standardized measures of discounted future net cash flows		$	321			$	400			$	786

		Total
		2005				2004				2003
Future cash inflows		$	82,294			$	83,203			$	79,652
Future production costs			(18,503	)			(19,486	)			(21,057	)
Future development costs			(13,434	)			(16,599	)			(15,681	)
Future income tax expense			(10,478	)			(9,526	)			(5,604	)
Future net cash flows			39,879				37,592				37,310
10% annual discount for estimating timing of cash flows			(8,246	)			(7,711	)			(10,824	)
Standardized measures of discounted future net cash flows		$	31,633			$	29,881			$	26,486

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		2005				2004				2003
Net change in prices and production costs		$	5,567			$	7,597			$	(5,020	)
Extensions and discoveries			—				—				360
Revision of previous quantity estimates			281				981				1,059
Changes in estimated future development costs			443				(2,156	)			(4,587	)
Sales and transfers of oil and gas produced			(13,725	)			(10,314	)			(8,070	)
Previously estimated development cost incurred during the period			3,827				3,110				3,110
Accretion of discount			2,337				2,344				2,992
Acquisitions			—				3,213				—
Net change in income taxes			410				(2,345	)			6,100
Net change in exchange rate			2,612				965				4,231
		$	1,752			$	3,395			$	175

	Additional Information Regarding Discounted Future Net Cash Flows:

	Australia

	Reserves — Natural Gas

	Reserves and Costs — Oil

	Income Taxes

	Canada

	Reserves and Costs

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			Americas												Australia/New Zealand
			2005				2004				2003				2005				2004				2003
Revenues:
	Oil sales		$	—			$	—			$	—			$	7,574			$	4,923			$	3,329
	Gas sales			282				1,557				535				12,196				11,312				9,647
	Other production income			—				—				—				1,819				1,632				1,214
	Total revenues			282				1,557				535				21,589				17,867				14,190
Costs:
	Production costs			—				—				—				6,144				5,416				4,424
	Depletion, exploratory and dry hole costs			23				30				(38	)			10,727				9,009				6,620
	Total costs			23				30				(38	)			16,871				14,425				11,044
Income before taxes and minority interest				259				1,527				573				4,718				3,442				3,146
	Income tax provision*			(65	)			(382	)			(134	)			(1,415	)			(1,027	)			(944	)
Income before minority interests				194				1,145				439				3,303				2,415				2,202
	Minority interests**			—				—				(18	)			(1,737	)			(1,085	)			(1,047	)
Net income from operations			$	194			$	1,145			$	421			$	1,566			$	1,330			$	1,155
Depletion per unit of production			$	—			$	—			$	—			A.$	7.40			A.$	7.25			A.$	5.27

*	Income tax provision used for Australia is based on a rate of 30%. Americas 25% is due to a 25% Canadian withholding tax on Kotaneelee gas sales.

**	Minority interests 44.90% in 2005, 44.9% in 2004 and 47.6% in 2003.

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A$		Australian Dollars.
AASB		Australian Accounting Standards Board.
Acceptance Form		The acceptance form for the Exchange Offer accompanying the Bidder’s Statement or the prospectus/proxy statement.
Additional Cash Consideration		The additional cash consideration of Aus.$0.10 per share described in Magellan’s Supplementary Bidder’s Statement.
Announcement Date		The date on which the Exchange Offer was announced to ASX, namely October 18, 2005.
ASIC		Australian Securities and Investments Commission.
Associate		Has the same meaning given to that term in section 9 of the Corporations Act.
ASTC		ASX Settlement and Transfer Corporation Pty Limited (ABN 49 008 504 532).
ASTC Settlement Rules		The operating rules of the settlement facility provided by ASTC.
ASX		Australian Stock Exchange Limited (ABN 98 008 624 691).
ASX Market Rules		The market rules of ASX (being part of the operating rules of ASX).
Australian Offer Documents		Magellan’s Bidder’s Statement and Supplementary Bidder’s Statement including the Exchange Offer.
Benchmark Offer Consideration		The approximate VWAP of Magellan Shares in the period from the Announcement Date to November 28, 2005, the last trading day prior to the lodgement of Magellan’s Bidder’s Statement.
Bidder’s Statement		Magellan’s bidder’s statement in respect of the Exchange Offer pursuant to Part 6.5 of the Corporations Act and in compliance with Sections 636 and 637 of the Corporations Act.
Board		The Board of Directors of Magellan.
Business Day		Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day and any other day that ASX declares is not a business day.
CDN		CHESS Depositary Nominees Pty Ltd (ACN 071 346 506)
CGT		Capital gains tax.
CHESS		The Clearing House Electronic Subregister System which provides for the electronic transfer, settlement and registration of securities in Australia.
CHESS Holding		A holding of MPAL Shares on the CHESS subregister of MPAL.
Condition		A condition of the Offer being a condition set out in Clause 7.1 of Appendix A of the Bidder’s Statement.
Controlled Entity		Has the meaning given to that word in the Corporations Act.

