Magellan Energy Ltd. has completed connection of all gas lines from the Thomas Martin and the Robert Anderson Lease in Morgan County, Tennessee and that gas production has commenced. This is a significant development for Magellan Energy. After much time, effort and hard work, the company is now in a position to rapidly increase its daily natural gas production rate and make additions to its reserves. In order to obtain an accurate estimate on the daily output from both wells, gas must flow through the lines for a period of approximately one to two weeks. This waiting period will enable Magellan to get a better understanding of production, as readings will have stabilized enough to achieve a balanced, daily output count. Magellan plans further studies in order to exploit the full potential of this project. The operators, TMD Energy Inc. will continue to work with Citizens Gas and monitor the situation to ensure there are no further disruptions.

Magellan Energy Ltd. announced an update on the status of its current projects including the participation agreements in Morgan County, Tennessee. This update addresses the ongoing work over procedures as well as the company restructuring notices. Magellan Energy announced that the work on the Robert Anderson Lease has made some significant progress. The compressor has been installed and all electrical needs have been addressed and met. The new pipeline is now in place, and the project will require additional work to be completed in order to be fully operational, and for Magellan to connect the well and begin production. The operator, TMD Energy Inc., has been in meetings with Citizens Gas to negotiate a possible re-connect to their lines, which will enable to sell gas while the company wait for the new lines. There has also been some increased activity on the Davidson well. The operators have opened the well and found a strong presence of gas and also that the well is bubbling. This is a strong indication that fluid is returning to the bore hole and coming back up. The WaterFlood project (Martin Wells) is progressing on a steady pace. The well is continuing to produce 3BOPD. The gas on these wells presently remain shut in and await the completion of the new lines.

Magellan Energy Ltd. announced that work is progressing on all three Tennessee projects. The company has installed a larger pump jack and a 118 engine, which is operating on natural gas, onto the Thomas L. Davidson well. During the last few weeks, logging on the adjoining leases delayed the completion of this project. With the logging now complete, KY-Tenn Oil Inc., the operators of the well, have connected a natural gas line to the well and the well has resumed production for oil. The well is expected to level out at a rate of 5 BOPD. At this rate, with current market prices, the well is expected to generate gross revenues of $150,000 per annum. Revenue from Magellan's interest is expected to payout the project in 2008 and with continual revenues in the coming years. The company is pleased that the work over procedures for Robert Anderson wells is expected to be finalized shortly. The road is currently being rebuilt and electricity is being connected to the property. The new compressor, built specifically for this lease, has arrived from the manufacturer and is expected to be installed and operational in the upcoming weeks. Once operational the Anderson wells will be producing both oil and natural gas. This project is being completed in advance of a new gas pipeline serving the area. Once the new line is in operation, the revenue from this project is expected to increase. The company is acquiring a larger interest in the Martin oil and gas field that is being converted into a waterflood project. In the interim, it will continue to produce oil and gas revenues for the company. The company is expecting first royalty payment for gas sales later.