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14 Jul 2008 11:08
Island Oil & Gas plc
("Island" or the "Company")
Licensing Option Award
Island Oil & Gas plc, through its subsidiary Island Expro Limited, a Dublin-based exploration and production company, is pleased to announce that it has been awarded a new Licensing Option in the North Celtic Sea basin, off the south coast of Ireland, subject to Board Approval and the execution of the Licensing Option Agreement. The Barryroe Licensing Option ("Barryroe Licence") has been granted to Lansdowne (40 per cent), Island Oil & Gas plc ("Island") (30 per cent) and Providence Resources plc ("Providence") (30 per cent). Lansdowne will act as the operator of the licence for the period of time up to and including the acquisition of any seismic data over the acreage. Thereafter, Providence will become the operator for any drilling and development activities.
The Barryroe Licence is over acreage which lies directly below the Seven Heads Gas Field
Three previous wells tested oil at between 1,300 and 1,600 bopd with associated gas
Oil tested was light crude (30 to 42 API, with a high wax content)
Potential development synergies with other Celtic Sea projects are being reviewed by Island
In the western part of the Barryroe Licence acreage, situated to the west of the producing Seven Heads Gas Field, the shallower section above 4000ft sub-sea is also included in the Licensing Option, an area previously relinquished by Island
The Barryroe Licensing Option (08/1) covers the same acreage included in the Seven Heads Oil Licensing Option (03/5) previously held by the Company. The new Licence has been renamed Barryroe to avoid confusion with the Seven Heads Gas Field which is partly situated above the deeper oil accumulations..
Part of the Barryroe acreage lies beneath the Seven Heads Gas Field, with the boundary between the two concessions lying at 4,000ft (approximately 1,250m) sub-sea. Within the Barryroe area oil has been successfully tested at flow rates of between 1,300 and 1,600 bopd, from three exploration or appraisal wells. The reservoir sands are in the Cretaceous Middle and Lower Wealden sequences between 1,400m and 2,300m (approximately 4,600 to 7,550ft) below sea level. The oil is light (30 to 42 degrees API) and contains relatively high wax contents ranging from 12 to 22 per cent, which may require treatment to avoid production difficulties.
From the previous technical work carried out, the two main challenges to commercial development have been identified as the reservoir continuity and the high pour point of the oil caused by the high wax content.
The significant increase in the price of oil since 2006 has materially improved the likelihood that these reserves could be exploited commercially.
The work programme for the new Licensing Option will focus upon these challenges.
Paul Griffiths, CEO of Island, commented:
"The new long term oil price environment, driven by the sustained rise in oil and gas prices has transformed the operating environment compared to when these oil accumulations were last tested in 1990.
Subject to a positive outcome from feasibility studies, the chances of a commercial oil development beneath the Seven Heads gas field is enhanced by the current and predicted pricing environment. In addition, gas associated with the oil could also feed into the existing Seven Heads infrastructure, potentially prolonging the life of the infrastructure and increasing the value of these assets to Island."
14 July 2008
Enquiries:
Island Oil & Gas plc
Paul Griffiths
Karl Prenderville Tel: +353 1 6313755
www.islandoilandgas.com
Davy (NOMAD and broker)
Anthony Farrell Tel: +353 1 679 6363
Landsbanki (UK broker)
Simon Robinson Tel: +44 (0)207 426 9000
College Hill (Financial PR)
Paddy Blewer Tel: +44 (0)20 7457 2020
Nick Elwes
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