IOG.L Regulatory News (IOG)

12 Dec 2006 07:05

Island Oil and Gas PLC12 December 2006 12 December 2006 ISLAND OIL & GAS PLC AWARDED EXCLUSIVE LICENCE IN MOROCCO Island Oil & Gas plc, (LSE:IOG) ("Island" or the "Company"), today announcesthat it has signed a reconnaissance contract for the granting of an ExclusiveReconnaissance Licence (the "Licence") in the Zag Basin onshore Morocco, by theOffice National des Hydrocarbures et des Mines ("ONHYM"). The granting of theLicence represents the further internationalisation of Island's projectportfolio with the Company focusing upon areas where its experience andtechnical competency can be utilised to best advantage. The Licence, which is valid for a period of 12 months until December 2007,covers an area of 21,807 sq. kms. The work programme that has been committed tocomprises geological field studies; a geochemical study; the processing andinterpretation of gravity and magnetic data; and the interpretation of satellitedata. The joint venture partners in the Licence are San Leon (Morocco) Limited(50%), the designated operator; GB Oil and Gas Ventures Limited (30%) and IslandOil & Gas plc (20%). Island's costs are fully carried by GB Oil and Gas VenturesLimited for the duration of the 12 month Licence. The Zag Basin is an under-explored Palaeozoic North African sedimentary basinwithin which no seismic data have been acquired to date. Wells drilled in the1960's encountered gas shows in Palaeozoic sandstones, with surface oil showsalso observed. An active petroleum system is believed to be present in thisbasin based on the early drilling history and the proven presence of a sourcerock equivalent to that responsible for the major Palaeozoic oil and gas fieldsof neighbour countries. Morocco has an attractive fiscal regime relative to other North African oil andgas producing countries - State Participation upon production of up to 25%; 10%royalty on oil production (first 300,000 tons of production exempt) and 5%royalty on gas production (first 300 million cubic meters exempt); and 35%corporation tax (only after 10 years of production holiday). Commenting on the award of the new licence, Paul Griffiths, Chief Executive ofIsland stated: "The award of the Moroccan licence covering an area approximately one third thesize of Ireland in one of the least explored prospective Palaozoic basins inNorth Africa marks a further step in our plans to broaden our internationalacreage position, particularly in onshore areas where drilling and developmentcosts are potentially lower relative to the offshore environment. Ourparticipation was achieved on the basis that we bring a proven operatingcapability to the joint venture partnership in the event that we move towards asuccessor licence. We believe that Morocco is under-explored relative to otherNorth African countries and we look forward to building a strong workingrelationship with ONHYM in order to develop other opportunities for Island". Enquiries: Lisa J Newman MCIPR MIRSNewman ConsultingTel: +44 (0)1252 878682 Notes to Editors: Island was founded in 2003 and listed on AIM in December 2004. The Company hasinterests in eleven Irish offshore licences, (six as operator) and the Q13Production Licence offshore Netherlands. The Company is involved in an activeexploration and appraisal programme with two successful gas discoveries in2006. The Company has secured the Petrolia rig for its planned 2007 drillingprogramme. Further information on Island 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