IOG.L Regulatory News (IOG)

8 Aug 2007 07:00

Island Oil and Gas PLC08 August 2007 8 August 2007 ISLAND OIL & GAS PLC ANNOUNCES SUCCESSFUL SCHULL GAS WELL Island Oil & Gas plc ("Island" or the "Company") (LSE:IOG) is pleased toannounce that the Island-operated gas appraisal well 57/2-3 ("Well 57/2-3" or"the Well") on Exploration Licence 5/05 (the Schull Gas Field) in the CelticSea, offshore Ireland has successfully tested dry gas at a rate of 21 millionstandard cubic feet per day ("mmscfpd") through a 72/64" restricted choke size,with absolute open flow potential of 40 mmscfpd. The gas was produced from UpperWealden reservoirs between 2,332 feet Measured Depth ("MD") and 2,599 feet MDbelow the rotary table ("BRT"). HIGHLIGHTS: •The well encountered a gross gas column of 292 feet, significantly greater than that prognosed pre-drilling. •Reservoir encountered 84 feet high to prognosis •Additional, previously untested, reservoirs discovered by the Schull well provide follow-up potential in offset structures on the Schull Licence •Positive drilling results upgrade the Schull Gas Field to a potential standalone development. FORWARD PROGRAMME: Well 57/2-3 is being suspended as a potential gas producer. Island is now commissioning a commercial and engineering study to determine theoptimum development scenario for the Schull, Old Head and West Seven Heads gasfields. It is currently anticipated that this study will include the potentialfor using at least one of the gas fields as a gas storage facility to allow foran increase in winter gas production at a time when gas prices are traditionallyhigher. Another option being evaluated is the use of one of the gas fields as apotential, short-term, national strategic gas reserve. The options beinginvestigated are designed to maximize the value of the potential gas reservesand of the additional infrastructure that would be required to develop the gasfields. These options are subject to the consents and approvals of theDepartment of Communications, Marine and Natural Resources, in accordance withthe normal procedures required. The Petrolia Rig will now be handed over to Providence Resources plc. Island has a 62.5% interest in the Schull Field, where it is partnered byValhalla Oil and Gas Limited with a 25% interest and EnCore Oil plc with a 12.5%interest. Commenting on the test results, Paul Griffiths, Chief Executive of Island,stated: "We are delighted with the positive drilling results from Schull which haveadded a new dimension to the Celtic Sea gas gas play in an area that hadpreviously remained under-explored. Our 2006 and 2007 drilling programmes havedelivered four successful gas wells which now form the basis for growing ourCeltic Sea gas business. " Enquiries: Lisa J Newman MCIPR MIRSNewman ConsultingTel: +44 (0)1252 878682 Paul GriffithsChief ExecutiveIsland Oil & Gas plcTel: +353 1 631 3755 Anthony FarrellDavyTel: + 353 1 679 6363 Notes to Editors: Island was founded in 2003 and listed on AIM in December 2004 (LSE:IOG). TheCompany has interests in eleven Irish offshore licences, as well as licences inthe Netherlands and Morocco. 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. 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