IOG.L Regulatory News (IOG)

20 Mar 2007 07:00

Island Oil and Gas PLC20 March 2007 20 March 2007 ISLAND OIL & GAS PLC UPDATED RESOURCE ESTIMATES FROM FUGRO ROBERTSON LIMITED Island Oil & Gas plc (LSE:IOG) ("Island" or "the Company"), announces that FugroRobertson Limited ("Fugro Robertson") has recently completed an independentassessment of the Company's most advanced near-development oil and gas projects.These include: the Amstel Oil Field, offshore the Netherlands; the Old Head ofKinsale and the Schull gas fields in the Celtic Sea. In addition,Fugro-Robertson has also assessed the producing Seven Heads gas field takinginto account the results of the West Seven Heads 48/23-3 appraisal well drilledby Island in 2006. This assessment constitutes a Competent Person's Report (the"Report") under the AIM Rules. Island's 2007 drilling programme will commence inthe second quarter of this year and will include appraisal wells at both the OldHead of Kinsale and Schull gas fields. Highlights of the CPR Report are: •Contingent P50 resources of 15.9 MMboe for Old Head of Kinsale,Amstel and Seven Heads West; •Old Head of Kinsale, Celtic Sea (Island interest 100%) - On a P50basis, Field gross gas in place of 78 Bscf; Field Gross Gas Recoverable of 55Bscf; net contingent resources of 9.2 MMboe. •Amstel Oil Field, Netherlands (Block Q13) (Island interest 60% afterexercise of State back-in rights) - On a P50 basis, Field gross oil recoverableof 10.9 MMbbl; total net contingent resources 6.5 MMboe. •Schull Licence, Celtic Sea (Island interest 55%) - Fugro Robertsonevaluated the Schull 57/2-2 discovery well ("Schull Field") and two adjacent gasprospects. On a P50 basis, Schull Field gas in place of 28 Bscf; and gross gasrecoverable reserves of 18.2 Bscf; net contingent resources of 1.7MMboe. For thetwo adjacent gas prospects, the unrisked total prospective resources are 74.1Bscf (net risked prospective resources 1.7 MMboe). •Seven Heads West, Celtic Sea (Island 55.75%) - At the Seven HeadsWest Sub-Area, P50 Field gross gas recoverable of 1.7 Bscf, making netcontingent resources of 0.2 MMboe, with potential P10 upside of net contingentresources of 0.3 MMboe based on P10 gross gas recoverable of 3.1 Bscf. Island drilled a successful gas well on the Old Head of Kinsale field in theCeltic Sea, offshore Ireland as part of its 2006 drilling programme; the firstnew gas discovery in the Celtic Sea for 16 years. The Company plans to drill afurther appraisal well at the Old Head of Kinsale in the second quarter of 2007,using the Petrolia Rig. Subject to the results from this well, a Plan ofDevelopment will be submitted based on completing and tying back the two wellsdrilled by Island to the Kinsale facilities subject to commercial agreement withMarathon and the consent of Irish regulatory authorities. Following the Old Head of Kinsale well, the Petrolia rig will move to the nearbySchull Licence, where Island will drill an appraisal well to evaluate the 57/2-2discovery made in 1987 by Total. The appraisal well will assess the continuityof and potential for establishing commercial gas flow rates from sandsencountered in the 57/2-2 well but not put on test at the time. The Schull wellis planned with a view to developing the gas potential of the area, where Islandhas identified two additional structures, through the Seven Heads/Kinsaleinfrastructure. There is significant potential upside in gas reserves in thisarea subject to the results of the well to be drilled this year. A potentialsatellite tie-back development at Old Head will significantly improve projecteconomics for Schull through a potential reduction in operating costs by sharingthe Kinsale Platform facilities. Island acquired its interest in the Amstel Field, offshore the Netherlands, itsfirst international acreage, in November 2006. Island is operator and theCompany is currently evaluating development options for this oil field andrevising a Plan of Development previously submitted to the Dutch authorities.Island is currently seeking availability of a Jack-up rig for drilling in thefield in 2008. The CPR reserves have been calculated in accordance with the standards of theSociety of Petroleum Engineers. The CPR does not currently quantify any resourcevolumes for Island's highly prospective Atlantic Margin licences, including itspotential multi-tcf gas prospects in the Slyne and Rockall Basins and also itsnear-development oil projects off the