Acquisition of Majority Interest in Nautilus Poplar LLC

On October 14, 2009, Magellan Petroleum Corporation (the "Company") entered into a Purchase and Sale Agreement (the "Nautilus Purchase Agreement"), dated October 14, 2009, with White Bear LLC, a Montana limited liability company ("White Bear") and YEP I, SICAV-FIS, a Luxembourg entity ("the YEP I Fund", and collectively with White Bear, the "Sellers") and simultaneously closed the transactions described therein on October 14, 2009 (the "Closing Date").

Under the Nautilus Purchase Agreement, the Company has acquired from the Sellers an 83.5% controlling ownership interest in Nautilus Poplar, LLC, a Montana limited liability company ("Nautilus Poplar") (such acquisition, referred to herein as the "Nautilus Transaction"). In addition, Nautilus Poplar has two other minority owners, Nautilus Technical Group, LLC ("Nautilus Tech"), with a 10.00% ownership interest and Eastern Rider, LLC ("Eastern Rider"), with a 6.54% ownership interest.

Nautilus Poplar holds a 68.75% undivided working interest in the East Poplar unit and varied interests ranging from 60-75% in the Northwest Poplar oil field located in Roosevelt County, Montana (the "Property"), which fields were first discovered in the early 1950s and have unrecovered oil reserves. In addition, the other minority owners of the Property are Nautilus Tech (with a 4.94% interest), Hunter Energy LLC (with a 25.05% interest) and Phoenix Oil & Gas LLC (with a 1.25% interest).

The Company paid gross $10.9 million for the controlling interest in Nautilus Poplar, comprised of a cash payment totaling approximately $7.3 million and the issuance of 1.7 million new shares of Company's common stock, par value $.01 per share (the "Common Stock"), valued by the parties at $2,380,000 (or $1.40 per share), with an adjustment for $1.2 million of net debt (as adjusted, the "Purchase Price"). All shares of Common Stock sold pursuant to the Nautilus Transaction will be registered in the name of the YEP I Fund and have not been registered under the Securities Act of 1933, as amended (the "Securities Act"). See Item 3.02 below.

The Nautilus Purchase Agreement provides that the Company anticipates causing Nautilus Poplar to drill not less than five new wells on the Property within the next four years and also contains customary representations and warranties regarding Nautilus Poplar, the Property and its oil and gas operations, which are in certain cases modified by "materiality" and "knowledge" qualifiers. Each of the Sellers has agreed to indemnify the Company in the event of a misrepresentation, breach or inaccuracy of its representations, warranties, covenants or agreements, up to the amount of the Purchase Price, for a period of 18 months after the Closing Date. Nikolay V. Bogachev, a principal of each of the Sellers and a director of the Company, has personally guaranteed the indemnification obligations of each of the Sellers under the Nautilus Purchase Agreement.

The above summary of the Nautilus Purchase Agreement is qualified in its entirety by reference to the full text of the Nautilus Purchase Agreement dated October 14, 2009, which is attached hereto as Exhibit 2.1 and is hereby incorporated by reference.

On October 14, 2009, White Bear, YEP I Fund, Nautilus Tech and Eastern Rider entered into an amendment and restatement of the Operating Agreement of Nautilus Poplar authorizing the transfer of the membership interests of White Bear and YEP I Fund to the Company. As a majority owner of the membership interests in and newly appointed manager of Nautilus Poplar, the Company will be in the position to control the operations of Nautilus Poplar.

The Amended and Restated Operating Agreement of Nautilus Poplar, dated October 14, 2009, is attached hereto as Exhibit 10.1 and is hereby incorporated by reference.

First Amendment to Registration Rights Agreement

On July 9, 2009, the Company and Young Energy Prize S.A., a Luxembourg corporation ("YEP") entered into a Registration Rights Agreement pursuant to which the Company granted to YEP certain registration rights with respect to 8,695,652 shares of the Company's Common Stock sold to YEP on July 9, 2009 pursuant to closing of the Securities Purchase Agreement (the "Purchase Agreement"), dated February 9, 2009, between the Company and YEP (the "YEP Shares"). The Registration Rights Agreement also covers 4,347,826 additional shares of Common Stock issuable by the Company (the "Warrant Shares") under the Warrant Agreement, dated July 9, 2009 (the "YEP Warrant Shares") delivered to YEP in connection with the purchase and sale of the YEP Shares.