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Controlling Participant		Has the meaning given in the ASTC Settlement Rules.
Corporations Act		The Corporations Act 2001 (Cth)(Australia).
Director		A director of Magellan.
EBIT		Earnings before interest and tax.
EBITDA		Earnings before interest, tax, depreciation and amortisation.
Encumbrance		An interest or power:
		(a) reserved in or over an interest in any asset including, without limitation, any retention of title; or
		(b) created or otherwise arising in or over any interest in any asset under a bill of sale, mortgage, charge, lien, pledge, trust or power,
		by way of security for the payment of a debt, any other monetary obligation or the performance of any other obligation and includes, without limitation, any agreement to grant or create any of the above.
Foreign Law		A law of any jurisdiction other than an Australian jurisdiction.
Foreign Shareholder		Any MPAL Shareholder whose address shown in the MPAL Register is a place outside Australia and its external territories, New Zealand, or the United States.
Governmental Agency		Any government, semi-government, administrative, fiscal, judicial or regulatory body, department, commission, authority, tribunal, agency or entity.
GST		Goods and services tax.
Holder Identification Number		The number used to identify an MPAL Shareholder on the CHESS Subregister of MPAL.
Insolvency Event		In relation to a body corporate:
		(a) an order is made or an application is made for the winding up of that body corporate and that order or application is not withdrawn or set aside within 10 Business Days;
		(b) a liquidator or provisional liquidator of that body corporate is made or appointed or 9 an application is made for the appointment of a liquidator or provisional liquidator and that application is not withdrawn or set aside within 10 Business Days;
		(c) an effective resolution is passed for the winding up of that body corporate or a meeting is convened for the purpose of considering any such resolution;
		(d) that body corporate is placed under any formal or informal kind of insolvency administration or a meeting is convened for the purpose of considering the appointment of an insolvency administrator;
		(e) a receiver, manager, receiver and manager or controller of the main undertaking, property or material assets of that body corporate is appointed or any step is taken for the appointment of such a receiver, manager, receiver and manager or controller or execution or distress or any other process is levied or attempted or imposed

