IOG.L Regulatory News (IOG)

1 Aug 2006 07:01

Island Oil and Gas PLC01 August 2006 1 August 2006 ISLAND OIL & GAS PLC ANNOUNCES SIGNIFICANT GAS DISCOVERY AT OLD HEAD OF KINSALE FIELD, OFFSHORE IRELAND Island Oil & Gas plc ("Island" or the "Company") today announces that, followingthe completion of logging and sampling operations, exploration well 49/23-1 (the"Well"), at the Old Head of Kinsale in the Celtic Sea, has successfullyencountered a Lower Cretaceous reservoir sequence with a gross 100 foot gascolumn, determined from pressure data. Initial indications are that the gas extends over an area in excess of 22 sq.km. and that potential volumes of gas in place in the structure are likely to bein the range of at least 90 to 120 bcf. The gas discovery is located only 25km. from Marathon's production facilities at the Kinsale field ("the KinsaleAlpha Production Platform"), greatly enhancing the economics of the discovery. Based on these encouraging results, Island has taken the decision to suspend theWell with the intention of returning in 2007 to re-enter the Well and carry outan extended gas well test. This will allow the Company to determine welldeliverability and maximum drainage area prior to the preparation and submissionof any Plan of Development. In the interim period, work will continue todetermine the technical and commercial feasibility of a potential subseatie-back to the Kinsale Alpha Production Platform. These arrangements aresubject to the consents and approvals of the Petroleum Affairs Division of theDepartment of Communications, Marine and Natural Resources. Well 49/23-1, which was spudded on 12 July 2006 in a water depth of 296 feet,was drilled to its planned total depth of 4,133 feet TVD ss in just 16 days. TheWell is operated by Island (with 100% equity interest) and was drilled using thesemi-submersible drilling unit, Petrolia, owned and operated by PetroliaDrilling Limited under contract to Island. The Petrolia rig will move shortlyto the Donegal Basin where it will drill the Lundin-operated well 13/12-1 on theInishbeg Prospect in which Island has a 31% equity interest. Commenting on the well results, Paul Griffiths, Chief Executive of Islandstated: "Following the successful testing of the Seven Heads West well 48/23-3, theCompany has now made the first new gas find in the Celtic Sea since 1990. TheCompany is naturally very pleased that its strategy of securing prospectiveLicence interests with potential reserves close to existing infrastructure hasbeen rewarded with two successful back-to-back gas wells. The success of thisstrategy demonstrates our ability to generate higher returns for the Companygiven the relatively lower cost of commercialising Celtic Sea discoveriesadjacent to existing facilities." Enquiries: Lisa J Newman MCIPR MIRSNewman ConsultingTel: +44 (0)1252 878682 Notes to Editors: This drilling update has been reviewed and approved by Paul Griffiths, ChiefExecutive of Island. Paul Griffiths is a geology graduate of the Royal Schoolof Mines, Imperial College London, and is a member of the Petroleum ExplorationSociety of Great Britain. He has 30 years experience in the oil and gasexploration sector and is a qualified person as defined in the guidance note forMining Oil & Gas Companies, March 2006 of the London Stock Exchange. "Cretaceous" is a geological strata formed during the period from 66 million to140 million years before the present Further information on Island, and previous press releases, can be found on the Company's website at http://www.islandoilandgas.com This information is provided by RNS The company news service from the London Stock Exchange