Madison Announces Proposed Transaction

Madison Energy Corp. (TSX VENTURE:MDC) ("Madison" or the "Corporation") is
pleased to announce that it has entered into a letter of intent (the "Letter of
Intent") with respect to a proposed sale of all of the issued and outstanding
securities of the Corporation (the "Share Sale") to an Alberta-based private oil
& gas company ("AlbertaCo") for a purchase price of $0.20 per share, subject to
adjustments. 


About the Share Sale

The Letter of Intent contemplates that AlbertaCo will undertake a due diligence
process to be completed on or before January 31, 2010 and concurrently Madison
and AlbertaCo will, with the assistance of their respective professional
advisers, determine a transaction structure for the Share Sale. Representatives
of Madison and AlbertaCo expect to finalize the transaction structure for the
Share Sale and enter into a formal agreement on or about January 31, 2010, at
which time Madison expects to issue a further press release setting out
additional details concerning the Share Sale. 


Completion of the Share Sale is subject to a number of conditions in favour of
Madison and AlbertaCo, respectively, including: the execution and delivery of a
formal agreement; no material adverse change in Madison; board approval of such
formal agreement; completion of satisfactory due diligence inquiries; receipt of
all necessary regulatory approvals (including the consent of the Exchange);
AlbertaCo receiving lock-up agreements, in a form acceptable to AlbertaCo in
respect of all Madison shares held by all directors, officers and other insiders
of Madison; the net debt of Madison, including off balance sheet items (which
include, but are not limited to, abandonment costs, tax amounts, change of
control payments, deal fees) including working capital not being more than $0 at
closing; Madison severance costs not to exceed a specified amount; Madison not
paying or declaring any dividends or distributions after September 30, 2009;
approval by the holders of Madison shares, if a vote is required, at a special
meeting to be held on a date as the parties agree, but in any event not later
than 60 days after execution of the formal agreement or March 31, 2010,
whichever date comes later, or such later date agreed to by both parties; the
holders of not more than 5% of the outstanding Madison Shares having exercised
rights of dissent in connection with the Share Sale and not withdrawn such
exercise prior to closing; and Madison restricting any capital expenditures to
$50,000 or less until closing. There is no assurance that these conditions will
be satisfied and the Share Sale will be completed.


All unexercised options and warrants to purchase Madison Shares will either be
exercised or cancelled for nil consideration prior to the effective date of the
Share Sale.


Madison and AlbertaCo have agreed to pay a break fee to the other party in the
amount of $125,000 in the event that, while the Letter of Intent is in effect,
either (i) Madison completes a corporate restructuring (including a
take-over-bid, merger or plan of arrangement), a major debt or equity financing,
or a sale of any asset or any interest therein; or (ii) AlbertaCo fails to
complete the Share Sale following execution of the formal agreement and
satisfaction of all conditions of Madison or any third parties thereunder. The
Share Sale is an arms' length transaction as none of the directors or officers
of AlbertaCo have any interest whatsoever in Madison. 


Investors are cautioned that this news release contains forward looking
information. Such information is subject to known and unknown risks,
uncertainties and other factors that could influence actual results or events
and cause actual results or events to differ materially from those stated,
anticipated or implied in the forward-looking information. Readers are cautioned
not to place undue reliance on forward-looking information, as no assurances can
be given as to future results, levels of activity or achievements.