IOG.L Regulatory News (IOG)

23 Nov 2006 07:00

Island Oil and Gas PLC23 November 2006 23 November 2006 ISLAND AWARDED Q13 PRODUCTION LICENCE, OFFSHORE NETHERLANDS Island Oil & Gas plc (LSE:IOG) ("Island" or the "Company") today announces thatformal transfer documents are currently being completed for the transfer of theQ13 Production Licence, offshore the Netherlands, to the Company. Effective17 November 2006, the Minister of Economic Affairs of the Netherlands awardedthe Q13 Production Licence, whilst in the same Decree approving the transfer ofthis Licence to Island, as operator, and Nido Petroleum Limited ("Nido"). Islandwill initially hold a 100% working interest in the Licence and, once theagreement for 40% mandatory State Participation through Energie Beheer NederlandB.V. ("EBN") has been completed, a 60% interest in the activities under theLicence. Upon completion, EBN will pay its share of agreed historical costs plusits share of future expenditure. Upon completion of the transfer of the Licence,Island will pay Nido a cash consideration of AU$300,000. The Q13 Production Licence covers an area of 30 sq. km. and contains the AmstelField, a Lower Cretaceous field with approximately 7-12 million barrels of grossrecoverable reserves (P90 to P10 range). The Amstel Field lies in water depthsaveraging 60 feet approximately 10 kms. offshore the Dutch coast. It wasdiscovered in 1962 by NAM ("Shell/Esso"). The Field is located within the WestNetherlands Basin, a prolific oil and gas province in which, to date, over 1.3billion barrels of oil-, and 3 tcf of gas-, in place have been encountered. TheAmstel Field is on trend with the Dutch offshore Rijn Field and the onshoreWassenaar Field. Three wells have been drilled in the Q13 Licence area: Q13-1 was the discoverywell, drilled by Shell/Esso in 1962. Wells Q13-8 and Q13-9 were appraisal wells,drilled in the 1990s by PanCanadian. Well Q13-8 flowed at 3,500 barrels of oilper day (bopd) with 1.12 mcf per day of associated gas. The other wells were notflow-tested, but oil was proven from pressure testing and sampling. Despite thegood flow rates, the field was considered marginal in the early 1960s and deemednon-commercial in the 1990s due primarily to low oil price and supply economics. Island has been approved as an operator in the Netherlands on the back of theCompany's successful operatorship offshore Ireland during 2006. Island isnearing completion of a new reservoir study over the Licence area which hasprovided the Company with a greater insight into the distribution of betterquality sands which will assist in optimizing the location of future wells.Island plans to develop the Amstel field by tying it back to existing facilitiesand targeting first oil in late 2008/early 2009 contingent upon rigavailability. Island will issue a further announcement as confirmation of the completion ofthe Award. Commenting on the Licence Award, Paul Griffiths, Chief Executive of Islandstated: "The award of this licence further underpins our strategy of focusing onnear-development oil and gas projects that are capable of generating early cashflow due to proximity to existing infrastructure. We are delighted that thisaward has resulted in two landmark milestones for the Company being attained:our first international licence and acceptance as an approved operator of amajor field development project in a mature and strategic oil and gas province.Island will continue to seek to evaluate potential opportunities in theNetherlands and internationally, subject to these being consistent with theCompany's near-development investment strategy and new status as an approvedoperator of a field development project." Enquiries: Lisa J Newman MCIPR MIRSNewman Consulting Tel: +44 (0)1252 878682 Notes to Editors: About Island 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 also secured the Petrolia rig for its planned 2007drilling programme. 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