Under the Registration Rights Agreement, the Company agreed to: (a) pay all expenses associated with the registration of the YEP Shares and the YEP Warrant Shares, including the fees and expenses of counsel to YEP; and (b) indemnify YEP, and its officers, directors, members, investor, employees and agents, each other person, if any, who controls YEP within the meaning of the Securities Act, against any losses, claims, damages, or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such . . .

Completion of Acquisition

As described in Item 1.01 above, on October 14, 2009, the Company completed its purchase from the YEP I Fund and White Bear of an 83.5% controlling interest in Nautilus Poplar. The disclosures regarding the Nautilus Transaction set forth above under the heading Item 1.01 are hereby incorporated herein by reference.

Financial Statements

The Company will file with the Securities and Exchange Commission (the "SEC") the historical financial statements of Nautilus Poplar required to be filed pursuant to Rule 3-05 of Regulation S-X under the Securities Act within 71 days of the date on which this current report on Form 8-K was required to be filed with the SEC.

Interests of Company Directors in the Nautilus Transaction

Nikolay V. Bogachev, a director of the Company since July 9, 2009, is also the President and Chief Executive Officer of YEP as well as an equity owner of each of YEP, the YEP I Fund and White Bear. According to its amended Schedule 13D filed on July 31, 2009, YEP is the record holder of 9,264,637 shares of the Company's Common Stock and holds a warrant to acquire an additional 4,347,826 shares of Common Stock. YEP, YEP I Fund and White Bear are affiliated entities as they are under the common control of Mr. Bogachev.

J. Thomas Wilson, a director of the Company, is the majority member of Eastern Rider, one of the minority members of Nautilus Poplar (holder of a 6.5448% membership interest) and, in addition, is a minority member of Nautilus Tech, the other minority member of Nautilus Poplar (holder of a 10% membership interest). Mr. Wilson is also an officer of YEP and White Bear.

The disclosure regarding the completion of the Nautilus Transaction set forth under Item 1.01 above is hereby incorporated herein by reference.

The shares sold to the YEP I Fund in the private placement pursuant to the Nautilus Purchase Agreement (the "Shares") have not been registered under the Securities Act or state securities laws, and may not be resold in the United States in the absence of an effective registration statement filed with the SEC or an available exemption from the applicable federal and state registration requirements.

In the Nautilus Purchase Agreement, the YEP I Fund represented to the Company that: (a) it is an accredited investor, as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act; (b) it acquired the Shares as principal for its own account for investment purposes only and not with a view to or for distributing or reselling the Shares or any part thereof, and (c) it is knowledgeable, sophisticated, and experienced in making, and qualified to make, decisions with respect to investments in securities representing an investment decision similar to that involved in the purchase of the Shares.

With respect to the sale of shares of Common Stock sold to the YEP I Fund, the Company replied upon the exemption from the registration requirements of the Securities Act provided by Regulation S promulgated under the Securities Act.

Company Press Release

On October 16, 2009, the Company issued a press release announcing the completion of the Nautilus Transaction. A copy of the Company's October 16, 2009 press release is filed herewith as Exhibit 99.1 and is hereby incorporated by reference.

(a) Financial statements of businesses acquired.

The financial statements of Nautilus Poplar required by Item 9.01(a) of Form 8-K will be filed by amendment or otherwise within 71 calendar days after October 20, 2009, the date by which this Current Report was required to be filed pursuant to General Instruction B.1. of Form 8-K.

(d) Exhibits.

Exhibit No.                                  Description

 2.1              Purchase and Sale Agreement between and among the Company, White
                  Bear and the YEP I Fund, dated as of October 14, 2009.

10.1              Amended and Restated Operating Agreement of Nautilus Poplar,
                  between and among White Bear, the YEP I Fund, Nautilus Tech and
                  Eastern Rider, dated as of October 14, 2009.

10.2              First Amendment to Registration Rights Agreement, between and
                  among the Company, YEP and the YEP I Fund, dated as of October
                  14, 2009.

10.3              Letter Agreement between and among the Company, Eastern Rider,
                  Nikolay V. Bogachev and Nautilus Tech, dated October 14, 2009.

99.1              Company press release, dated October 16, 2009.