IOG.L Regulatory News (IOG)

7 Feb 2006 07:00

Island Oil and Gas PLC07 February 2006 7 February, 2006 ISLAND CONCLUDES SEVEN HEADS SUB-AREA EQUITY INTEREST ASSIGNMENT AGREEMENT AND ANNOUNCES DRILLING PLANS FOR THE SEVEN HEADS FIELD Island Oil and Gas plc, ("Island"), the independent oil and gas exploration andproduction company, today announces that, through its wholly owned subsidiaryIsland (Seven Heads) Limited, it has concluded a Sub-Area Equity InterestAssignment Agreement (the "Agreement") for the Seven Heads Petroleum Lease,subject to the approval and consent of the Minister, with Marathon InternationalPetroleum Hibernia Limited, through its wholly owned subsidiary Ramco Celtic SeaLimited ("RCSL"). Under the terms of this Agreement, Island will drill a well,as part of its three-well drilling programme, in April 2006 using the Petroliadrilling rig to test the possible extension of the Seven Heads gas field in anarea immediately to the west of the 48/24-6 production well, which to date hasencountered some of the best producing gas sands in the Seven Heads gas field. Island will fund 100% of the cost of the well, including testing, in return forincreasing its equity interest in all of the unappraised part of the Seven HeadsPetroleum Lease (the "Sub-Area") west of a defined partition line (See map athttp://www.islandoilandgas.com/default.asp?docId=12481) close to the 48/24-6production well. Island's equity interest in the Sub-Area will increase from12.5% to 55.75% following the drilling of the well as a result of earning halfof RCSL's current interest in the Sub-Area. RCSL shall have the option at anytime up to four weeks before the spud date of the well, which, subject toregulatory consents and approvals, is currently anticipated to be on or about1st April 2006, of increasing its equity interest in the Sub-Area to a maximumof 50% by paying 13.5% of the cost of drilling and testing the well to earn anadditional 6.75% interest. Island will operate the well during the drilling period but operatorship willrevert back to RCSL once the drilling programme has been completed. Commenting on the Agreement, Paul Griffiths, Chief Executive of Island, stated: "We are delighted to be working together with Marathon in Seven Heads. Marathonhas an unrivalled history of experience and expertise in producing gas from theCeltic Sea. Island provides complementary technical skills in that it has overthe past two years made significant progress towards developing and maturingready for drilling its portfolio of exploration and appraisal projects in thisarea. We believe that this will help us to forge a positive and creative workingrelationship with Marathon going forward. An example of this is the way thecompanies have cooperated to move quickly to begin to evaluate the potentialupside in the Seven Heads gas field by executing an agreement that willfacilitate new drilling on Seven Heads utilizing, subject to regulatory consentsand approvals, the Petrolia drilling rig, which is currently under contract toIsland ". Enquiries: Lisa J Newman MCIPR MIRSNewman Consulting Tel: +44 (0)1252 878682 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