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		against any of the main undertaking, property or material assets of that body corporate;
		(f)  that body corporate stops payment or ceases to carry on the whole or any material part of its business or threatens to do so;
		(g) an order for payment is made or judgement is entered or signed against that body corporate in an amount of not less than A$100,000 and is not satisfied, stayed or set aside within 5 Business Days;
		(h) that body corporate becomes insolvent or unable to pay its debts;
		(i)  a compromise, composition or arrangement is proposed with or becomes effective in relation to the creditors or any class of creditors of that body corporate or that body corporate proposes a reorganisation, moratorium or other administrative procedure involving its creditors or any class of its creditors; or
		(j)  any action is commenced to strike that body corporate’s name off any register of companies.
Listing Rules		The listing rules of the ASX.
Magellan		Magellan Petroleum Corporation (ARBN 117 452 454).
Magellan By-Laws		The Restated By-Laws of Magellan as of 22 July 2004.
Magellan Restated Certificate of Incorporation		The Magellan Restated Certificate of Incorporation (as amended) of Magellan as amended on 12 February 1988 and 22 December 2000.
Magellan CDI		A Magellan CHESS Depository Interest.
Magellan CDI Holder		A holder of a Magellan CDI.
Magellan Share		A share of common stock in the capital of Magellan.
Magellan Shareholder		A registered holder of a Magellan Share.
MPAL		Magellan Petroleum Australia Limited (ABN 62 009 728 581).
MPAL Constitution		The Constitution of MPAL.
MPAL Group		MPAL and its Controlled Entities.
MPAL Register		The register of MPAL Shareholders.
MPAL Shareholder		A registered holder of MPAL Shares.
MPAL Share		An ordinary share in the capital of MPAL.
NASDAQ		NASDAQ Capital Market.
Offer		The off market conditional takeover bid for all of the issued MPAL Shares made by Magellan comprising:
		(a) the offer to acquire MPAL Shares set out in Appendix A made under the Bidder’s Statement; and
		(b) the offer to acquire MPAL Shares held by MPAL Shareholders with a registered address on the MPAL Register on the Offer Date in the US to be undertaken under the US Offer Document.
Offer Consideration		Consideration of Magellan Share and cash offered by Magellan for MPAL Shares, as described Magellan’s Supplementary Bidder’s Statement.

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Offer Date		The date of the Exchange Offer being December 16, 2005.
Offer Period		The period for which the Offer remains open as set out in Section 2 of Appendix A to Magellan’s Bidder’s Statement, namely until March 9, 2006.
Registrar		ASX Perpetual Registrars Limited (ABN 54 083 214 537).
Relevant Interest		Has the same meaning given to that term in sections 608 and 609 of the Corporations Act.
Revised Offer		The revised share and cash consideration described in Magellan’s Supplementary Bidder’s Statement.
Rights		All accretions, rights or benefits of whatever kind attaching to or arising from MPAL Shares directly or indirectly after the date of this Bidder’s Statement, including, without limitation, all dividends, distributions, and all rights to receive dividends, distributions or to receive or subscribe for Securities, stock shares, notes, bonds, options or other securities, declared, paid or issued by MPAL or any of its controlled entities.
SEC		The U.S. Securities and Exchange Commission.
Security		Has the meaning as given in Section 92 of the Corporations Act.
Trading Day		Has the meaning given in the ASX Listing Rules.
US		United States of America.
US$		U.S. dollar.
US Offer Documents		The joint prospectus/proxy statement contained within Magellan’s registration statement and Form S-4 (File No. 333-129329) and all appendices and exhibits.
Voting Power		Has the same meaning given to that term in section 610 of the Corporations Act.
VWAP		Volume weighted average price.

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	(1) reviewed the draft Exchange Offer;
	(2) reviewed publicly available information relating to both MPC and MPAL, including MPC’s Annual Reports on Form 10-K for the four fiscal years ended June 30, 2005, and MPAL’s Annual Reports to Shareholders for the four fiscal years ended June 30, 2005;
	(3) reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets and prospects of MPC and MPAL, furnished to us by the management of MPC;
	(4) discussed with management of MPC the historical and current operations, financial condition and future prospects for MPC and MPAL and reviewed certain internal financial information, business plans and forecasts prepared by their respective managements;
	(5) reviewed certain information with regard to the estimates of oil and gas reserves in the Mereenie, Palm Valley, Nockatunga, Aldinga and Kotaneelee fields.
	(6) reviewed the historical prices and trading volumes of the common stock of both MPC and MPAL;
	(7) reviewed certain financial and market data for both MPC and MPAL and compared such information with similar information for certain publicly-traded companies which we deemed comparable;
	(8) reviewed the financial terms of certain mergers and acquisitions of businesses which we deemed comparable;

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	(9) reviewed certain financial statements combining MPC and MPAL on a pro forma basis; and
	(10) performed such other analyses and investigations and considered such other factors as we deemed appropriate.

	Very truly yours,
	TM Capital Corp.
	/s/ W. Gregory Robertson

	By:	W. Gregory Robertson

	President
	Baron Partners Limited
	/s/ Paul Young

	By:	Paul Young

	Executive Director

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