west coast of Ireland (Connemara oilfield) and the Celtic Sea (Seven Heads oil field). Island will continue toprogress these projects and is currently in discussion with potential industrypartners to further pre-development appraisal activity. Paul Griffiths, Chief Executive of Island Oil & Gas plc, commented: " The Fugro Robertson report focuses on our most advanced projects from ourextensive project portfolio. We are now beginning the process of bringingforward the value of our project portfolio through the prioritised developmentof near-term production projects, farm-outs and industry alliances. We willcontinue to prove-up the value of the remainder of our portfolio over the coming12 to 24 months, and will be commencing our 2007 Celtic Sea drilling programmein the second quarter with an appraisal well firstly at the Old Head of Kinsaleand then at the Schull gas fields." Enquiries: Lisa J NewmanNewman Consulting Tel: +44(0)1252 878682 Notes to Editors: Dr Jan Ypma, Manager of the Petroleum Reservoir Group of Fugro Robertson Limited, and a Petroleum Reservoir Engineer (PhD Theoretical Physics), is the qualifiedperson who managed the evaluation of the technical and commercial informationrelating to Island Oil & Gas plc and the documentation of the Competent PersonsReport from Fugro Robertson Limited. Dr Ypma is also the qualified person whoreviewed and approved the technical information included in this announcement. Glossary of technical terms: Bscf - Billions of standard cubic feet of gas MMboe - Million barrels of oil equivalent, which assumes that 6Mscf of gas hasthe same calorific equivalent of 1 barrel of oil Mscf - Thousands of standard cubic feet of gas MMscf - Millions of standard cubic feet of gas P10 - Proven, Probable and Possible reserves P50 - Proven and Probable Reserves Proven Reserves - Those quantities of petroleum which, by analysis of geologicaland engineering data, can be estimated with reasonable certainty to becommercially recoverable, from a given date forward, from known reservoirs andunder current economic conditions, operating methods, and governmentregulations. Proved reserves can be categorized as developed or undeveloped. Ifdeterministic methods are used, the term reasonable certainty is intended toexpress a high degree of confidence that the quantities will be recovered. Ifprobabilistic methods are used, there should be at least a 90% probability thatthe quantities actually recovered will equal or exceed the estimate. Unproven Reserves - Based on geologic and/or engineering data similar to thatused in estimates of proved reserves; but technical, contractual, economic, orregulatory uncertainties preclude such reserves being classified as proved.Unproved reserves may be further classified as probable reserves and possiblereserves. Probable Reserves - Those unproved reserves which analysis of geological andengineering data suggests are more likely than not to be recoverable. In thiscontext, when probabilistic methods are used, there should be at least a 50%probability that the quantities actually recovered will equal or exceed the sumof estimated Proved plus Probable reserves. Possible Reserves - Those unproved reserves which analysis of geological andengineering data suggests are less likely to be recoverable than probablereserves. In this context, when probabilistic methods are used, there should beat least a 10% probability that the quantities actually recovered will equal orexceed the sum of estimated Proved plus Probable plus Possible reserves. Reserve and Resource Categories After discovery, reserves may be assigned to one of the following two categoriesbased upon their commercial status at any point in time. Reserves - Those quantities of petroleum that have been discovered that areestimated to achieve a commercial return on investment and have been approvedfor development by Government and the Board of Directors of the owners. Contingent Resources - Contingent Resources are those quantities of petroleum,which are estimated, on a given date, to be potentially recoverable from known(discovered) accumulations, but which are not currently considered beingcommercially recoverable. Prospective Resources - Prospective Resources are those quantities of petroleumthat are estimated, on a given date, to be potentially recoverable fromundiscovered accumulations. This information is provided by RNS The company news service from the London Stock Exchange